Defined Duration Investing is the process of establishing financial-planning-based time horizons and then matching specific assets to those time horizons using the Defined Duration approach. We created a quantifiable process by which we can assign the defined duration, or time horizon, of certain assets and then blend and interchange them to match to specific financial planning goals.

Because equities are long-term instruments in the defined duration process we can utilize metrics like long-term CAPE ratios to quantify future expected risk adjusted returns. As you can see in the chart here, historical CAPE ratios align very closely to future long-term risk adjusted returns of stocks. By quantifying the different PE ratios of the markets we can make reasonable estimates about the time horizon over which those instruments might generate certain returns. This allows us to quantify a defined duration using estimates of sequence of returns risk. This can enhance the financial planning process by providing clarity over what is needed and when while also reducing sequence of returns risk across assets.

In the case of DDXX this process allows us to reweight a portfolio based on expected long-term risk adjusted returns as opposed to blindly following the market-cap weights that can result in concentration, style and regional risk.

CAPE Ratio (Cyclically Adjusted Price-to-Earnings Ratio): A valuation metric that compares a stock index’s current price to its average inflation-adjusted earnings over the past 10 years to assess long-term market valuation.

Sharpe Ratio: A measure of risk-adjusted return that compares an investment’s excess return (over the risk-free rate) to its volatility, showing how much return is earned per unit of risk.

DDXX targets a 20-year defined duration, positioning it as a long-horizon equity instrument designed to align with extended financial planning horizons. The Fund holds 6–10 globally diversified ETFs, combining regional and style exposures to maintain a consistent 20-year time horizon while managing valuation-driven risk.

The process begins with an assessment of expected time-weighted risk and return across the three core regions—U.S., foreign developed, and emerging markets. For example, if U.S. equities exhibit a defined duration of 30 years and foreign equities 15, DDXX would weight approximately one-third U.S. and two-thirds foreign to reach its 20-year target, recognizing the higher sequence-of-returns risk embedded in expensive markets.

To refine diversification and enhance temporal balance, DDXX tilts toward equity styles—such as value, momentum, growth, size, and volatility—that have historically improved risk-adjusted returns. These tilts are dynamic: when valuations are high and defined durations lengthen, allocations are reduced and/or eliminated; when valuations reset and durations shorten, exposures are increased and/or added. For instance, if growth stocks carry a defined duration of 30 versus a market average of 18, DDXX will underweight growth and emphasize shorter-duration assets to preserve the 20-year target.

As markets rise and expected returns fall, the algorithm systematically trims or eliminates the most extended, expensive exposures. Conversely, when markets decline and future returns improve, it adds to longer-duration assets to maintain the target horizon. This rules-based rebalancing keeps DDXX anchored to a 20-year defined duration while continuously directing capital toward regions and styles with higher expected long-term efficiency.

The result is a disciplined, equity-only strategy that maintains a consistent long-term orientation, dynamically rebalancing to align with investor time horizons and evolving global market conditions.

DDXX quantifies the defined duration of the total US stock market, foreign developed stock market, emerging markets as well as value, growth, momentum, volatility and size styles. Importantly, the algorithm does not allocate based on style or region alone and instead assesses the time horizon over which that style or region might contribute a specific return. After assessing these 8 styles and regions the fund then quantifies the allocation to match the target 20 year defined duration.

DDXX holds broadly diversified market-cap weighted ETFs as well as styles that help it maintain a target defined duration. This means the fund might tilt to certain factors or regions depending on current market environments. Where DDXX is different is that it quantifies the expected time horizon over which these factors or regions might contribute expected risk/return. DDXX can be thought of as a time-weighted blend of market-cap and style funds. For instance, while market-cap weighted funds allocate to size, DDXX weights its holdings to account for the time-weighted risk exposures from its holdings. This has the potential to reduce concentration risk and sequence of returns risk while still holding an aggressive and diversified portfolio of global stocks.

In doing so, DDXX doesn't just blindly allocate to factors or market-caps, but is actually assessing the risk and time horizon that factors and regions contribute to future expected returns. For instance, if valuations in US growth are extremely high and future expected returns are low, then DDXX accounts for the excessive defined duration contribution from this component and must counterbalance it elsewhere to maintain its 20 year target. This may require the fund to hold more international value to achieve the 20 year target.

In short, DDXX might tilt to certain factors based on their defined duration contribution to the portfolio, but its primary goal is to maintain a target 20 year time horizon by assessing the expected return contributions of its underlying components across time.

DDXX is designed to generate stable real returns over a constant 20-year time horizon. DDXX is inherently aggressive and will hold a 100% equity portfolio at all times. This means it is significantly exposed to principal declines.

DDXX may be appropriate for matching an asset to a financial goal in the 15+ year time horizon. This could include retirement planning, estate planning, multi-generational needs, and other long-term financial planning goals. Inside of the asset allocation sleeve for this time horizon it could serve as the entire equity allocation on its own or it can serve as a longer duration tilt when compared to a more broadly diversified equity sleeve.

DDXX is designed to target an average defined duration of 20 years, but different market environments could constrain its ability to maintain this exact target. Therefore, the underlying algorithm assigns a target of 20 years within a range of 15-25 years based on the current environment and constraints. Typically, if the average defined duration of the stock market is very high (because valuations are extended) the fund might not be able to achieve a 20 year target and the algorithm will default to holding more lower defined duration instruments. For example, if the global stock market has an average defined duration of 25 and DDXX's underlying instruments cannot establish a 20 year target the algorithm will default to a lower target to reduce excessive concentration in very expensive segments of the market. Likewise, if stocks decline significantly and valuations fall the algorithm might be forced to target a longer defined duration to achieve its target. While we expect the defined duration to average 20 over time, the algorithm is designed to be dynamic knowing that market environments could require some deviance from this target across time.

DDXX has a net expense ratio of just 0.25% and gross expense ratio of 0.34% (fee waiver of 0.09%). Its fund-of-funds structure allows it to be highly tax-efficient, as the fund can rebalance internally without triggering capital gains, which would be necessary if we held the same allocation in its individual components.

However, investors may still realize taxable distributions, and individual tax outcomes depend on personal circumstances. DDX’s tax efficiency is not guaranteed and may vary depending on market conditions and fund activity.