BlackRock is offering target-date exchanged-traded funds aimed at helping people save for their retirement outside of a 401 (K) plan.
Investors may select a fund from a new group of professionally managed ETFs that closest matches their retirement date. At the targeted date, the funds transition into the iShares Target Retirement ETF, according to an announcement Thursday from BlackRock.
The firm, the world’s largest asset manager, said the new offering is the industry’s sole group of target-date ETFs.
The funds provide exposure to a mix of stocks, bonds and inflation-protected assets, becoming more conservative as investors approach their retirement. People who don’t have access to a corporate retirement plan may access the new ETFs through brokerage platforms.
“Anyone with $25 can now start saving for retirement,” said Nick Nefouse, global head of retirement solutions at BlackRock, during a media briefing on Thursday at the firm’s New York headquarters. The “cost is very low.”
The fees and expenses of the target-date ETFs range from 0.09% to 0.11%, while the iShares Target Retirement ETF has a cost of 0.08%, according to BlackRock.
| BlackRock’s new ETFs |
| iShares LifePath Target Date 2025 ETF ITDA |
| iShares LifePath Target Date 2030 ETF ITDB |
| iShares LifePath Target Date 2035 ETF ITDC |
| iShares LifePath Target Date 2040 ETF ITDD |
| iShares LifePath Target Date 2045 ETF ITDE |
| iShares LifePath Target Date 2050 ETF ITDF |
| iShares LifePath Target Date 2055 ETF ITDG |
| iShares LifePath Target Date 2060 ETF ITDH |
| iShares LifePath Target Date 2065 ETF ITDI |
| iShares LifePath Retirement ETF IRTR |
BlackRock’s announcement says that 57 million Americans lack access to a 401(k) or retirement plan sponsored by their employer.
The new ETFs may be an option for people who are self-employed or work for a business that does not offer its employees a retirement-savings plan, as well as savers who change jobs and may be looking to roll their 401(K) assets into an IRA, or individual retirement account, according to Dominik Rohe, head of the Americas ETF and index investments business at BlackRock.
The “important thing” is to stay invested, Rohe said at the briefing. “It’s a long game.”
Read: ‘Cash is a trap,’ warns JPMorgan’s David Kelly. Here’s how a traditional mix of stocks and bonds may pay off.
The target-date ETFs invest in a broad portfolio of underlying iShares exchange-traded funds.
They provide exposure to stocks globally, but are heavily weighted to the U.S. within equities, Nefouse said at the briefing. The ETFs are also exposed to U.S. fixed income, including Treasury-inflation protected securities, as well as real estate and infrastructure, he said.
The U.S. stock market was trading lower on Thursday afternoon, with the Dow Jones Industrial Average
DJIA
down 0.5% while the S&P 500
SPX
fell 0.7% and the Nasdaq Composite
COMP
dropped 0.8%, FactSet data, at last check.
So far this year, the S&P 500 is up around 11.5% based on late afternoon trading.
In the fixed-income market, long-term Treasury yields continued their march higher on Thursday, with the yield on the 10-year Treasury
BX:TMUBMUSD10Y
up eight basis points at around 4.98% in afternoon trading, FactSet data show.
Bonds have broadly suffered this year as yields have spiked amid the Federal Reserve’s effort to bring down inflation through higher interest rates. The iShares Core U.S. Aggregate Bond ETF
AGG
has a loss of almost 3% in 2023 through Wednesday on a total return basis, according to FactSet data.
“Investing is complicated,” said Rohe, with the iShares LifePath Target Date ETFs providing a potential choice for the “average, everyday investor” seeking to save for retirement.
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