Which type of fund targets a specific retirement year and adjusts asset allocation as that date approaches?

The type of fund that targets a specific retirement year and adjusts asset allocation as that date approaches is known as a targeted-maturity fund. These funds are designed to automatically shift their investment mix from a more aggressive asset allocation to a more conservative one as the target date nears, which helps to mitigate risk for investors as they approach retirement. This strategy allows investors to participate in potential growth when they are further from retirement while gradually reducing exposure to riskier assets to preserve capital as retirement draws closer.

Static-allocation funds maintain a fixed asset allocation regardless of market conditions or the proximity of retirement. Cash balance plans, on the other hand, are a type of defined benefit plan that provides participants with a predetermined account balance rather than investment-oriented management. Hybrid retirement plans blend features of both defined benefit and defined contribution plans, but do not specifically focus on adjusting asset allocation based on a retirement timeline.