History

• The Vanguard S&P 500 Index fund (VFINX) was the first unmanaged fund created in the early 1970s to mimic the index by holding the same stocks in the same proportions. Many others have been offered since.
  
  

Availability

• Since the early 1990s, many company sponsored retirement plans have made Lifecycle funds available in an interest to simplify participation, and these funds have also gained popularity outside of retirement plans.
  
  

Asset Allocation

• There are three basic classes of investment; stocks, bonds and cash (equivalents). Stocks have the most volatility but offer the greatest potential reward, while cash offers the least returns and is the most stable. Blending these three groups together can offer meaningful results.
  
  

Lifecycle Mutual Funds

• The simplicity of Index funds -- along with growing confusion over available investment choices -- drove mutual fund companies to create funds that incorporated asset allocation strategies. One fund could combine several funds with differing investment objectives to match an individual strategy.
  
  

Lifecycle Allocation

• The goal of Lifecycle funds is to match an investor's risk tolerance and age with a single suitable fund that is more aggressive at a younger age, and more conservative as retirement approaches. A Lifecycle fund for a 30-year-old may hold a heavier percentage in a stock fund, with some bond fund and little stable value fund exposure. The allocation may be nearly reversed at retirement age.