I am retired and take educated guesses on all things financial.

September 25, 2008

September 25, 2008: A Port In A Storm: TDX Independence In Target ETF

Most of us agree that it will take time (the length of time, who knows?)for world markets to settle, and for the acts necessary to restore confidence in U.S. financial leadership to take hold. During this time, what is an investor to do?

I have written extensively in my blog about ideas to cope and profit in today's tough markets for the past few months. Most strongly, I feel actively managed rental real estate (homes to apartments) or, passively managed real estate through iShares' NAREIT Residential Real Estate Fund (REZ) is a winner. I have also mentioned attractively priced ETFs like PowerShares' Preferred Financial ETF (PGF), and others for safety such as iShares'Lehman 1-3 year Treasury Bond ETF (SHY), iShares' iBoxx Investment Grade Corporate Bond ETF (LQD), Vanguard's Short Term Bond Fund (BSV) and a thinly traded micro-sized ETF that deserves more respect, PowerShares'Autonomic World Growth ETF (PTO).

Another appropriate investment for consideration now is XShares' TDX Independence In Target ETF (TDX), a $25m Fund that is a great place to park some of your hard-earned money. This ETF is actually billed as a one-stop solution to target date investing, using Zack's In-Target Lifecycle Index as it's measure. The index draws from three broad asset classes: international equities, domestic equities and fixed income securities. The fact that XShares touts TDX as an ETF "designed for investors who are at or near their target date of retirement at the time of investment" gives you a certain idea that this portfolio is designed to be conservative and wealth-preserving, while throwing off a dividend. Approximately 85% of the ETF is in fixed income, primarily U.S Government obligations with a dash of AAA Corporate Bonds. The remaining 15% is in U.S. equities with a world presence, Foreign Securities and A through BB-rated Bonds. TDX is rebalanced annually, or quarterly in volatile times. The present dividend is about 3%. I like this mix for the time being.

Trading at about $25.00/share, TDX holds 368 securities and has a volume of approximately 16,000 shares per day.

There is a time and place for prudence. TDX will not make you rich. But it will allow you to sleep at night as a holding within your diversified portfolio.

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