An allocation fund is an investment vehicle with multiple asset classes. Target-date funds are a popular example of allocation funds.
What is an allocation fund?
Allocation funds come with different asset allocations based on different investor goals. For example, investors getting close to retirement may consider holding balanced funds, which have a mix of stocks and bonds in the same fund.
College graduates looking to save for retirement may consider a target-date fund: an investment that contains mostly stocks at the beginning and gradually increases bond exposure as the target retirement date approaches.