Whether you're a Baby Boomer, a Gen-Xer or a Millennial, you'll likely be impacted by this transfer in some way. As a Baby Boomer, you may have retired, or be on the verge of retirement, and considering how you'll distribute your wealth and when. If you're a Millennial or Gen-Xer and beginning your investing journey with an inheritance from this transfer, you may be thinking about how you can invest it purposefully.
Regardless of age or where you are, ETFs—which are diversified collections of securities (like mutual funds) that trade on an exchange (like stocks)—may help improve this transfer of wealth by offering low costs, portfolio diversification and fund transparency that can potentially give every generation the opportunity to leave their mark.
With their fees being a third of the average active mutual fund,2 iShares ETFs can help both Baby Boomers and Millennials pursue their financial goals while keeping costs lower.
For Baby Boomers, who may have shorter investing horizons of, let's say, 10 years, a hypothetical $10,000 investment in a fund charging 0.96% in fees (the average fee for an active mutual fund), with monthly contributions of $1,000 and an assumed compounded rate of return of 8%, would grow to $190,450 and lead to $11,264 in fees. Everything else being equal, the same amounts invested in a fund charging 0.34% in fees (the average iShares ETF fee) would grow to $197,632 and lead to only $4,081 in fees.3 That would leave you with an extra $7,183. For younger investors with longer investing horizons, those savings can add up considerably over time.
Following the financial crisis of 2008, it's understandable why investors may be looking for more diversification and transparency when it comes to investing. Case in point: 59% of Millennials will not invest in something they don't understand.4
“When I sit with clients today, they say, ‘I can't emotionally deal with another 2008 situation,’” says one financial advisor.5
iShares ETFs offer investors access across multiple asset classes, including equities, fixed income, commodities, multi-asset and real estate.
iShares equity ETFs, for example, range from broad U.S. market ETFs—which seek to track indexes like the S&P 500—to international exposures to sector funds, which hold shares of companies from specific industries, like healthcare or technology.
Investors who are looking to manage potential stock market volatility could also consider bond ETFs, which are a collection of individual bonds that trade on exchange. For Boomers, bond ETFs, like the iShares Core U.S. Aggregate Bond ETF,6 can be considered for a portfolio for retirement. For Millennials just starting out, bond ETFs can serve as a strong foundation for your portfolio in the long term.
There are even ETFs designed around risk tolerance. For investors who are uneasy with the ups and downs of the market—either the time-sensitive Boomer or the nervous Millennial—consider ETFs like iShares Edge MSCI Min Vol USA ETF.7 This fund seeks to track the investment results of an index composed of U.S. equities that, in the aggregate, have lower volatility characteristics relative to the broader U.S. equity market, which can help give volatility-sensitive investors the confidence to stay invested.
The future is getting here faster than we may think. New technologies are transforming the way we live and work, and investors are looking to take advantage of these opportunities by aligning their interests and passions with their investments.
iShares ETFs offer all investors the opportunity to invest in the future they believe in with the hopes of leaving a legacy behind. How? One way is access to megatrends.
BlackRock has identified five megatrends—the powerful, transformative forces that are changing the trajectory of our global economy. These include technological breakthrough, demographics and social change, rapid urbanization, climate change and resource scarcity, and emerging global wealth.
iShares ETFs offer investors access to megatrends by aiming to track indexes of public stocks that may benefit from shifts in technology, society and the environment over decades. For example, iShares Genomics Immunology and Healthcare ETF8 seeks to track an index composed of companies that could benefit from the long-term growth and innovation in genomics, immunology and bioengineering, while iShares Self-Driving EV and Tech ETF9 seeks to track an index composed of companies that may benefit from growth and innovation in and around electric vehicles, battery technologies and autonomous driving technologies.
While megatrend opportunities used to be available primarily to institutions, iShares megatrend ETFs represent the next frontier of access and transparency. They are distinct from broad market exposures and should be viewed as alternatives to picking individual stocks or sectors.
The U.S. looks set to experience the greatest intergenerational wealth transfer ever. ETFs could be an effective investment vehicle for preparing for this wealth transfer between generations and turning those funds into a long-lasting legacy.
For more information on ETFs, click here.
SOURCES:
1 Cerulli Associates, 2018 http://info.cerulli.com/HNW-Transfer-of-Wealth-Cerulli.html.
2 Morningstar, as of 12/31/18. Comparison is between the average Prospectus Net Expense Ratio for the iShares ETFs (0.34%) and active open-end mutual funds (0.96%).
3 This a hypothetical example for illustrative purposes only and does not include the impact of brokerage commissions or other fees. This does not represent the performance of any fund and is not indicative of any future result. Average fees sourced from Morningstar, as of 12/31/18.
4 Broadridge, Targeting the Digital Generation, 2016.
5 Barron's, 2018 https://www.barrons.com/articles/how-the-financial-crisisstill-affects-investors-1536361852.
6 “iShares Core U.S. Aggregate Bond ETF,”BlackRock https://www.ishares.com/us/products/239458/ishares-core-total-us-bond-market-etf.
7 “iShares Edge MSCI Min Vol USA ETF,”BlackRock https://www.ishares.com/us/products/239695/ishares-msci-usa-minimum-volatility-etf.
8 “iShares Genomics Immunology and Healthcare ETF,”BlackRock https://www.ishares.com/us/products/308878/ishares-genomics-immunology-and-healthcare-etf-fund.
9 “iShares Self-Driving EV and Tech ETF,”BlackRock https://www.ishares.com/us/products/307332/ishares-self-driving-ev-and-tech-etf-fund.
IMPORTANT INFORMATION:
Carefully consider the Funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds' prospectuses or, if available, the summary prospectuses, which may be obtained by visiting www.iShares.com or www.blackrock.com. Read the prospectus carefully before investing.
Investing involves risk, including possible loss of principal.
Funds that concentrate investments in specific industries, sectors, markets or asset classes may underperform or be more volatile than other industries, sectors, markets or asset classes than the general securities market. Technology companies may be subject to severe competition and product obsolescence.
Transactions in shares of ETFs will result in brokerage commissions and will generate tax consequences. All regulated investment companies are obliged to distribute portfolio gains to shareholders.
Diversification and asset allocation may not protect against market risk or loss of principal.
When comparing stocks or bonds and iShares Funds, it should be remembered that management fees associated with fund investments, like iShares Funds, are not borne by investors in individual stocks or bonds.
Investment comparisons are for illustrative purposes only. To better understand the similarities and differences between investments, including investment objectives, risks, fees and expenses, it is important to read the products' prospectuses.
This information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any security in particular. This material is strictly for illustrative, educational, or informational purposes and is subject to change.
The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, "BlackRock").
The iShares Funds are not sponsored, endorsed, issued, sold or promoted by MSCI Inc., nor does this company make any representation regarding the advisability of investing in the Funds. BlackRock is not affiliated with MSCI Inc.
iSHARES and BLACKROCK are registered trademarks of BlackRock. All other marks are the property of their respective owners.
ICRMH0919U-911082
">Whether you're a Baby Boomer, a Gen-Xer or a Millennial, you'll likely be impacted by this transfer in some way. As a Baby Boomer, you may have retired, or be on the verge of retirement, and considering how you'll distribute your wealth and when. If you're a Millennial or Gen-Xer and beginning your investing journey with an inheritance from this transfer, you may be thinking about how you can invest it purposefully.
Regardless of age or where you are, ETFs—which are diversified collections of securities (like mutual funds) that trade on an exchange (like stocks)—may help improve this transfer of wealth by offering low costs, portfolio diversification and fund transparency that can potentially give every generation the opportunity to leave their mark.
With their fees being a third of the average active mutual fund,2 iShares ETFs can help both Baby Boomers and Millennials pursue their financial goals while keeping costs lower.
For Baby Boomers, who may have shorter investing horizons of, let's say, 10 years, a hypothetical $10,000 investment in a fund charging 0.96% in fees (the average fee for an active mutual fund), with monthly contributions of $1,000 and an assumed compounded rate of return of 8%, would grow to $190,450 and lead to $11,264 in fees. Everything else being equal, the same amounts invested in a fund charging 0.34% in fees (the average iShares ETF fee) would grow to $197,632 and lead to only $4,081 in fees.3 That would leave you with an extra $7,183. For younger investors with longer investing horizons, those savings can add up considerably over time.
Following the financial crisis of 2008, it's understandable why investors may be looking for more diversification and transparency when it comes to investing. Case in point: 59% of Millennials will not invest in something they don't understand.4
“When I sit with clients today, they say, ‘I can't emotionally deal with another 2008 situation,’” says one financial advisor.5
iShares ETFs offer investors access across multiple asset classes, including equities, fixed income, commodities, multi-asset and real estate.
iShares equity ETFs, for example, range from broad U.S. market ETFs—which seek to track indexes like the S&P 500—to international exposures to sector funds, which hold shares of companies from specific industries, like healthcare or technology.
Investors who are looking to manage potential stock market volatility could also consider bond ETFs, which are a collection of individual bonds that trade on exchange. For Boomers, bond ETFs, like the iShares Core U.S. Aggregate Bond ETF,6 can be considered for a portfolio for retirement. For Millennials just starting out, bond ETFs can serve as a strong foundation for your portfolio in the long term.
There are even ETFs designed around risk tolerance. For investors who are uneasy with the ups and downs of the market—either the time-sensitive Boomer or the nervous Millennial—consider ETFs like iShares Edge MSCI Min Vol USA ETF.7 This fund seeks to track the investment results of an index composed of U.S. equities that, in the aggregate, have lower volatility characteristics relative to the broader U.S. equity market, which can help give volatility-sensitive investors the confidence to stay invested.
The future is getting here faster than we may think. New technologies are transforming the way we live and work, and investors are looking to take advantage of these opportunities by aligning their interests and passions with their investments.
iShares ETFs offer all investors the opportunity to invest in the future they believe in with the hopes of leaving a legacy behind. How? One way is access to megatrends.
BlackRock has identified five megatrends—the powerful, transformative forces that are changing the trajectory of our global economy. These include technological breakthrough, demographics and social change, rapid urbanization, climate change and resource scarcity, and emerging global wealth.
iShares ETFs offer investors access to megatrends by aiming to track indexes of public stocks that may benefit from shifts in technology, society and the environment over decades. For example, iShares Genomics Immunology and Healthcare ETF8 seeks to track an index composed of companies that could benefit from the long-term growth and innovation in genomics, immunology and bioengineering, while iShares Self-Driving EV and Tech ETF9 seeks to track an index composed of companies that may benefit from growth and innovation in and around electric vehicles, battery technologies and autonomous driving technologies.
While megatrend opportunities used to be available primarily to institutions, iShares megatrend ETFs represent the next frontier of access and transparency. They are distinct from broad market exposures and should be viewed as alternatives to picking individual stocks or sectors.
The U.S. looks set to experience the greatest intergenerational wealth transfer ever. ETFs could be an effective investment vehicle for preparing for this wealth transfer between generations and turning those funds into a long-lasting legacy.
For more information on ETFs, click here.
SOURCES:
1 Cerulli Associates, 2018 http://info.cerulli.com/HNW-Transfer-of-Wealth-Cerulli.html.
2 Morningstar, as of 12/31/18. Comparison is between the average Prospectus Net Expense Ratio for the iShares ETFs (0.34%) and active open-end mutual funds (0.96%).
3 This a hypothetical example for illustrative purposes only and does not include the impact of brokerage commissions or other fees. This does not represent the performance of any fund and is not indicative of any future result. Average fees sourced from Morningstar, as of 12/31/18.
4 Broadridge, Targeting the Digital Generation, 2016.
5 Barron's, 2018 https://www.barrons.com/articles/how-the-financial-crisisstill-affects-investors-1536361852.
6 “iShares Core U.S. Aggregate Bond ETF,”BlackRock https://www.ishares.com/us/products/239458/ishares-core-total-us-bond-market-etf.
7 “iShares Edge MSCI Min Vol USA ETF,”BlackRock https://www.ishares.com/us/products/239695/ishares-msci-usa-minimum-volatility-etf.
8 “iShares Genomics Immunology and Healthcare ETF,”BlackRock https://www.ishares.com/us/products/308878/ishares-genomics-immunology-and-healthcare-etf-fund.
9 “iShares Self-Driving EV and Tech ETF,”BlackRock https://www.ishares.com/us/products/307332/ishares-self-driving-ev-and-tech-etf-fund.
IMPORTANT INFORMATION:
Carefully consider the Funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds' prospectuses or, if available, the summary prospectuses, which may be obtained by visiting www.iShares.com or www.blackrock.com. Read the prospectus carefully before investing.
Investing involves risk, including possible loss of principal.
Funds that concentrate investments in specific industries, sectors, markets or asset classes may underperform or be more volatile than other industries, sectors, markets or asset classes than the general securities market. Technology companies may be subject to severe competition and product obsolescence.
Transactions in shares of ETFs will result in brokerage commissions and will generate tax consequences. All regulated investment companies are obliged to distribute portfolio gains to shareholders.
Diversification and asset allocation may not protect against market risk or loss of principal.
When comparing stocks or bonds and iShares Funds, it should be remembered that management fees associated with fund investments, like iShares Funds, are not borne by investors in individual stocks or bonds.
Investment comparisons are for illustrative purposes only. To better understand the similarities and differences between investments, including investment objectives, risks, fees and expenses, it is important to read the products' prospectuses.
This information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any security in particular. This material is strictly for illustrative, educational, or informational purposes and is subject to change.
The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, "BlackRock").
The iShares Funds are not sponsored, endorsed, issued, sold or promoted by MSCI Inc., nor does this company make any representation regarding the advisability of investing in the Funds. BlackRock is not affiliated with MSCI Inc.
iSHARES and BLACKROCK are registered trademarks of BlackRock. All other marks are the property of their respective owners.
ICRMH0919U-911082
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