The Benefits of iShares ETFs in 401(k) Plans

With the changing 401(k) industry landscape focused on cost and transparency, it's time to retire the old ideas of what a 401(k) plan has to be. iShares Exchange Traded Funds (ETFs) offer a number of advantages for constructing a 401(k) plan and how to help you integrate them.

High Fees Can Erode Plan Performance

When using iShares ETFs in retirement plans, fund management fees are transparent and record-keeping fees are separated. There are no hidden fees or cross-subsidy arrangements. In addition, expense ratios for ETFs tend to be lower than those of traditional mutual funds. For more information on the differences between ETFs and mutual funds, click here.

Help Manage Risk

iShares ETFs offer broad diversification across asset classes:

• Get Broad Diversification: iShares ETFs provide exposure to over 275 indexes across a large array of sectors and countries.
• Avoid Style Drift: By tracking a benchmark, iShares ETFs can help avoid "style drift," the tendency of a portfolio to diverge from it's objectives. Actively managed mutual funds may vary from stated goals while seeking to outperform their stated benchmark, that can cause concentrations that change the risk-return profile of your portfolio.
• Easily Disclose Holdings: iShares ETFs disclose the holdings and the value of every fund portfolio every trading day, providing necessary information to help prevent unknowingly becoming overweighted in an asset class or investment position.

Access to Over 275 Funds that Track Indexes

Index investments like iShares ETFs seek to deliver performance that tracks a market or asset class benchmark. iShares ETFs seek to track more than 275 different indexes. Each modular component represents a specific asset class, style, sector, country, or region. These diverse instruments help achieve the necessary asset allocation goals with flexibility.