any particular pros/cons to either?
The original one-stop-shop mutual funds were balanced funds. Balanced funds blended stocks and bonds together so that an investor wouldn’t have to worry over how much to commit to either category. As Americans, we are rarely satisfied with the status quo however, so in an effort to make the wheel rounder, we have redeveloped the plain vanilla balanced fund into the life style and life cycle funds we see so frequently.
A life style fund blends stocks, bonds and other investments to try to achieve a certain level of overall risk exposure. For example, if you determined that you are comfortable taking a “moderate” level of risk, you could find a life style fund which attempts to target that risk level, and which attempts to maintain that level of risk exposure over time. By contrast, a life cycle fund, like a target date fund, is focused on managing money toward a target, and will generally reduce the overall amount of risk in the fund as the target date is approached.
They both have their strengths and weaknesses however. The life style fund can give you more consistent exposure to a level of risk, but you may have to make a decision on your own about whether or not that level of risk is appropriate, or needs to be adjusted. The life cycle fund takes the guess work out of trying to reduce risk exposure over time, as you approach your retirement or other target date, but these funds often err on the side of less risk, which may not be a perfect strategy for you if you have a long investing time-horizon.
One advantage they both share however, is that by using them, an investor can be more consistent in their approach and will often be less inclined to make emotional buy or sell decision, which rarely work out to their benefit.
