Which of the following accurately describes the nature of life cycle funds?

Life cycle funds are designed with the intention of aligning investment strategies with the investor's age and intended retirement date. As individuals approach that date, these funds gradually shift their asset allocations from higher-risk investments, such as stocks, to more conservative investments, like bonds or cash equivalents. This gradual change is often referred to as a "glide path," reflecting a strategy to reduce risk as retirement nears.

By doing so, life cycle funds help manage the risk of market volatility for investors who are likely to need the funds around the time of their retirement. This dynamic investment approach adapts to the changing needs and risk tolerance of the investor over their life cycle, which distinguishes life cycle funds from those that maintain a fixed asset allocation or follow a consistent strategy regardless of age. Therefore, the essence of life cycle funds is accurately captured by the description of shifting investment strategies over time to accommodate the investor’s journey toward retirement.