BlackRock’s iShares exchange traded fund unit is crafting managed portfolios that help smaller retail investors diversify across a range of asset classes with just one investment.
According to a Securities and Exchange Commission filing, iShares is working on four ETFs-of-ETFs tailored for conservative, moderate, moderate growth and growth investment strategies. BlackRock Fund Advisors (BFA) will select the holdings. [BlackRock’s iShares Readies ‘Core Allocation’ ETFs]
Each of the managed portfolios will hold funds that track large-capitalization, mid-capitalization and small-capitalization U.S. equity, international developed market and emerging market, short-term U.S. government and corporate debt, long-term U.S. government and corporate debt, or the U.S. aggregate bond market. [ETF Managed Portfolios Continue Growth Pattern]
However, the weightings will vary, depending on an investor’s time horizon or risk appetite:
- The iShares Core Allocation Conservative ETF allocations include 20% in equities and 80% in fixed-income.
- The iShares Core Allocation Moderate ETF allocations include 40% to equities and 60% to fixed-income.
- The iShares Core Allocation Moderate Growth ETF allocations include 60% to equities and 40% to fixed-income.
- The iShares Core Allocation Growth ETF allocations include 85% to equities and 15% to fixed-income.
Jeff Tjornehoj, senior research analyst at Lipper Inc., argues that these allocation ETFs could be more appealing than mutual funds for the fee-only advisors, reports Jason Kephart for Investment News. Advisors would only need to trade one investment instead of juggling multiple picks.
“It’s cost-effective for investors who are too small to warrant extensive portfolio building,” Tjornehoj said in the article.
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Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.