Target Date ETFs Are Here - 1 Fund for Life?

Описание: Target date ETFs are here. Previously you could only get a target date fund in the form of a mutual fund. Now the enormous asset manager BlackRock has launched the industry's first lineup of target date ETFs.

I've long maintained that target date funds are unfairly maligned. The knee-jerk criticism of many pundits and novices are that target date funds are too conservative because they put young investors in broadly diversified asset classes and namely total bond market funds. The flawed logic in “100% stocks while young” aside, we know empirically that most investors overestimate their tolerance for risk, only realizing so when they panic sell during a severe market crash.

Vanguard found that their TDF investors tend to outperform even their DIY index investors over the long term because TDF's remove the behavioral aspects like tinkering, biases, and performance chasing.

These funds are also very affordable with an average expense ratio of about 0.10%, or 10 basis points.

Target date funds take more risk early and adjust to a more conservative allocation over time. When the target retirement date is reached, the fund will transition into the iShares Target Retirement ETF for retirement income.

There are currently a total of 10 ETFs in the lineup and they're staggered by 5 years, beginning with 2025.

Read the blog post here: https://www.optimizedportfolio.com/is...

#retirementinvesting #etfs #investingnews

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