Thursday March 16, 2006
Are "Life Cycle" Funds A Good Investment?
More and more money is moving into "life cycle" funds, Wall Street’s latest investment fashion. What are "life cycle" funds? And are some life cycle funds actually better than others?
A "life cycle" fund is a fund that automatically adjusts its allocation between stocks and bonds as you get closer to a specific target date — usually the date of your retirement. Suppose you plan to retire in, say, nine or ten years. You would shop for a life-cycle fund with a 2015 target date. And the fund would automatically and gradually move your holdings year by year from larger positions in stocks into larger positions in bonds and cash.
The information and views contained in this column do not represent a recommendation or solicitation to buy or sell any particular security or fund. Past results are not a guarantee of future outcomes. Investments of any kind can result in losses. When considering any investment, you should independently judge the content, management, fees, tax implications, and risk factors of the investment and, in particular, read its prospectus and/or other offering materials.