BlackRock tries again at target-date ETFs

investmentnews.com:

It’s been nearly a decade since BlackRock closed a line of iShares target-date ETFs for which it had high hopes.

At the time, the products, like other ETFs, had struggled to win a place in 401(k) plans. They attracted $310 million — an extremely modest figure for the world’s largest asset manager.

But now the company is taking another stab at target-date ETFs, this week launching the only such series in the U.S. With that product line, the iShares LifePath Target Date ETF suite, BlackRock is employing a different tactic. Rather than focusing on 401(k) plans, it’s aiming the ETFs at investors who don’t have employer-sponsored retirement plans.

The new series also differs from the one that closed in 2014, said Todd Rosenbluth, head of research at VettaFi.

“Things are different. ETFs have become more mainstream, and the younger generation of advisors and investors are focused on ETFs more than mutual funds. These ETFs are also actively managed, unlike the prior ones that tracked an index and did not take advantage of BlackRock’s asset allocation expertise,” Rosenbluth said in an email. “These are low-cost, broadly diversified ETFs and can help those without a 401(k) option or those that have maxed out their contributions but want to save more in a low-cost manner.”

Another firm that dabbled in target-date ETFs, Deutsche, folded its line of X-trackers target dates in 2015, a year after BlackRock.

This time, BlackRock has no competitors, at least not yet. The new series includes funds in vintages from 2025 to 2065, and fees range from 8 basis points to 12 bps.

That’s similar to the fee range for the lowest-cost share class of BlackRock’s LifePath Index mutual fund series, said Megan Pacholok, senior manager research analyst