A lifestyle fund is an investment fund:

A lifestyle fund is an investment fund:

• A. Which changes its asset allocation to more secure assets as the investor approaches retirement age
• B. Open only to wealthy investors, with a minimum investment of €100,000
• C. Which invests only in shares of companies making exclusive clothing and accessories
• D. Which changes its asset allocation to higher risk/return assets as the investor approaches retirement age

Answer: (A)

Lifestyle funds adjust the mix of assets over time to match the investor’s shrinking time horizon, automatically reducing risk as retirement nears. They typically start with a higher proportion of equities for growth and progressively shift into more secure assets like bonds and cash equivalents to cushion volatility and protect capital as the target date approaches. This glide-path approach is exactly what the option describes: moving toward more secure assets as retirement age nears. The other choices don’t fit because they focus on eligibility, a sector-specific investment, or increasing risk near retirement—contrary to the aim of preserving capital and reducing risk as the horizon shortens.

Lifestyle funds adjust the mix of assets over time to match the investor’s shrinking time horizon, automatically reducing risk as retirement nears. They typically start with a higher proportion of equities for growth and progressively shift into more secure assets like bonds and cash equivalents to cushion volatility and protect capital as the target date approaches. This glide-path approach is exactly what the option describes: moving toward more secure assets as retirement age nears. The other choices don’t fit because they focus on eligibility, a sector-specific investment, or increasing risk near retirement—contrary to the aim of preserving capital and reducing risk as the horizon shortens.