BlackRock, the world’s largest asset manager, has introduced a new group of target-date exchanged-traded funds (ETFs) designed to help individuals save for retirement outside of a 401(k) plan. These professionally managed ETFs are tailored to match investors’ retirement dates, with the funds transitioning into the iShares Target Retirement ETF at the targeted date.
The new offering from BlackRock represents the industry’s only group of target-date ETFs. These funds provide a diversified exposure to stocks, bonds, and inflation-protected assets, gradually becoming more conservative as investors approach retirement. Even those without access to a corporate retirement plan can now invest in these ETFs through brokerage platforms, making retirement savings accessible to anyone with just $25.
According to Nick Nefouse, global head of retirement solutions at BlackRock, the cost of investing in these target-date ETFs is remarkably low. Fees and expenses range between 0.09% and 0.11%, while the iShares Target Retirement ETF has an expense ratio of just 0.08%.
BlackRock’s announcement highlights that 57 million Americans lack access to a 401(k) or employer-sponsored retirement plan. For individuals who are self-employed, work for a company without a retirement-savings plan, or those looking to roll over their 401(k) assets into an individual retirement account (IRA), these new ETFs provide a viable option.
Dominik Rohe, head of the Americas ETF and index investments business at BlackRock, emphasized the importance of staying invested for the long-term. Retirement savings, he noted, is a “long game” that requires consistent commitment and smart financial decisions.
With BlackRock’s target-date ETFs, saving for retirement has become more accessible and affordable for millions of Americans.
Cash is a Trap: A New Approach to Investing
Modern investing requires a fresh perspective. According to JPMorgan’s David Kelly, holding onto cash can be a trap. Instead, a balanced mix of stocks and bonds may provide better returns.
One option for investors is target-date ETFs. These funds invest in a diverse portfolio of iShares exchange-traded funds. While they offer exposure to global stocks, the focus is primarily on the U.S. market. The ETFs also include U.S. fixed income assets like Treasury-inflation protected securities, as well as real estate and infrastructure.
On Thursday, the U.S. stock market experienced a downturn. The Dow Jones Industrial Average (DJIA) was down by 0.1%, while the S&P 500 (SPX) and the Nasdaq Composite (COMP) both fell by 0.2%.
Despite this, the S&P 500 has seen a 12% increase so far this year.
In the fixed-income market, long-term Treasury yields continue to rise. At last check, the yield on the 10-year Treasury stood at around 4.96%, showing a six basis point increase during afternoon trading.
Bonds have struggled in 2023 due to increased yields caused by the Federal Reserve’s attempts to combat inflation through higher interest rates. For example, the iShares Core U.S. Aggregate Bond ETF (AGG) has experienced a loss of nearly 3% this year on a total return basis.
Investing can be complex, but there are options available for everyday investors seeking to save for retirement. The iShares LifePath Target Date ETFs offer a potential solution for those looking to secure their financial future.