Examples of such funds can be found at BMO, Scotiabank, Manulife, T. Rowe Price, Pimco, and many other banks and financial institutions too numerous to mention here. These funds are the "cruise control" of mutual funds. As the investor gets closer to retirement, the fund's asset allocation becomes more conservative and focuses on fixed income. The changing asset allocation is called the glide path.
"In the U.S., target-date funds hit the public consciousness after the Pension Protection Act of 2006. The legislation allowed 401(k) plan sponsors to make life cycle funds the default investments for participants who didn't choose their own funds. The logic was that since investors were now in charge of their own retirement funds, sitting in cash wasn't going to get them there".(See Nasdaq)
In Canada, target dated funds began gaining more interest around the same time. These funds have some very positive aspects which are desired by many investors. Many individuals are so busy with their own careers, family and lives that they truly want their retirement funds on cruise control. Although I often point out you are the best keeper of your retirement plan and your money, many people either do not, or cannot look after their own plans.
There are however some drawbacks to these plans you should be aware of. The Canadian investment review has an excellent article on this very subject entitled: The trouble with retirement dated funds.
Retirefunds may not be for everyone but there is a growing investor base that wants to keep their investments on cruise control. If you are interested in this form of retirement financing, you should contact a qualified financial adviser.