A new Lipper survey of life-cycle funds, The Life Cycle Funds: Fit for Life, shows a dramatic increase in these low-maintenance portfolios, ...

A new Lipper survey of life-cycle funds, The Life Cycle Funds: Fit for Life, shows a dramatic increase in these low-maintenance portfolios, which are primarily offered as options in 401(k) US pension plans. The survey focuses on two kinds of funds: lifestyle funds, which are allocated more or less aggressively based on investors’ risk tolerance, and the less common target retirement funds, which are allocated based on how far out an investor is from a given retirement date. Assets in life-cycle funds in the US have more than doubled since 2000, and they grew 38 per cent in December 2004, to $139.7 billion, from $101.4 billion in 2003. Assets in lifestyle funds rose 28 per cent, to $95.8 billion, while those in target retirement funds jumped 65 per cent, to $43.9 billion. “A large majority of investors have neither the time nor the inclination nor the expertise to plan for their retirement and this is a turnkey kind of investment for them,” said Michael Porter, a senior research analyst at Lipper and co-author of the study. The funds not only provide professional diversification, but also regularly rebalance the allocation, something most 401(k) participants do not do, according to Mr Porter. By far the largest share of the life-cycle funds market, 34.2 per cent, belongs to Fidelity and Vanguard.