NEW YORK Feb 12 BlackRock Inc, the world's largest money manager, is expanding its push into the retirement market with a new set of bond funds tied to indexes that track an individual's expected annual retirement income once he or she reaches age 65.
The new funds, which BlackRock is targeting at investors over 55, are linked to a series of retirement benchmark indexes the company launched in July. The index series, called CoRI Indexes, allow pre-retirees to calculate an estimate of how much their current savings would produce in annual income when they turn 65, or conversely, how much they would need to save to reach a certain annual lifetime income level upon retiring.
"We designed CoRI to be an investable index," said Chip Castille, head of BlackRock's U.S. retirement group, in a press briefing in New York on Wednesday.
The five new funds are the first in the series, with maturity dates in 2015, 2017, 2019, 2021 and 2023. The idea is that upon reaching age 65, investors can choose to liquidate their holdings in the fund and invest in another lifetime income product, such as an annuity, or can stay in the funds for another 10 years, until they turn 75, at which point the funds liquidate and they receive the remaining investment.
The new funds are what Castille describes as "plain vanilla" bond funds, comprised primarily of U.S. Treasuries and high-quality corporate bonds.
Castille said other firms may be able to license the CoRI indexes using their patents, and BlackRock is already talking with other fund companies.
BlackRock, which has the fourth-largest franchise in the defined contribution industry in terms of assets in its plans, said it had $30 billion in net inflows into its defined contribution channel last year, increasing its total assets in the unit to $525 billion.
Chief Executive Officer Larry Fink has said that defined contribution and retirement planning are among top priorities for the New York-based asset manager. BlackRock introduced Castille's U.S. retirement group in January and said it would be focusing on product development and services geared toward individual investors.