The world’s largest wealth manager wants workers to take a little more risk in their retirement accounts.
BlackRock leverages 99% equity allocation in target-date funds for vintages up to 30 years from retirement date, the company disclosed in regulatory filings Wednesday. Funds, including those in the iShares LifePath ETF series, will also have higher equity allocations until the target date, at which point they reach 40%, an amount unchanged from the current Glide Path of Products. The revisions, amounting to an increase of about 6 percentage points, are set to take effect in June and BlackRock’s target-date funds will be more aggressive in trading.
The change follows the company’s latest research, which found that longevity is growing in the United States, and that people are earning a fixed income for longer than ever before. “We believe they can afford to take less financial risk later in their careers, potentially resulting in more assets in retirement approximately 75% of the time,” according to the report’s summary.
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This is a seemingly minimal change that will have major implications given the scale of the company’s business. BlackRock’s U.S. target-date assets in mutual funds, ETFs and collective investment trusts represent about $611 billion by the end of 2025, according to data from Sway Research. Only Vanguard, at nearly $1.8 trillion, and Fidelity, with $693 billion, are larger. BlackRock, which declined to be interviewed, is the only company that offers target-date ETFs. Its line of iShares LifePath funds, which launched in 2023, represent about $400 million in assets.
At the industry level, target date glide paths, or the asset allocation changes they create over time, are increasingly equalized. The products came under scrutiny during the 2008 financial crisis, when many near-retirement investors were hit by losses they didn’t anticipate. Some providers avoided stock exposure as a result, but target-date funds have become significantly more aggressive in recent years:
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Target date funds had an average equity allocation of 92% in 2024, up from about 85% in 2015, according to Morningstar’s most recent Target Date Landscape report.
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At the target date (which is designed to be close to retirement), the average equity weighting was 45% in 2024, up from just 40% in 2015.
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The changes occurred because bond yields were less attractive in the 2010s and early 2020s. At the same time, more young workers are investing in target-date funds through their 401(k) plans, and life expectancy has generally increased, the report noted.
