What is a lifecycle fund designed to do?

A lifecycle fund is specifically designed to automatically adjust its asset allocation based on the target retirement date of the investor. This means that as the investor approaches retirement, the fund gradually shifts its investment strategy from a more aggressive mix, which typically includes a higher proportion of stocks for growth, to a more conservative mix with a larger focus on fixed-income securities and cash equivalents to preserve capital.

This automatic rebalancing is meant to manage risk in line with the investor's timeline, ensuring that as they near retirement, they are less exposed to the volatility of the stock market while still aiming to achieve sufficient growth during their saving years. The goal is to align the risk level of the investment with the investor's age or timeline for needing the funds, optimizing for their specific retirement needs.

The other options do not accurately capture the primary function of a lifecycle fund. Maximizing short-term gains focuses on a more aggressive investment strategy that doesn't align with the goals of lifecycle investing. Investing exclusively in treasury securities is significantly narrower than the diversified approach taken by lifecycle funds. Minimizing tax liabilities is also not a primary focus; although lifecycle funds can be structured to be tax-efficient, their main purpose is adjusting risk based on retirement dates.