Target Risk Fund

DEFINITION of 'Target Risk Fund'

A fund that attempts to expose its investors to a specified amount of risk. The fund manager of a target risk fund is responsible for overseeing all the securities owned within the fund, to ensure that the level of risk isn't greater or less than the fund's target amount of risk exposure.

BREAKING DOWN 'Target Risk Fund'

Target risk funds typically label themselves as "conservative", "moderate risk" or "aggressive" in terms of their risk exposure. Regardless of the label applied, the intent is to offer a relatively constant level of risk exposure to investors.

This allows investors who are considered highly risk averse to identify and select a fund of funds that has a conservative risk exposure target, and once invested in the fund, remain confident that their level of risk exposure will not change substantially.

The manager of a target risk fund is responsible for ensuring that the fund's level of risk exposure is on target, and the fee's charged for operating the fund (on top of the fees charged by mutual funds owned within the target risk fund) is compensation for the value-added service.

RELATED TERMS
  1. Institutional Fund

    A fund that targets high value investors with low management ...
  2. Investment Fund

    A supply of capital belonging to numerous investors that is used ...
  3. Fund Of Funds

    A mutual fund that invests in other mutual funds. This method ...
  4. To Fund

    A type of target-date retirement fund whose asset allocation ...
  5. Total Annual Fund Operating Expenses

    For a mutual fund or other type of fund management structure, ...
  6. Closed To New Investors

    Mutual funds and hedge funds that do not accept investments from ...
Related Articles
  1. Retirement

    An Introduction To Target Date Funds

    Target date mutual funds can be an alternative to bonds and CDs for investors who do not wish to actively manage their savings. The reason: These financial products periodically reallocate fund ...
  2. ETFs & Mutual Funds

    Mutual Funds

    What mutual funds are: Professionally managed pools of stocks, bonds and/or other instruments that are divided into shares and sold to investors. Pros: Diversification; liquidity; simplicity; ...
  3. ETFs & Mutual Funds

    5 Characteristics of Strong Mutual Fund Shares

    Discover some of the basic characteristics shared by good mutual funds that investors can use to help them in selecting funds.
  4. ETFs & Mutual Funds

    Mutual Funds Are Awesome - Except When They're Not

    This investment is very popular, but that doesn't mean it comes without risk.
  5. ETFs & Mutual Funds

    Target Date Funds: More Popular, Cheaper Than Ever

    How target date funds can help investors weather volatility when it comes to saving for retirement.
  6. ETFs & Mutual Funds

    Make Sure You Avoid Adding These Mutual Funds to Your 401(k)

    Find out which five types of mutual funds you should avoid in your 401(k), including why buying this year's hottest fund is likely a losing bet.
  7. Financial Advisor

    Target Date Funds Can Be Customized: Here's How

    Target date funds will likely become a permanent fixture in the marketplace for the retirement plan sector. Here's how they have recently improved.
  8. ETFs & Mutual Funds

    The Top 5 All Cap Core Mutual Funds for 2016

    Learn how to shop for the best all-cap mutual funds, and identify five funds that invest in companies of all sizes and offer good returns with low expenses.
  9. ETFs & Mutual Funds

    Mutual Funds Commonly Found In Retirement Plans

    If you have a 401(k), these fund names should ring a bell. Here's how and why.
  10. Managing Wealth

    How Mutual Fund Managers Pick Stocks

    Learn about how mutual fund managers choose stocks based on the type of funds they manage and the investment goals of the funds' shareholders.
RELATED FAQS
  1. How do I judge a mutual fund's performance?

    Evaluate mutual fund performance utilizing resources such as Morningstar; compare the fund with others in its peer group ... Read Answer >>
  2. Why are mutual funds subject to market risk?

    Find out why mutual funds, like all investments, are subject to market risk, including how the different types of market ... Read Answer >>
  3. How do I calculate the loan-to-value ratio using Excel?

    Learn what a mutual fund and a money market fund are, and understand the differences between each and how they serve various ... Read Answer >>
  4. What is an appropriate large cap mutual fund fee?

    Discover what an appropriate fee for a large-cap mutual fund should be, and learn how choosing index mutual funds can lead ... Read Answer >>
  5. Do mutual funds invest only in stocks?

    Discover which types of mutual funds invest in only equities, or stocks, and which mutual funds also include investments ... Read Answer >>
  6. Why do index funds tend to have low expense ratios?

    Understand what an index fund is and why the nature of index funds causes them to have lower expense ratios than more actively ... Read Answer >>
Hot Definitions
  1. Glass-Steagall Act

    An act the U.S. Congress passed in 1933 as the Banking Act, which prohibited commercial banks from participating in the investment ...
  2. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  3. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  4. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  5. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  6. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
Trading Center