A target date fund is type of fund that automatically changes its asset mix at a certain 'target date'. Essentially these products are targeted at investors which are likely to meet some life-change e.g. retirement. Thus an example would be a fund with a 70% allocation to equities and 30% allocation to bonds - the allocations might switch so that there is a 70% allocation to bonds once the investor's retirement age is reached. The main advantage for investors is the convenience factor of putting their investing activities on autopilot and in one fund.
Synonyms: Life-cycle fund, Life stages fund, Automatic investment scheme
If you have any further questions or would like to add to the entry above, then please submit your thoughts below.