A life cycle fund, also known as a target date fund, is a type of mutual fund that adjusts its level of risk according to the age of its owner. As the investor approaches retirement, the fund will gradually shift towards a more conservative investment strategy, reducing its exposure to stocks and increasing its holdings in fixed income assets. This recognizes the need for a lower risk profile for someone nearing retirement. Essentially, a life cycle fund is designed to align with an individual's changing investment needs as they progress through different stages of life.
