Standard Life Assur-ance Co. of Canada has launched new versions of its life-cycle funds that allow members of its group plans to choose an investment portfolio that matches their risk tolerance as well as their target date for cashing out.

The funds — called Model Dynamic Portfolios — are like other life-cycle funds introduced by fund families such as IA Clarington Investments Inc. and Fidelity Investments Canada Ltd. , in that they offer a variety of target dates and adjust the asset allocation to a more conservative mix to reduce volatility as the maturity date approaches.

However, investors in the Standard Life product can also pick an investment strategy most suited to their needs and objectives, ranging from growth-oriented to conservative. Assets in the funds are rebalanced quarterly to stay on track with each individual’s chosen risk profile as well as his or her target date.

Most life-cycle funds in the market either “invest toward an anticipated retirement date or according to an investor’s risk profile, but don’t take both factors into account,” says Anthony Cardone, senior vice president of group and retirement at Standard Life. “The Model Dynamic Portfolios overcome the limitations of target-year and life-cycle funds by investing for both time and risk level.”

The target date for life-cycle funds typically is chosen to coincide with a known future event that must be financed, such as retirement or the post-secondary education of children. Although life-cycle funds are designed to take the decision-making out of investing by offering built-in asset allocation and portfolio rebalancing, their “one size fits all” approach may be too simple to satisfy all investors.

“The basis premise of most life-cycle funds is that they address time horizon, but don’t specifically address risk tolerance,” says David O’Leary, manager of fund analysis at Morningstar Canada. “They give everybody with the same target date the same asset mix. The new Standard Life funds add an extra level of customization, and that’s a positive.” IE