Financial Terms / G - H / Glide path

Glide path

Target date funds are those that, according to specific rules, have an asset allocation mix that keeps shifting as the years go by. For example, a 2040 target date fund serves those who would like to retire by 2040 and has asset mixes that shift dynamically yearly to hit that retirement year.

The glide path is the formula that directs the asset mix that a particular target date fund should follow throughout its lifetime. It defines how much capital should be allocated to each asset every year.