XShares, perhaps best-known for its line of HealthShares exchange traded funds (ETFs), is now broadening its horizons even further. According to Jesse Emspak at Investor’s Business Daily, the fund provider has joined forces with RPG Consultants to get target-date ETFs into retirement plans.
Back in October, XShares launched the TDAX Independence ETFs. They’re a series of target-date funds, which start out as mostly equity funds and a little bit of fixed income. As the fund nears its "target date," the fixed-income portion grows while the equity price shrinks.
ETFs aren’t a big part of the 401(k) market yet, but RPG and XShares hope that as investors realize how much more cost-effective target date funds are relative to mutual funds, their intereste will be piqued. And if the TDAX funds manage to capture just 1% of the 401(k) market, it’s no small potatoes: the amount will translate into billions of dollars.
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