Bonnie Bauman of Ignites wrote a story about lifecycle and lifestyle funds. Lifecycle funds are age-based and look at a set schedule for an investor’s age. Lifestyle funds combine assets to fit objectives and risk tolerances based on the investor.
These type of funds are marketed toward 401(k) plans as a good investment option. Traditionally 401(k) plans have offered limited investment options for participants, but more and more participants want choices. We have seen how ETFs are used more in plans through providers such as ShareBuilder.
But lifecycle and lifestyle funds may not be what participants need. They encompass a mix of investment strategies and not all providers excel at each strategy. In a sense, this type of fund doesn’t really offer an open platform participants are searching for. Also, they are funds of funds and fees are paid for the fund as well as for the funds within.
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