Retirees certainly have many different options when it comes to choosing investment strategies for their nest eggs. However, many gravitate towards approaches that require less active management. To be fair, this should not come as a particular surprise. Retirement is all about enjoying the later years of life. Retirees shouldn’t have to be worried about daily market noise to enjoy ongoing income. Nor should they need to worry about shifting their bond durations or asset allocations to match economic conditions.
This is why set-it-and-forget-it approaches tend to offer such a strong appeal to retirees. These strategies can offer a way to put one’s hard-earned wealth to good use while not requiring the rigorous stressors of regular market management.
See More: Rising Price Risks Boost Case for Bond Ladder ETFs
Distributing Ladder ETFs: A New Vehicle for Retirement Income
Distributing ladder ETFs can operate as a compelling set-it-and-forget-it strategy for retirees. These funds offer bond exposure through a laddered portfolio, generating regular income through more structured means.
The Northern Trust 2035 Inflation-Linked Distributing Ladder ETF (TIPB ) works as a particularly good example in this case. TIPB provides laddered exposure to U.S. Treasury Inflation Protected Securities (TIPS), which scale their principal with the Consumer Price Index (CPI). This makes TIPB an especially good choice as a low-stress investment, as it aims to provide income that properly adjusts to the impact of inflation.
See More: Inflation Uncertainty Calls for Bond Laddered Approach
Each of the rungs in TIPB’s portfolio corresponds to one of the calendar years through 2035. In each rung, Northern Trust’s portfolio team allocates a selection of TIPS that hit maturity in that specific year. Crucially, TIPB gives its principal back to investors on an annual basis, adding the additional benefit of principal to pair with income.
This approach is why TIPB works particularly well as a reliable low-risk strategy for retirees to put their savings to use. The fund’s laddered portfolio aims to do all the work.
For more news, information, and analysis, visit the Bond Ladders Content Hub.
Disclosures:
ETF investing involves risk, and principal loss is possible. Shares of any ETF are bought and sold at market price (not NAV). They are not individually redeemed from the ETF. Brokerage commissions will reduce returns. The net asset value of the Northern Trust ETFs will decline over time as income payments are made to shareholders. Individual bonds carry an obligation to fully return principal to investors at maturity, however ETFs have no such obligation.
Before investing, carefully consider the investment objectives, risks, charges, and expenses. This and other information is in the prospectus and a summary prospectus, copies of which may be obtained by visiting www.flexshares.com. Read the prospectus carefully before you invest.
Northern Funds Distributors, LLC, distributor. Northern Funds Distributors, LLC and FlexShares are not affiliated with Northern Trust.
All investments are subject to investment risk, including the possible loss of principal amount invested. Investments do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.
Not FDIC insured | May lose value | No bank guarantee
