Defined Duration 5 ETF (DDV)

The Defined Duration 5 ETF (DDV) is an actively managed exchange-traded fund built for investors with money they will need in about five years — it holds 80–90% high-quality bonds and 10–20% global stocks, keeping the portfolio duration steady and aligned to that timeline.

Imagine you know you will need a specific amount of money in five years. A car payment. A house down payment. A major renovation. Not next year; not in ten years, but in roughly five. Most investors with that need either throw the money into a savings account that pays nearly nothing, or they pick a traditional mutual fund without any regard for when they will actually use the money. Discipline Funds, the sponsor of DDV, saw the gap and built a fund designed explicitly around that five-year horizon. The fund does not try to beat the market or chase performance; it tries to be there with your money, intact and reasonably grown, when you need it.

How a Five-Year Clock Works

DDV’s job is to deliver a balance of growth and capital preservation over five years. To do that, the fund holds bonds as its backbone — between 80% and 90% of assets. These are high-quality bonds: U.S. government securities and investment-grade corporate debt. The fund keeps their maturities relatively short so that the overall bond portfolio has a duration of roughly five years. (Duration is a measure of how much a bond’s price swings when interest rates move; a five-year duration means that a 1% rise in rates tends to cause roughly a 5% decline in price.)

The remaining 10% to 20% goes into global stocks — not for spectacular gains, but for steady growth. The stocks are tilted toward quality, value, and dividend payers, investments that typically bounce around less than the broad market.

The combination is deliberate. Bonds anchor the stability. Equities provide enough growth that five years of compounding does not feel like a waste of time. Together, they are meant to preserve capital while adding modest returns by the five-year mark.

Active Management and Rebalancing

DDV is actively managed, not an index fund. Discipline Funds’ team makes decisions about which bonds to buy, which to trim, and how much equity exposure to hold at any moment. This active involvement costs 0.25% in annual expenses — reasonable for an active fund, though higher than a plain-vanilla bond index ETF.

The active approach earns its keep through disciplined rebalancing. If stocks soar and the equity sleeve grows from 15% to 25% of the fund, the managers trim equities and buy bonds to restore the balance. This countercyclical rebalancing forces the fund to buy when markets are down and sell when they are hot, a simple but effective behavioral guard against the mistakes that sink most investors.

Who This Is For

DDV works best for investors with a specific five-year need and an ability to hold the position until that date arrives. A parent saving for a child’s college entrance in five years is a textbook use case. Someone planning a mid-career sabbatical and setting aside the money now. A business owner who plans to retire in five years and wants predictable wealth available then.

The fund is not for someone who will need the money in two years or keeps it until retirement in twenty. A two-year time horizon calls for a shorter-duration fund (like DDV’s three-year sibling, if Discipline Funds offers it); a twenty-year horizon should probably lean much heavier into stocks. DDV is not a catch-all; it is a precisely fitted tool.

Risks and Realistic Expectations

The primary risk is interest rate movement. If rates rise sharply after you buy the fund, the bond holdings will decline in value. A 2% rise in rates might trim 10% from the bond-heavy portfolio. This is temporary only if you hold to maturity, but if you need the money before five years are up and rates have risen, you will realize losses.

A secondary risk is opportunity cost. If stocks soar over five years and DDV’s equity sleeve delivers only single-digit returns, you will regret not holding more equities. Conversely, if a severe recession hits before year five, the bonds will have been a blessing — you will have capital intact while others who held all-stock portfolios are underwater.

The fund does not promise to beat inflation, though historically bonds and modest equity exposure tend to do so modestly. It does not promise excitement. Returns in a quiet year might be 3–4%. Investors chasing double-digit annual returns should not buy DDV; they should buy something else.

Checking Your Work

Anyone considering DDV should start by being honest about when they will need the money. Truly five years, or is it “around five years” (which usually means “whenever the market looks good”)? The more certain the timeline, the more sense the fund makes. Next, look at the prospectus to see the exact holdings and the fund’s realized duration — Discipline Funds publishes this data regularly. Finally, consider your tolerance for ups and downs; if a 10% drawdown in the bond portfolio will spook you into selling, DDV is not the vehicle.

The fund trades like any ETF and is available at most brokers. It is plain-vanilla and explicit about its goal: stable, five-year-aligned wealth. That clarity is its virtue.