BlackRock’s iShares Readies ‘Core Allocation’ ETFs

September 10th at 2:57pm by John Spence

BlackRock’s iShares is readying a new set of “fund of funds” ETFs targeting individual investors and financial advisors looking for help managing risk in their portfolios.

The planned ETFs could also appeal to investors in 401(k) retirement plans, according to a report Tuesday.

BlackRock on Monday filed regulatory documents for the iShares Core Allocation Series, a line of actively managed target-risk ETFs, Ignites.com reports.

“The funds, which could become active as early as late November, allocate assets among the company’s 10 core ETFs,” according to the report.

The ETF business faces an uphill battle in 401(k) plans, which are dominated by traditional mutual funds.

“ETFs don’t have the same advantages when you put them in retirement plans … so it will take time,” said Morningstar fund analyst Michael Rawson in the article. “People like ETFs because there is low cost. But typically, 401(k) plans have very low share costs.”

ETFs also face challenges in the retirement market because record-keeping is geared to mutual funds. [ETFs Gaining Popularity in 401(k) Plans]

“There’s a long road ahead for ETFs in 401(k) plans,” Alec Papazian, associate director at Cerulli Associates, said in a recent Pensions & Investments article, adding “there are a lot of administrative complications” that represent “significant hurdles” for ETFs in 401(k) plans. [401(k) Retirement Plans Shy Away from ETFs]

Headline and story updated throughout.

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