The original Discipline Fund ETF has evolved into the Defined Duration 10 ETF (DDX), which is the next step in our Defined Duration Investing framework. Over the last five years, we’ve refined our approach to quantifying portfolio time horizons, and DDX represents the most advanced version of that methodology while maintaining its original framework.

The fund now features a lower expense ratio of 0.27% (0.25% net ER) and an enhanced algorithm designed to more consistently maintain a 10-year defined duration target. DDX continues to employ a countercyclical rebalancing process, consistent with long-term investing principles exemplified by John Bogle’s own asset allocation approach, but with refined precision to manage both equity exposure and bond duration drift more effectively.

How it Works

DDX seeks to balance principal stability and growth across an average 10-year defined duration horizon. The portfolio dynamically allocates between 30–70% equities and 30–70% high-quality U.S. government and investment-grade bonds depending on market conditions.

The bond sleeve focuses on high-quality, investment-grade U.S. government bonds and shorter-maturity instruments to maintain stability. The improved bond algorithm better manages duration skew, helping the fund maintain a consistent interest-rate risk profile. The equity sleeve uses a global equity allocation diversified across regions and styles. The equity weighting expands or contracts countercyclically—reducing equity exposure during market booms and increasing exposure after significant declines—helping to stabilize the portfolio’s effective duration and seeking to reduce sequence of returns risk.

The fund’s algorithm dynamically adjusts both stock–bond balance and bond duration to maintain its target 10-year time horizon. Unlike static multi-asset funds that allow market movements to lengthen portfolio duration, DDX rebalances to keep duration consistent across market cycles.

Why DDX Over Other Options?

Most asset-liability matching (ALM) strategies rely heavily on bonds, particularly long duration instruments, to meet future liabilities. However, as the bond market has lengthened in duration and declined in yield, these instruments have become less efficient for long-term matching.

A multi-asset approach—combining high-quality bonds with equities—can better align a portfolio to a 10-year time horizon. But traditional multi-asset funds often introduce excess volatility because they are dominated by equity risk. For example, a 50/50 stock–bond portfolio typically derives over 75% of its volatility from stocks, exposing investors to behavioral and sequence-of-returns risks at the worst possible times.

DDX’s countercyclical rebalancing process mitigates these issues by reducing equity exposure when valuations are high and increasing it when valuations are low. This helps maintain a more consistent, time-weighted risk profile, aligning portfolio behavior with long-term financial planning needs.

Use Cases for DDX

DDX may be a consideration for asset–liability matching and financial planning needs in the 7–15 year horizon, such as:

  • Core stock/bond holdings for increased tax efficiency around risk profile maintenance
  • Pre-retirement or “bridge” portfolios for clients approaching retirement
  • Intermediate-term legacy or gifting goals
  • Replacing target date holdings with a more customized defined duration instrument

DDX is designed as a core multi-asset holding for investors seeking a systematic, time-aligned allocation that adjusts intelligently to market conditions. It’s ideal when used in an asset-liability matching strategy and retirement plans.

To learn more about DDX please see here.