Business Glossary

mutual fund that switches between stocks, bonds, and money market securities to maximize shareholders' returns while minimizing risk. Such funds, which have become extremely popular in recent years, relieve individual shareholders of the responsibility of timing their entry or exit into different markets, since the fund manager is making those decisions. Theoretically, asset allocation funds provide a built-in buffer against declining stock and bond prices because the manager can move all the fund's assets into safe money market instruments. On the other hand, the manager has flexibility to invest aggressively in international and domestic stocks and bonds if he or she sees bull markets ahead for those securities.