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Target Date Fund

Target date funds, also referred to as life cycle funds, are a type of mutual fund or Exchange Traded Fund (ETF) that periodically modifies its asset allocation to become increasingly conservative as it ages.  The intention is to hold an asset allocation appropriate to individuals within a given age range.  These funds generally become more conservative as they age by increasing their concentration in bonds and cash while simultaneously decreasing the proportion of funds held in stocks.  Also, target date funds become more focused on generating income and less focused on creating growth as they mature.

Companies that create and market target date funds emphasize the convenience these products provide by automatically adjusting the asset allocation from year to year, and the benefit of professional fund management.


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