Which statement about Lifecycle funds is true?

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Multiple Choice

Which statement about Lifecycle funds is true?

Explanation:
Lifecycle funds are designed to match a saver’s time horizon by adjusting risk over time. They follow a glide path: when the retirement date is far, the fund emphasizes growth with more stocks; as the target date nears, it shifts toward more conservative assets like bonds and cash equivalents to reduce risk. This automatic reallocation is what makes the statement true. They don’t invest solely in global stocks; they diversify across asset classes including bonds and cash. They aren’t cash equivalents themselves, and they do change risk over time as the target date approaches.

Lifecycle funds are designed to match a saver’s time horizon by adjusting risk over time. They follow a glide path: when the retirement date is far, the fund emphasizes growth with more stocks; as the target date nears, it shifts toward more conservative assets like bonds and cash equivalents to reduce risk. This automatic reallocation is what makes the statement true. They don’t invest solely in global stocks; they diversify across asset classes including bonds and cash. They aren’t cash equivalents themselves, and they do change risk over time as the target date approaches.

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