Fewer Negative Surprises. More Predictable Outcomes.
In ever increasing numbers, plan sponsors are turning to target date funds. But as recent experience has made clear, not all target date funds are created equal.
BlackRock's LifePath Funds were the industry's first target date funds. For nearly twenty years, our philosophy has been to deliver more predictable retirement outcomes with fewer negative surprises.
The single most important question to ask about a target date fund is: "What is its objective?" LifePath is founded on the belief that participants want to avoid negative surprises that can curtail retirement spending.
That's why we manage for three major risks:
Longevity Risk: Outliving Their Money
LifePath is managed to capture long-term growth when the participant's human capital — including future earnings — is highest. It's also designed to continue capturing prudent growth to support them throughout retirement.
Inflation Risk: Eroding Spending Power
LifePath's retirement mix of TIPS and real assets, combined with its 38% equity landing point, is designed to support inflation adjusted spending for 30 years after retirement.
Market Risk: Negative Surprises
LifePath seeks fewer negative surprises, especially as retirement approaches. The importance of this objective was never more evident than following the financial crisis in 2008, when 2010-dated funds experienced extreme losses.
Investing in target date funds involves risk including loss of principal. The target date in the name of the fund is the approximate date when an investor plans to start withdrawing money. The blend of investments in each portfolio are determined by an asset allocation process that seeks to maximize assets based on an investor's investment time horizon and tolerance for risk. Typically, the strategic asset mix in each portfolio systematically rebalances at varying intervals and becomes more conservative (less equity exposure) overtime as investors move closer to the target date. The principal value of a fund is not guaranteed at any time, including at the target date.
Your clients should consider the investment objectives, risks, charges and expenses of each target date mutual fund carefully before investing. The prospectuses and, if available, the summary prospectuses contain this and other information about the funds, and are available, along with information on other BlackRock funds, by calling 800-882-0052. The prospectuses and, if available, the summary prospectuses should be read carefully before investing.
The LifePath strategies are among various investment strategies that are managed by BlackRock as part of its investment management and fiduciary services. Strategies may include bank collective investment funds maintained and managed by BlackRock Institutional Trust Company, N.A., which are available only to certain qualified employee benefit plans and governmental plans and not offered or available to the general public. Accordingly, prospectuses are not required and prices are not available in local publications. To obtain pricing information, please contact your local service representative. There are structural and regulatory differences between collective funds and mutual funds that may affect their respective fees and performance. Strategies maintained by BlackRock are not insured by the Federal Deposit Insurance Corporation and are not guaranteed by BlackRock or its affiliates.
Prepared by BlackRock Investments, LLC, member FINRA. BLACKROCK and LIFEPATH are registered and unregistered trademarks of BlackRock, Inc. or its subsidiaries in the United States or elsewhere.