As the number of lifestyle funds continues to swell and the rate of their asset growth surpasses regular equity funds, mutual fund companies are beginning to try and differentiate their lifestyle funds with increasingly diversified lifestyle funds, The Wall Street Journal reports.

Rather than just invest in a mix of traditional equity and bond funds, new lifestyle funds are delving into junk bonds, real estate, emerging markets, natural resources and exchange-traded funds.

Investors allotted $29.9 billion to lifestyle funds in the first 11 months of 2005, according to the latest data from Financial Research Corp. That boosted their assets 34%, as opposed to the 9% growth in all long-term mutual funds.

But these exotic flavors of lifestyle funds are making it difficult for investors to choose among them, according to The Journal. And while the fees on these funds-of-funds are typically higher than other actively managed funds because of the added layer of management, the increasing diversification is boosting these fees even higher.

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