Target-date investing, a long-dominant strategy in mutual funds, is being re-examined by BlackRock Inc. with an exchange-traded fund twist. The biggest ETF provider in the world announced a group of ten funds this week that, as investors get older, move their money into more conservative positions. From 2025 to 2065, the new lineup aims to …
Target-date investing, a long-dominant strategy in mutual funds, is being re-examined by BlackRock Inc. with an exchange-traded fund twist. The biggest ETF provider in the world announced a group of ten funds this week that, as investors get older, move their money into more conservative positions. From 2025 to 2065, the new lineup aims to target retirement dates every five years. BlackRock’s new funds are the only target-date mutual fund and collective investment trust strategy available in an ETF wrapper, despite the fact that these instruments contain around $2.8 trillion globally. About ten years have passed since the asset management firm closed its target-date ETFs that were passively managed in 2014. Other competitors were restrained by the intense competition from mutual fund products. DWS Group discontinued its target-date ETF lineup in 2015 and hasn’t reopened it. BlackRock is prepared to try again, with ETFs currently valued at $7 trillion and the mutual fund industry suffering financial losses. “There has been a significant progress in the use of ETFs since 2014, especially in the individual market setting,” stated Nick Nefouse, BlackRock’s head of retirement solutions, during an appearance on Bloomberg Television’s ETF IQ. “This is really for the individual investor; most 401(k) users wouldn’t use this type of product,” the statement reads. The goal of introducing the technique in an ETF is to draw in investors who are not currently enrolled in employer-sponsored retirement plans. These plans don’t need the exchange-traded fund’s tax efficiency because they are usually funded with pre-tax money. Co-founder of ETFGI Deborah Fuhr predicts that BlackRock’s relaunch will probably be more successful than its first attempt.
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