How are lifestyle funds characterized?

Lifestyle funds are characterized primarily by their predefined levels of risk that cater to different investor profiles, offering a set allocation that typically does not evolve over time. They are designed to suit the specific risk tolerance of an investor, meaning they may shift between equities, fixed income, and other asset classes depending on the fund's target risk level. However, unlike other funds that dynamically adjust their asset mix as the investor ages or as market conditions change, lifestyle funds maintain a stable allocation strategy based on the risk profile they represent.

This characteristic distinguishes lifestyle funds from options that may emphasize solely fixed income or solely high-risk investments, as well as those that rely on fluctuating allocations over time, such as target date funds. Target date funds, in contrast, adjust their asset allocation as a specific retirement date approaches, gradually becoming more conservative. Thus, while lifestyle funds do consider risk as part of their structuring, they do not adapt their allocations in the same manner that target date funds do.