Choosing a lifecycle option for your age group

Lifecycle funds are based on the premise that investors in different age groups should not have the same mix (or allocation) of assets in their investment portfolio. While younger members can afford a higher level of risk in the form of growth assets, it’s generally held that older members should take a more defensive approach in the lead up to retirement.

Lifecycle funds are also an acknowledgement that most super fund members are not actively engaged with their super and don’t know how it’s invested. To address this, lifecycle products automatically increase the amount of defensive assets (such as bonds) relative to growth assets (such as shares and property) as you age and your investment horizon draws nearer.

Automatic adjustments to your asset mix not only help reduce your exposure to market risk in the lead up to retirement, or sequencing risk, but also reduce the temptation to tinker with your investments in reaction to adverse market movements. 

Comparing lifecycle funds

Because lifecycle funds have different asset allocations for different age groups and different ‘glide paths’, that is, they reduce growth assets at different points in the lifecycle of their members, they can be difficult to compare.

To make it easier to compare like with like, SuperGuide is introducing a lifecycle fund comparison tool (below).

To use the tool, you simply key in your birth year to discover which funds offer a lifecycle option and the percentage of growth assets they hold for members your age.