“Set it and forget it” exchange traded fund (ETF) investors might see a certain appeal in target date funds. These types of ETFs have seen an increase of availability this year.

On Nov. 7, iShares announced a new strategy to be implemented in a series of “target-date” ETFs to help fund retirement or college tuition needs, reports Don Dion for Seeking Alpha. The different funds will have varying time horizons that allow the investor to plan when he or she will need the money.

Asset allocation would shift as the target date approches; thus, arranging a more conservative investment portoflio in atticipation of investor capital withdrawal.

The iShares target-date funds can be used in the savings market. It is said to be well-suited for IRA rollovers or small-sized 401(k) plans with a combination of transparency in ETFs and the benefits of target funds, which may ease mistakes because of poor asset allocation and not making portfolio changes over time.

A similar family of products provided by TD Ameritrade (AMTD), the TDX Independence funds, are composed of individual equities and bonds, whereas iShares created a set of funds derived from iShares ETFs. This may prove to be more conservative for investors over the long term than that of the invidivual equity approach by TD Ameritrade. A couple of current TDX funds include:

  • TDX Independence 2010 ETF (TDD): down 12.8% year-to-date

ETF TDD performance

  • TDX Independence 2020 ETF (TDH): down 27.8% year-to-date

ETF TDH performance

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.