Many investors have seen their 401(k)s take a beating in this recession, but among the many solutions out there that could fix this problem and bring us back to normal are exchange traded funds (ETFs).

Elainor Laise of The Wall Street Journal outlines the following five ways to help get things going again:

• Save, save, save.  Undersaving has always been a major problem, but in these hard times it seems to be prevailing.  Dwindling down some of your wants and desires to needs may enable you to save a few more pennies and get you over that bump. With ETFs, there are hundreds of options for where you can invest and save, too. No matter your goals, risk tolerance and investing style, there are several options for you. Find them.
• Utilizing company matches. This may be difficult because many employers are decreasing or even eliminating this policy.  If this is the case, up your contribution to the maximum that the IRS will allow, $16,500 per individual for the current year and $22,000 for those of you 50 and older. Not only will this boost your nest egg, it will lower your contribution to Uncle Sam’s pocket.
• Don’t keep jumping from one fund to another.  It might be tempting to dump a loser and jump onto the next best thing, but relying on emotion isn’t always the wisest decision.  A possible solution to this is the use of target-date funds, like TDX Independence In-Target (TDX). Additionally, have a strategy to avoid letting your emotions get in the way.
• Pay attention to fees. This is the easiest area to improve.  The majority of 401(k)s are focused on mutual funds, which generally charge have an expense ratio of around 1.02%.  Contrast this with ETFs, which generally charge an expense ratio of 0.58%.; this can cut costs by almost half. Not only do ETFs offer the lowest expense ratio of all investment tools, they offer much more: transparency, easy diversification, lower risk.
• Encourage workers to save. Many companies don’t offer 401(k)s because of hefty costs and administrative issues and many workers that do have access to 401(k)s simply don’t utilize them. Perhaps the government can make it a bit easier for small business to offer 401(k)s.

If you haven’t already, it is time for all investors to blow the dust off of their 401(k) portfolios, look them over with a fine-tooth comb, consider all investment options, educate themselves about investment tools, especially ETFs, save a little more and get some advice from a reputable financial advisor. Let’s put the devastation of 2008 behind us and make every effort to maximize our portfolios.

Some actively-managed exchange traded funds (ETFs) and target-date funds have not been immune to the market turbulence and have felt the same wrath as other securities in this crazy market.

These investment tools have become a primary investment vehicle for retirement savings, expecting to reach $276 billion and $1.1 trillion in assets, by 2009 and 2013, respectively.  A main characteristic of these funds is that they are managed by firms that use proprietary funds.  In fact, 85% of all target-date assets are held by Fidelity, T. Rowe Price, Vanguard, and Principal, all providers that use only proprietary funds as underlying investments, states Mariana Lehmann of Ignites.

Although the manner in which these funds are managed appears to be monotone, change seems to be in their near future.  Russell Investments is banking on its overall approach to building portfolios to influence the deferred contribution market by offering a “full-service” to advisors and plan sponsors.

Ridgeworth Investments has decided to liquidate its Life Vision Target-Date fund on Feb. 27, 2009, and focus its efforts on participating in the target-date fund marketplace by its funds multi-manager target-date fund providers.   Lastly, Target-date funds which offer best-of-breed funds are starting to evolve and slowly eat away at the target-date funds using proprietary underlying funds.

Among target-date ETFs in the marketplace now are:

• TDX Independence In-Target (TDX)
• TDX Independence 2010 (TDD)
• iShares S&P Moderate Allocation Fund (AOM)
• iShares S&P Growth Allocation Fund (AOR)
• iShares S&P Aggressive Allocation Fund (AOA)

The TDX funds are not structured as funds of funds like other target-date products on the market, and are instead based on proprietary indexes from Zacks Investment Research. The iShares target-date funds aren’t structured as funds of funds, either, although some of iShares ETFs are components.

The closer you get toward your retirement date, the higher the ratio of bonds in your portfolio, earning their name of a retirement plan on autopilot. Simon Maierhofer for ETF Guide reports that XShares and TD Ameritrade teamed up and created five TDAX Independence Funds, which he explores in light of the recent market turmoil. Do they follow their objectives?

Combined, they boast $150 million in assets.

• TDX Independence In-Target (TDX): The most conservative fund; 3% of the fund’s assets are allocated to international equities, 8% to domestic equities and 89% to fixed income.

• TDX Independence 2010 (TDD): This fund is designed for investors who plan to retire around 2010. 8% of the fund’s assets are allocated to international equities, 24% to domestic equities and 68% to fixed income. The allocation to equities is adjusted downward to 11% in the year 2010.

• TDX Independence 2020 (TDH): This fund is designed for investors who plan to retire around 2020. 17% of the fund’s assets are allocated to international equities, 49% to domestic equities and 34% to fixed income. After 2020, 11% is allocated to equities.

• TDX Independence 2030 (TDN): This fund is designed for investors who plan to retire around 2030. 22% of the fund’s assets are allocated to international equities, 65% to domestic equities and 13% to fixed income. After 2030, 11% toward equities is adjusted.

• TDX Independence 2040 (TDV): 24% of the fund’s assets are allocated to international equities, 72% to domestic equities and 4% to fixed income. The allocation to equities is adjusted downward to 11% in the year 2040.

The In-Target ETF has certainly provided a place to have parked your money. TDX is down 4.6% year-to-date. The 2010 portfolio is down about 15.3%, which given the general market conditions is acceptable. The 2020 portfolio dropped by 25.5%, the 2030 and 2040 portfolios have lost about 32.3% and 34.2%, respectively.

It’s up to investors to ultimately decide if that performance works for them, and whether these kinds of funds are a fit in their portfolios.

The TDAX exchange traded funds (ETFs) has changed their name. The new name is TDX Independence Funds, effective immediately. Their ticker symbols, as listed on NYSE Arca, will remain the same.

A life-cycle ETF operates under the same asset allocation formula that assumes the investor will retire at a specific, pre-determined date, which is identified in the title of the fund. Over time, the portfolio’s asset allocation becomes more conservative over time so that they stay in line with their objective. These types of funds have other applications, too, such as to save money for a wedding or college.

The ETFs will be known thusly as:

• TDX Independence 2010 (TDD), down 5.6% year-to-date
• TDX Independence 2020 (TDH), down 9.7% year-to-date
• TDX Independence 2030 (TDN), down 12.4% year-to-date
• TDX Independence 2040 (TDV), down 14.3% year-to-date
• TDX Independence In-Target (TDX), up 0.4% year-to-date