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Target allocation funds allow you to choose an asset allocation based on your own risk tolerance.
These funds combine our expertise in asset allocation and security selection. They offer diversification across multiple asset classes, including domestic and international stocks across varying styles and market capitalization ranges, investment grade and high yield fixed income, and short-term investments. Fidelity also offers seven Asset Manager® funds, with equity exposure ranging from conservative (20%) to aggressive growth (85%).
Each of our seven Fidelity Asset Manager funds is named for its exposure to stocks. For instance, the Fidelity Asset Manager 20% maintains an equity allocation of around 20%, while the Fidelity Asset Manager 85% maintains an equity allocation of around 85%. Choosing a fund starts with understanding your risk tolerance, time horizon, and investment goals. Because stocks are considered to be more volatile than bonds or short-term investments, the Fidelity Asset Manager 20% may be more appropriate for investors who are less comfortable with risk or have a shorter time horizon, while the Fidelity Asset Manager 85% may be better for those who are more comfortable with risk or have a longer time horizon. You simply select the Asset Manager fund that you believe best meets your needs and Fidelity will do the rest.
Stock markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments.
In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk, liquidity risk, call risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.
High yield/non-investment grade bonds involve greater price volatility and risk of default than investment grade bonds.