The biggest exchange-traded funds manager in the world just got bigger. Barclays Global Investors today launched a series of target date ETFs, and two more fixed-income portfolios, the iShares S&P Short Term National Municipal Bond Fund (NYSEArca: SUB) and the iShares Barclays Agency Bond Fund (NYSE Arca: AGZ).

Notably, one of the bond ETFs (AGZ) represents the first under the Barclays index brand. The branding change was recently made to erase the association with now-bankrupt Lehman Brothers, the former index provider, which Barclays Capital acquired.

Target date funds have been the fastest-growing part of the mutual fund world. Now however, a number of ETF managers are launching target date funds and preparing to take a bigger chunk of that market away from traditional fund managers. The iShares Asset Allocation Exchange Traded Funds are based on the new S&P Target Date and Target Risk Indexes (see story here.)

While BGI is not the first ETF manager to join the target date parade, BGI was in fact the first to offer target date funds for institutional investors. These are known as LifePath, and launched 15 years ago today.

iShares says it will target the IRA market and retirement plans of smaller employers with the new target date funds. Asset growth in those markets among existing target date portfolios has outpaced the growth of individual funds in recent years.

Assets in target date funds reached $184 billion at the end of 2007, according to Financial Research Corp. data, an annual growth rate of 70%. In 2000, there were 23 target date funds, and now there are more than 300, according to Lipper.

The suite of target date iShares includes:

Through the worst of the bond market meltdown and related pricing problems in the fixed-income ETF sector, BGI officials maintained that ETFs were, on balance, helping to facilitate price discovery in the illiquid, nontransparent bond markets.

In fact, Matt Tucker, head of fixed-income trading at BGI, predicted that as a result of the role fixed-income ETFs played through the market meltdown, there would be increased need for more transparency and ease of trading in fixed income, and as a result, there would be more ETF product development on the bond side.

The new iShares muni ETF is being launched to capture assets from tax-sensitive, yield-focused investors. There are only 3 ETFs targeting the short-term muni market, according to Morningstar: Market Vectors Short Municipal (NYSE: SMB); PowerShares VRDO Tax-Free Weekly (NYSE Arca: PVI); SPDR Lehman Short Term Municipal Bond (NYSE Arca: SHM).

SUB is at the higher end of the expense range, with a ratio of 0.25%, matching PVI. SHM charges 0.20%, and SMB 0.16%. SMB only had $12.2 million in assets at Q3 end, while SPDRs' SHM is the largest short muni ETF, with $192 million in assets, as of yesterday. PowerShares PVI has $142 million in assets.

The iShares Barclays Agency Bond Fund (AGZ) tracks the Barclays Capital U.S. Agency Index. Agencies already made up 9.6% of the Barclays Capital U.S. Aggregate Index, as of 10/31. While ETF investors have exposure to agency bonds through the wide range of more broadly defined government bond ETFs, the agency-specific nature of AGZ makes it stand out. AGZ has an expense ratio of 0.20%.