From the December 2007 issue of Research Magazine • Subscribe!

December 1, 2007

TargetDate ETFs Hit the Street

Among the new exchange-traded funds XShares Advisors recently introduced on NYSE Arca are a series of five target date or "lifestyle" ETFs that range in maturities from 2010 to 2040. These are the first target date ETFs to be launched and could signal the adoption of ETFs in more retirement plans.

Each fund's approach is determined by its target withdrawal date. Funds with longer time horizons have higher initial equity exposure (including international equities) with greater volatility and risk. Funds with shorter time horizons have higher fixed-income exposure as well as lower volatility and risk.

Lifestyle mutual funds have been a success in 401(k)s and similar retirement plans. The concept of lifestyle ETFs could catch on and open up a huge new base of investors in the retirement plan market.

The lifestyle ETFs track indexes designed by Zacks Investment Research and charge an annual expense ratio of 0.65 percent.

Six other new Xshares ETFs are known as Adelante Shares, designed to provide exposure to narrow slices of the U.S. real estate market. Each of these equal-weighted ETFs holds 25 securities, while another new ETF, the market cap-weighted Composite Real Estate ETF, holds 40 companies.

Each of the funds charges an annual expense ratio of 0.58 percent.

XShares is best known for its HealthShares ETFs, which track narrow industry sectors within the healthcare field.

The upstart firm is competing for a share of the ETF market against much larger rivals including Barclays Global Investors, PowerShares, State Street Global Advisors and Vanguard.

o Adelante Shares RE Classics ETF (ACK) o Adelante Shares RE Composite ETF (ACB)o Adelante Shares RE Growth ETF (AGV) o Adelante Shares RE Kings ETF (AKB) o Adelante Shares RE Shelter ETF (AQS)o Adelante Shares RE Value ETF (AVU)o Adelante Shares RE Plus Yield ETF (ATY)o TDAX Independence 2010 ETF (TDD) o TDAX Independence 2020 ETF (TDH)o TDAX Independence 2030 ETF (TDN)o TDAX Independence 2040 ETF (TDV)o TDAX Independence In-Target ETF (TDX)

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Ron DeLegge is the San Diego-based editor of www.etfguide.com.

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