What is Zacks Lifecycle Index?
Definition of Zacks Lifecycle Index
Zacks Investment Research, Inc. developed a series of indexes which are used as benchmarks for the lifecycle of target-gate funds. Each target-date fund has a different index as a benchmark. Domestic binds, U.S. equities and international equities are constituents of Zacks lifecycle index.
Explanation of Zacks Lifecycle Index
Investors who are saving for their retirements and have no interest and/or knowledge to manage their investments are more likely to use lifecycle or target-gate funds. In Zacks investment Inc., proprietary selection rules are used to classify bonds and stocks with risk profile as well as return profile. The asset mix distribution becomes more and more conventional when the target date approaches. There are 300 U.S. stocks, 100 debt securities and 100 international securities in Zacks index.
The biggest advantage of Zacks lifecycle index is that the investor’s portfolio can be put in one fund in automated way, this one fund is then managed for the investor. The investors who do not want to manage their own portfolios find such kind of funds convenient.
The major similarity between lifecycle funds and target-date funds is of automatically managing the asset ratio of cash, stocks and bonds. Whereas, the major difference between these two is the way of setting their future dates.