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BlackRock Profile The Retirement Advisor ==> Free Newsletters:: January 2007 & January 2008 <== | ||
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BlackRock Fund Family Review
Taken from the February 2008 issue of The Retirement Advisor newsletter BlackRock Founded: 1988 by Laurence D. Fink Corporate Headquarters:
Number of Mutual Funds: Approximately 90, not including target-date funds Average Expense Ratio: 1.55% for domestic stocks, 1.65% for international stock, and 1.05% for taxable bond funds.
Starting with only $1 billion in assets in 1988, BlackRock has
grown into a multinational investment organization (with offices in nearly 20
countries, such as the
Because of this, BlackRock generally did not roll out retail versions of its strategies or institutional funds as early as their larger competitors. With BlackRock’s acquisition of State Street Research in 2005 and Merrill Lynch Investment Managers in 2006, this is now changing. More importantly, BlackRock has historically shown a great willingness to invest in its talent and new technologies. From a retail investor standpoint, this has helped tremendously – as this has resulted in BlackRock in doing a much better job in reaching out to its retail investors, though things such as weekly market commentaries on its website and detailed shareholder reports. There is still room for improvement, but BlackRock has made rapid progress in this area over the last couple of years. |
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In terms
of fees, BlackRock ranks only “average” in all of the broad
categories. For example, the average expense ratio of its
domestic equity funds is 1.55%, or over 100 basis points higher than
the expense ratio of the Dodge & Cox Stock Fund and 97 basis points
higher than the expense ratio of the American Funds Fundamental
Investors fund (one of our recommended actively managed domestic equity
funds). We believe BlackRock could further reduce fees across
many of its mutual funds. This is especially important in
BlackRock’s fixed income mutual funds, where a mere 25 basis point
difference could be a significant hurdle to outperforming one’s peers
over time.
Model Portfolios 2007 Results: The Retirement Advisor Aggressive Growth and Income Model Portfolio 1 , designed for someone approaching retirement who is interested in a portfolio allocation designed to provide income and capital appreciation while avoiding excessive risk, gained 9.52% in 2007, its first year of existence. This portfolio was 50% in stock index funds and 50% in fixed income index funds (or ETF equivalents.) It benefited greatly from TIPS for inflation protection which we feel allows a lower allocation to equities and a 4% withdrawal rate. The Retirement Advisor Moderate Growth and Income Model Portfolio 2 , designed for someone who has retired and seeks to maintain their current standard of living, even with inflation, gained 8.48% in 2007, its first year of existence. This portfolio was 30% in stock index funds and 70% in fixed income index funds (or ETF equivalents.) It benefited greatly from TIPS for inflation protection The Retirement Advisor Conservative Capital Preservation Model Portfolio 3 ,
designed for someone in the later stages of retirement who wants to
avoid any losses in their portfolio and who does not need a lot of
inflation protection, gained 8.32% in 2007, its first year of
existence. This portfolio was 100% in fixed income index funds (or ETF
equivalents.) It benefited greatly from TIPS for inflation protection. |
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