Exploring Lifestyle Funds


United States flagLifestyle funds are designed to simplify an investor’s selection of a diversified, risk-appropriate portfolio. Individual funds target different levels of risk tolerance, ranging from conservative to aggressive. What’s more, lifestyle funds are managed, monitored and regularly rebalanced by an experienced portfolio management team to maintain a consistent risk/return profile in the face of changing market conditions. Investors value the lifestyle funds’ ability to offer instant diversification across a broad range of asset classes.

Works the way you want to invest

To some, the concept of owning one fund that comes complete with a prepackaged, diversified portfolio — under experienced management — may sound unique. But this approach isn’t uncommon and may suit those investors without the time or knowledge to create a diversified, risk-appropriate portfolio on their own. In other words, this fund choice may appeal to the ‘life-style’ of certain investors.

Choose the fund that matches your goals and risk tolerance

Investors select the lifestyle fund — which targets a particular level of risk — that most closely matches their own goals and risk profile. For example, you may select a fund to help you achieve an intermediate goal, such as funding a college education, or one that supports the long-range purpose of providing retirement income. What’s more, your lifestyle fund can operate as the major holding in your portfolio or complement existing products. Each fund option (generally, major fund families offer four or five options) comes with a targeted asset allocation.

In general, these funds range from income funds, which invest 20% of their assets in equities (stocks) and 80% in fixed income (bonds), to highly aggressive growth funds with a 100% equities allocation.

Of course, investors should regularly reassess their own risk tolerance to ensure the fund they’ve selected matches their current risk profile. In the event one particular lifestyle fund is no longer compatible with their risk profile, they can move into a different lifestyle fund.

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