BlackRock Goes Big(ger) With ‘Smart Beta’ 401k Target Date Fund

Smart beta strategies continue to gain in popularity.

Smart beta strategies continue to gain in popularity.

Smart beta got another shot in the arm with Blackrock’s announcement of its new 401k target date fund lineup.

According to the $5 trillion investing behemoth, it made the changes to its LifePath series of target date mutual funds to “better reflect today’s retirement investing needs—in particular, by offering a broader choice among varying degrees of active asset management within the fund series.”

“In addition to offering a more flexible active fund, LifePath will now feature an innovative fund designed to capture “smart beta” factors for enhanced performance.”

BlackRock claims its LifePath Funds as the first target date funds and about one in four Fortune 100 companies use LifePath as part of their defined contribution plan investment menus.

The changes include:

“Smart beta strategies have become increasingly popular for investors who want to manage risk and target precise exposure to factors that are historical drivers of return. These approaches seek to take advantage of the performance premium that can be offered by certain fundamental security factors such as momentum, quality and value, as well as the risk reducing features of minimum volatility.”

LifePath Dynamic is designed for plan sponsors who seek additional return potential and plans whose participants have a higher risk tolerance or are behind in their savings. LifePath Dynamic funds are managed by Matthew O’Hara and Phil Green.

There will be no changes in the investment process or strategy of BlackRock LifePath Index funds, one of only two target date fund series in the industry awarded a Gold rating by Morningstar. LifePath Index funds will continue to be managed by Amy Whitelaw and Alan Mason, and has added Matthew O’Hara.

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