Rather than using lifecycle funds as they are intended - a way to achieve broad diversification and periodic reallocations with the broad stroke of a single investment - many investors are using them as a part of their portfolios, Vanguard found, according to an AP report. Worse yet, some are laddering their investments in multiple lifecycle funds.

In "How America Saves 2005," Vanguard found that while they are intended to be the sole or core holding in an investor's portfolio, "actual participant behavior is at odds with this goal, with many participants using lifecycle funds as just another part of their overall portfolio."

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