Avatar Associates, a New York City-based money manager that creates asset allocation funds using exchange-traded funds, has nabbed a distribution deal with AEGON's fee-based advisory arm, Investment Advisors International (IAI).

IAI will distribute Avatar's ETF asset allocation funds to the retirement market. The deal will also extend into the IRA rollover market, and ultimately, to a new ETF-only wrap program that Avatar is creating for IAI's retail channel. IAI was founded by AEGON in 2006 to target middle-income families, but has since expanded into institutional and high-net-worth.

Overall, Avatar has $1.4 billion in its ETF funds of funds. Avatar switched to being an ETF-only asset allocation company in 2004.

Target date funds have become the flavor of the day in the retirement market, and it has not escaped the notice of ETF providers, from the biggest to the smallest. XShares Advisors had the first-ever series of target date funds, created with TD Ameritrade, and just last week, Barclays Global Investors launched its first series of target date iShares (see story here.)