Life-cycle Funds Attract Assets

Chart of the Week for April 13-20, 2006

Life-cycle funds, also known as target retirement funds, were introduced in the 1990s but have surged in popularity in recent years as shown by the flow of assets into these funds in the graph above. Life-cycle funds serve as a one-stop shop for investors with a certain retirement date in mind; the asset allocations change over time to become more conservative as retirement approaches. These are diversified offerings and most are funds made up of other funds. The assets in life-cycle funds and the number of fund offerings has increased significantly since 2002 — so much so that in March, Morningstar® introduced three new categories for these funds to separate them from other types of asset allocation funds: Target Date 2000-2014, Target Date 2015-2029, and Target Date 2030+.

This illustration was compiled by information from outside sources. These companies are not affiliated with ICMA-RC. This information is being provided for educational purposes and is not intended to be construed as or relied upon as investment advice. ICMA-RC does not offer specific tax or legal advice. Individuals are advised to consider any new investment strategies carefully prior to implementing.

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