iShares has just issued a dozen new unique ETFs that track the S&P Target Date Index Series and the Target Risk Index Series.

Here is a breakdown of the two categories with the tickers and expense ratios:

Methodology

The S&P Target Date Index Series and Target Risk Index Series are composed entirely of iShares ETFs, similar to a fund of funds. Each underlying ETF is chosen as a broad representation of an asset class. According to Standard and Poor's Target Date Index Series methodology guide:

"The index series reflects the market consensus for asset allocations for different target date horizons. In particular, each index is representative of the investment opportunity available to investors for the corresponding target date horizon, with asset class exposure driven by a survey of available target date funds for that horizon."

This means that it is the two index series' intention to provide a benchmark based on asset allocation opportunities available in the marketplace.

This is different from most indexes that systematically hold the entirety of or a representation of an investable universe, defined by an asset class, style, sector, industry, etc. These indexes instead represent aggregate asset allocations by each index's mutual fund peer group.

To determine the asset-class weights for each target date and target risk index, S&P surveys mutual funds categorized as Target Date funds or Target Risk funds by the Lipper and Morningstar databases. After surveying a category peer group, a trend line is fitted to the data points, only utilizing asset classes with more than 1%. Measures are taken to solve an outlier effect without removing the number of funds used in the survey. The indexes are rebalanced annually using the same surveying method.

The goal of these indexes is to represent allocation decisions among asset classes; not sector, style or individual security selections. To represent an asset-class allocation, iShares ETFs are used. It is very clear that S&P intended and designed the indexes to become ETFs.

It is interesting that S&P chose ETFs as the underlying assets instead of the indexes that those ETFs track. This makes the creation and redemption of the ETFs simpler since hundreds of individual securities are represented by the underlying ETFs.

The expense ratios of the target date and target risk index funds listed above include the expense ratios charged by the underlying ETFs of each fund. The expense ratio fees of the underlying ETFs, which are all iShares products, are discounted when held by the fund.

Listed below are the ETFs S&P can employ for asset allocations that are determined for their Target Date Index and Target Risk Index Series. Each index may or may not contain all these funds depending on their asset class inclusion in each index.

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