BlackRock Offers First Retirement Date ETFs for Investors Saving Outside of 401(k) Plans

BlackRock offers target date exchange-traded funds aimed at helping people save for retirement outside of a 401(K) plan.

Investors can select a fund from a new group of professionally managed ETFs that most closely matches their retirement date. On the scheduled date, the funds will be transferred into the iShares Target Retirement ETF, according to a Thursday announcement from BlackRock.

The company, the world’s largest asset manager, said the new offering constitutes the industry’s only 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 retirement. Individuals who do not have access to a company retirement plan can access the new ETFs through brokerage platforms.

Anyone with $25 can now start saving for retirement, Nick Nefouse, global head of retirement solutions at BlackRock, said at a news conference Thursday at the company’s headquarters in New York. The cost is very low.

Fees and expenses for 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.

New BlackRocks 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

BlackRocks’ announcement indicates that 57 million Americans do not have access to a 401(k) or employer-sponsored retirement plan.

The new ETFs may be an option for people who are self-employed or who work for a company that doesn’t offer a retirement savings plan for its employees, as well as for savers who are changing jobs and looking to potentially -be to transfer their 401(K) assets. in an IRA, or individual retirement account, according to Dominik Rohe, head of the Americas ETF and index investing business at BlackRock.

The important thing is to stay invested, Rohe said during the briefing. It’s a long game.

Read: Cash is a trap, warns David Kelly of JPMorgans. Here’s how a traditional mix of stocks and bonds can pay off.

Target date ETFs invest in a broad portfolio of underlying iShares exchange-traded funds.

They provide exposure to stocks around the world, but are heavily weighted to the United States within stocks, Nefouse said at the briefing. The ETFs also have exposure to U.S. fixed income securities, including Treasury inflation-protected securities, as well as real estate and infrastructure, he said.

The U.S. stock market was trading lower 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 0.8 %, according to FactSet data, at last check.

Year to date, the S&P 500 is up about 11.5% based on late afternoon trading.

In the fixed-income market, long-term Treasury yields continued to rise Thursday, with the 10-year Treasury yield BX:TMUBMUSD10Y up eight basis points at around 4.98% in trading. ‘afternoon, according to FactSet data.

Bonds have suffered overall this year as yields have soared amid the Federal Reserve’s efforts to reduce inflation through higher interest rates. The iShares Core US Aggregate Bond ETF AGG posted a loss of nearly 3% in 2023 through Wednesday on a total return basis, according to FactSet data.

Investing is complicated, Rohe said, with the iShares LifePath Target Date ETFs offering a potential choice for the average, everyday investor looking to save for retirement.

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