Trades are made to keep the asset allocation parallel to the set date. [Target-Date ETFs: Are They on Target?]
These funds are intended to be a buy-and-hold retirement investment. They can be used for other expenses such as college or other large expenditures, but are mostly used for retirement. [The Age Factor in ETF Investing]
The ease of use of these funds appeals to investors who like to purchase their investment and forget about it until they need it. Professionals suggest that the most important factor to look at is the asset allocation strategy and how aggressive the fund starts out, to how passive it becomes at the end date.
Target-date ETFs include:
- db-X 2020 Target Date Fund (NYSEArca: TDH)
- db-X 2010 Target Date Fund (NYSEArca: TDN)
- db-X 2040 Target Date Fund (NYSEArca: TDV)
- iShares S&P Target Date 2015 Index Fund (NYSEArca:TZE)
- iShares S&P Target Date 2020 Index Fund (NYSEArca:TZG)
- iShares S&P Target Date 2025 Index Fund (NYSEArca:TZI)
Tisha Guerrero contributed to this article.