Term funds

A term fund is an investment fund with a limited term from the start . The purchase of the investor is only possible during the subscription period . The invested assets remain in the fund until the end of the term. During the term, investors can sell fund units every trading day. At the end of the term, the entire fund is liquidated and the invested capital including the accrued income is distributed to the unitholders.

AS funds and open-ended real estate funds may not be launched as term funds in Germany.

Life cycle funds

Lifecycle funds are a special form of term funds.

In the case of life cycle funds, the composition of the portfolio depends on how much time remains until the target date. If this period is still very long, then the fund consists mainly of stocks . These offer a better return in the long term, but carry the risk of price losses. In the event of a bear market , there is still enough time to compensate for these price losses. The closer the target date comes (for example the planned start of retirement), the more the money is shifted into bonds with high credit ratings, so that the capital that has been reached can no longer be lost.

They are primarily intended for private retirement provision and have been available in Germany since 2004.