IFIC Mutual Funds Licensing Practice Exam · Question
A client contributing to a Registered Education Savings Plan (RESP) for their newborn child wants an investment solution that automatically adjusts its asset allocation over time to become more conservative as the child approaches university age. Which of the following mutual fund types is specifically designed for this purpose?
Target Date Funds are specifically designed to automatically de-risk their asset allocation over time, moving from a growth-oriented strategy to a more conserva
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Question: A client contributing to a Registered Education Savings Plan (RESP) for their newborn child wants an investment solution that automatically adjusts its asset allocation over time to become more conservative as the child approaches university age. Which of the following mutual fund types is specifically designed for this purpose?
Answer options:
- Balanced Fund
- Index Fund ✅ Target Date Fund
- Sector-Specific Fund
Correct answer: Target Date Fund
Explanation: Target Date Funds are specifically designed to automatically de-risk their asset allocation over time, moving from a growth-oriented strategy to a more conservative one as the target date (e.g., college enrollment) approaches.
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