Sunday, January 14, 2007

TD Ameritrade gets in the target date lifecycle game.

Behold, TD Ameritrade's investment advisory group "Amerivest" has filed with the SEC for the introduction of a series of Target Date ETF's.

  • Independence 2010 ETF

  • Independence 2020 ETF

  • Independence 2030 ETF

  • Independence 2040 ETF

  • Independence In-Target ETF


These funds will track custom indexes from Zack's, designed to outperform corresponding Lipper target benchmarks.

Once each Underlying Index is established, the Index Methodology adjusts the relative weightings of each asset class within each Index, and may adjust the relative weightings of subsectors of one or more asset classes along a "glidepath", gradually moving from a more aggressive to a more conservative allocation as the target date approaches, and then gradually back to a more moderately conservative allocation following the target date.


Each ETF will invest in portfolio of domestic, international, and fixed income assets. Each fund will share the same quantitative equity portfolio, with a different weighting given to fixed income. The contents of the fixed income portfolio will be different for each fund.

This is a big step forwards for retirement investing in the US. For the first time, with just a brokerage account, people can have a complete investment program in a single ETF share. In the past, a lifecycle strategy was only available in a mutual fund or annuity. Those vehicles often had management fee's in excess of 1% and less flexibility than ETFs.

These new TDAX Independence ETFs work nicely with TD Ameritrade's, ultra low cost iZone accounts. These accounts give qualified investors ($5000 minimum) flat rate $5 trades with no monthly fees or trading minimums.

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