BlackRock on Oct. 19 announced the launch of what it said is the industry's only suite of target-date exchange-traded funds, a product it says is timely given that 57 million private sector American workers lack access to an employer-sponsored retirement plan.
The iShares LifePath Target Date ETFs invest in a broad portfolio of underlying iShares ETFs, BlackRock said in a news release.
The funds, which have expense ratios ranging from 0.08% to 0.11%, are designed to help investors stay on track for retirement by adjusting over time, taking more risk early on and gradually becoming more conservative as the target retirement date nears, the release said.
The release reflected 10 funds, nine with target dates ranging from 2025 to 2065 as well as a retirement ETF.
Speaking at an Oct. 19 BlackRock media roundtable on "Independent Savers and the Retirement Crisis," Nick Nefouse, global head of retirement solutions and head of LifePath at BlackRock, referenced the annual BlackRock Read on Retirement report.
"And what we've found over the last couple of years is there's a divergence happening between people with access to 401(k) plans and people without access to 401(k) plans," Nefouse said. "We know that people with access (are) 15 times more likely to save than people without access to 401(k) plans."
BlackRock wanted to take what was working in 401(k)s and apply it to help the individual investor, he said.
"So, we took the target date fund … in the 401(k) and then we're now applying that into an ETF wrapper," Nefouse said. "In doing so, what we're now providing individual investors is the same professional management, diversification and low costs that we're providing to our largest clients."
During the Q&A portion of the event, Todd Rosenbluth, head of research at VettaFi, a data and analytics provider, asked what was different in the industry now given that such ETFs had existed in past but don't exist any longer because of sufficient demand.
Nefouse acknowledged that BlackRock closed a series of target date ETFs in 2014 but added that those funds were not LifePath Target Date funds. Since then, two or three things have changed, he said.
"I think retirement is much different now almost 10 years later than it was in 2014," Nefouse said, citing his earlier point regarding the divergence between people who have access to 401(k) plans and those who don't.
"The second part though is really about the continued advancement in ETFs," he said.
