While target-date products, including exchange traded funds (ETFs), are seeing big growth, it’s been found that many investors still don’t understand quite how they work.

Kevin Burke for Ignites points out that this lack of understanding is apparent in how some investors are using them, choosing to use them as an alternative to 529 college savings plans, or pairing funds of differing maturities as a diversification strategy. Other investors have been using them as they would any other investment option, and allocating only a portion of their assets in them.

One analyst says the danger in this is that investors might find themselves with an asset allocation that’s not appropriate for their time horizon. But the analyst also puts the onus on the industry, saying they need to do a better job of explaining that these funds are all-or-nothing and how investors should be using them.

In fact, research by the Financial Research Corp. is showing that if target-date firms make a better effort at education, it could boost the amount of money flowing into the funds. The other challenge for the funds is convincing investors to stick with them until they retire.

TD Ameritrade and XShares teamed up to offer a line of target date ETFs under the name TDAX. For now, they are the only providers of these ETFs:

• TDAX Independence In-Target ETF (TDX), up 1% year-to-date
• TDAX Independence 2040 ETF (TDV), down 6.2% year-to-date
• TDAX Independence 2030 ETF (TDN), down 5.9% year-to-date
• TDAX Independence 2020 ETF (TDH), down 3.5% year-to-date
• TDAX Independence 2010 (TDD), down 1.1% year-to-date