The term "glide path" refers to a projected future performance or return for an investment portfolio. It is essentially a measure of how well a pension fund, endowment or other long-term investor's assets are likely to perform in the years leading up to their target retirement date.
The glide path represents the asset allocation mix that an investor intends to maintain over time as they move towards their desired level of risk and return. It is typically depicted on a graph with the x-axis representing the time horizon, and the y-axis showing the portfolio's projected performance or return.
The glide path can be used by an investor to determine how much risk they are taking in their current asset allocation mix compared to where they need to be at their target retirement date. If an investor is too aggressive, they may experience significant losses if the market takes a downturn; on the other hand, if they are too conservative, they could miss out on potential gains and not achieve their long-term financial goals.
In summary, the glide path represents the optimal balance between risk and return for an investor as they move towards their target retirement date, helping them to make informed decisions about their portfolio allocation mix along the way.