FYI: Inventing new products to solve difficult financial problems has been a mainstay of the mutual fund industry. In the 1990s, the fund industry introduced target-date retirement funds. That was followed by the launch of target-maturity bond funds that customize a person’s fixed-income exposure to a defined year.
By extension, the exchange-traded fund industry has done plenty of innovating itself. And the latest twist could someday rival the popularity of previous inventions: targeted distribution funds.
Sometimes referred to as “managed payout funds,” targeted distribution funds aim to deliver lifetime income payments via a minimum distribution amount. Certain funds offer a specified monthly payout while others deliver variable payments based upon fund performance. Let’s examine ETFs that follow this strategy.
M* Snapshot HNDL:https://www.morningstar.com/etfs/xnas/hndl/quote
M* Snapshot TFIV:https://www.morningstar.com/etfs/bats/tfiv/quote