“We think certain investors are looking for different outcomes,” Jay Jacobs, head of research and strategy at Global X, said in an email. “Some are looking for a specific level of monthly income from their assets, whereas others are looking for a floating amount above what they could get from Treasuries.”
And Jacobs noted the indexes seek to mitigate risk by looking at historic volatility and correlations across the various asset classes tracked by the 11 ETFs that can be employed by Wilshire for its indexes.
“For instance, as government yields rise the Target 5 portfolio can rely more on government bonds to get to a 5 percent income target rather than higher-risk areas like high-yield bonds or high-dividend equities,” he said.