BlackRock unveils suite of target-date retirement ETFs

Oct 20th, 2023 | By | Category: Alternatives / Multi-Asset

BlackRock has introduced a suite of multi-asset target-date ETFs in the US designed for investors seeking an affordable, simple, and tax-efficient pathway to save for retirement.

BlackRock unveils suite of target-date retirement ETFs

Each LifePath ETF’s asset allocation follows a glidepath, becoming more conservative as its target retirement date approaches.

The iShares LifePath Target Date ETFs include funds with target retirement dates between 2025 and 2065 in five-year increments, as well as a maturity fund that is designed for investors already in retirement.

Each ETF maintains a diversified portfolio that includes a variety of underlying iShares ETFs, providing exposure to both equity markets — covering the US, developed international, and emerging markets — and fixed income assets such as US Treasuries and investment-grade corporate bonds.

Each fund’s asset allocation is regularly adjusted, becoming more conservative over time according to a predetermined “glidepath”, reflecting the need for reduced investment risk as retirement approaches.

The longest-range LifePath ETF currently has an asset mix of approximately 95% equity ETFs and 5% fixed income ETFs, while the shortest-range fund is currently split approximately 40/60 between stocks and bonds.

The suite aims to cater to various investment needs, from those without access to workplace retirement plans to those seeking to augment existing 401(k)s or roll them into IRAs.

Listed on NYSE Arca, each LifePath ETF comes with an expense ratio ranging from just 0.08% to 0.11%, making it a cost-effective option for investors at all stages of their savings journey. The full suite is outlined below:

iShares LifePath Target Date 2025 ETF (ITDA US); expense ratio 0.09%
iShares LifePath Target Date 2030 ETF (ITDB US); 0.09%
iShares LifePath Target Date 2035 ETF (ITDC US); 0.10%
iShares LifePath Target Date 2040 ETF (ITDD US); 0.11%
iShares LifePath Target Date 2045 ETF (ITDE US); 0.11%
iShares LifePath Target Date 2050 ETF (ITDF US); 0.11%
iShares LifePath Target Date 2055 ETF (ITDG US); 0.11%
iShares LifePath Target Date 2060 ETF (ITDH US); 0.11%
iShares LifePath Target Date 2065 ETF (ITDI US); 0.11%
iShares LifePath Retirement ETF (IRTR US); 0.08%

Addressing the Retirement Savings Gap

According to BlackRock, the introduction of the firm’s LifePath ETFs comes at a critical juncture as 57 million Americans currently lack access to a 401(k) or any employer-sponsored retirement plan.

“This product makes saving for retirement even more accessible at a time when Americans are less confident about their retirement readiness than ever before,” said Anne Ackerley, Head of Retirement at BlackRock. “With nearly 50% of private sector workers unable to save through their employers, the iShares LifePath Target Date ETF suite offers an autonomous solution for retirement preparedness.”

The dwindling confidence in retirement savings is corroborated by BlackRock’s eighth annual Read on Retirement report which found that nearly 40% of independent savers – individuals who do not have access to a retirement plan through their employers – feel they are off track for retirement. This sentiment reflects a significant 23% uptick from the previous year.

Moreover, the report showed that 47% of these savers rely heavily on cash reserves, thus missing out on the potential investment growth crucial for meeting their retirement objectives. Nonetheless, 45% of these independent savers claim that access to financial advice would boost their confidence, and a whopping 71% express an interest in using a target date fund for retirement planning.

“Over 30 million Americans trust iShares for novel solutions to meet their financial goals,” remarked Dominik Rohe, Head of Americas ETF and Index Investments at BlackRock. “The iShares LifePath Target Date ETFs empower millions to build toward retirement with the convenience and simplicity of a single iShares ETF.”

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