RESP target date funds

A Registered Education Savings Plan (RESP) is a long-term savings plan designed to help families save for their child’s post-secondary education. One way to simplify RESP investing is by using a target date fund — an option that aligns with your child’s expected start date and automatically adjusts over time.

To explain how these funds work, we spoke with Jen Wong, Director, Managed Solutions at CIBC Asset Management.

Jen Wong: A target date fund is a type of investment fund that automatically adjusts its mix of investments over time. It typically starts with a more growth-focused allocation — like stocks — and gradually shifts to more conservative investments, like bonds and cash equivalents, as the target date approaches. In the case of RESPs, the target date is usually the year your child is expected to begin post-secondary school.

The idea is to grow your RESP when your child is young, then reduce risk as the start of school approaches. The fund’s investment manager handles all of this for you, so there’s no need to rebalance it yourself manually.

Jen Wong: The biggest benefit is simplicity. You choose a fund based on the year your child is expected to start post-secondary education, and the fund automatically adjusts its asset allocation over time. This evolving asset mix approach is ideal for investors who want professional management without the need for ongoing decisions. Because all investment changes follow a disciplined glide path managed by professionals, investors are less likely to make impulsive decisions—such as buying high during market rallies or selling low during downturns. This helps you stay focused on a consistent, long-term strategy rather than letting emotions drive your investment choices.

Additionally, each fund is diversified, holding a mix of asset classes — such as equities, bonds, and sometimes other investments — which helps manage risk and reduce volatility. The automatic rebalancing feature keeps the portfolio aligned with the fund’s objectives.

Jen Wong: Most funds follow a "glide path," which is the schedule for adjusting the investment mix over time. When the child is young and the target date is far away, the fund may invest more heavily in equities for long-term growth. As the child approaches the date to start post-secondary school, the fund gradually shifts to a more conservative mix — typically with more fixed income — to help protect the value of the RESP in the final years as this is typically when withdrawals begin for education expenses.

The pace of this shift can vary by fund. Some adjust equity exposure gradually each year, while others make larger moves in the final few years before the target date. You can review the fund’s documentation for details on its specific glide path.

Jen Wong: Like any investment, target date funds carry some risk — especially in the early years when the allocation may be heavily weighted toward equities. That said, the built-in risk management features are designed to help reduce market volatility over time.

It’s important to remember that while these funds can help make the decision of what, when, and how to invest easier through its automated investment strategy, you’re still responsible for deciding how much to contribute and when. The fund helps manage the “how,” but not the “how much.”

If you're looking for a simple, professionally managed way to invest your RESP, target date funds may be worth a closer look. They offer automated rebalancing, diversified holdings and a timeline that adjusts with your child’s age — helping you stay on track with long-term education goals while reducing the need for hands-on management.