BlackRock’s Fink Marks 30-Years of TDFs

BlackRock Inc. Chairman and CEO Larry Fink took to social media Wednesday to mark 30 years since its first target-date fund was launched.

Larry Fink

Fink championed TDFs’ role in retirement saving, writing that the investment vehicles “have made investing for retirement easier and more accessible for millions of Americans.” The asset manager’s head related BlackRock’s sale and development of TDFs to the firm’s “role in helping more and more people prepare for retirement.”

BlackRock’s LifePath target-date series was introduced in 1993, according to the firm. Today, 60% of 401(k) plan participants are invested in a TDF, according to the asset manager’s retirement division.

BlackRock is currently the sixth-largest provider of TDFs in the U.S. by assets, with $64 billion, according to Simfund, which, like PLANADVISER, is owned by Institutional Shareholder Services Inc. BlackRock saw the second most net inflows into TDFs in Q3, second only to American Funds, which is owned by Capital Group.

The Vanguard Group is the largest TDF provider by assets in the U.S., according to Simfund. The firm marked the 20-year anniversary of its first retirement target-date series in October.

In his post, Fink pointed to BlackRock’s recent release of an exchanged-traded-funds-based TDF series available for individual retirement accounts. The firm positioned the series as a retirement savings vehicle for what it cited as the 57 million Americans who do not have access to a workplace plan, including gig and part-time workers.

Fink pointed to the simplicity of TDFs as part of their success.

“TDFs are a simple way to invest for retirement,” he wrote. “To choose the right one, people have to make just one decision: What year do you want to retire?”

Some in the retirement industry have more recently been calling for personalization in retirement savings that goes beyond TDFs. Options include putting participants into managed accounts and implementing more personalized TDFs that take into account factors beyond age. 

In a related report on the outlook for TDFs, BlackRock noted its Life Path TDF series has evolved to look beyond only age and the appropriate glidepath, but also takes into account income profiles, life expectancy, and risk aversion. In 2013, the firm had incorporated Real Estate Investment Trusts and Treasury Inflation-Protected Securities, international exposure, and commodities into the series.

BlackRock has also, starting in 2020, been developing a lifetime income option for its TDF strategies. To date, 14 plan sponsors have elected to work with BlackRock to implement its LifePath Paycheck representing more than $27 billion in TDF assets and over 500,000 participants, according to a spokesperson.

Other areas of research for future product offering are including alternative investments and tax optimization to TDFs, which “will allow us to further evolve target date funds to be even more targeted,” according to the spokesperson.

“Throughout my career, I’ve seen again and again that people who plan and save for their retirement have more hope and confidence about the future,” Fink wrote. “Far too many Americans are not prepared today.”

Correction: Adjusts description of BlackRock’s lifetime income option.