BlackRock Inc, the world's largest money manager, is making a push into the retirement market with a new series of indexes and funds geared toward individual investors preparing for retirement.
The asset manager on Wednesday unveiled its BlackRock CoRI Retirement Index series, called "CoRI Indexes," which will allow pre-retirees to calculate an estimate of how much their current savings would produce in annual income when they turn 65. The "CoRI" title is in part a nod to the indexes' focus on retirement income.
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BlackRock said other firms will be able to license the indexes and underlying data for use with their clients. The tool is a way for BlackRock, which works largely with institutional investors, to further extend its reach to individual investors and financial advisers.
BlackRock also said it filed prospectuses late Tuesday with the U.S. Securities and Exchange Commission to provide bond funds linked to the indexes. The funds will be part of a portfolio builder tied to the indexes that BlackRock plans to introduce later this year.
"Asset managers must do a much better job" helping investors with "outcome-oriented" solutions to ensure they have enough money saved for retirement, Robert Kapito, BlackRock's president and co-founder, said on Wednesday at a conference at BlackRock's New York headquarters.
The new series, which includes 10 indexes listed on the New York Stock Exchange, is targeted at people aged 55 to 64 who are not yet retired. BlackRock plans to add a new index every year.
Each of the current 10 CoRI indexes are linked to the ages between 55 to 64. A CoRI Index 2014, for example, would be for someone who is 64 years old and will turn 65 in 2014, while a CoRI Index 2015 is designed for someone 63 years old, who will turn 65 in 2015.
Each CoRI Index level is calculated based on a series of factors including inflation expectations, interest rate adjustments, and the probability that an individual will be alive. With a CoRI Index 2014, which was at $19.02 as of Tuesday, someone who is 64 and who has $600,000 saved for retirement would be able to calculate (by dividing the index level into their retirement savings) that those savings could fund an estimated $31,545 in annual income when they reach retirement.
"Within seconds, you can get a more accurate calculation about what you need to save in retirement," said Chip Castille, head of BlackRock's Defined Contribution group in the U.S. and Canada.
The index levels will be publicly available, along with an online tool that allows individual investors to view their current expected retirement income.
Each index is made up of a portfolio of bonds chosen to track the attributes of the target level calculated - that set of bonds could include corporate U.S. dollar-denominated bonds or U.S. government bonds, for example. Since an index's target level is designed to converge with the median price of an annuity at age 65, the portfolio of bonds are selected to have an aggregate return that approximates the estimated cost of lifetime income starting at 65.
BlackRock, which own the iShares exchange-traded funds business, had $3.9 trillion in assets under management as of the end of June. Shares of BlackRock closed down 0.2 percent at $281.96 a on the New York Stock Exchange.
