iShares Boasts $2 Billion in 401k Assets
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Wednesday, January 13, 2010

iShares Boasts $2 Billion in 401k Assets

Are ETFs breaking into 401(k) plans successfully? Industry insiders interested in that question may want to take a look at Wednesday's Wall Street Journal "Fund Track" column, where Ian Salisbury highlights iShares' efforts in the 401(k) business so far and ponders the barriers to ETFs' ascendance in the defined contribution retirement plan marketplace.

iShares parent BlackRock told the WSJ that iShares now has at least $2 billion in 401(k) assets, thanks to about $500 million in 2009 inflows. The article cites Greg Porteous, director of iShares' 401(k) business, and three 401(k) providers who have added iShares ETFs to their offerings: Ascensus, the Newport Group and Plan Administrators, Inc..

The article also returns to some common themes in the struggle to push ETFs into 401(k)s.

"Exchange-traded funds have struggled in the 401(k) market because retirement plans neutralize some of their key advantages," Salisbury writes, noting that 401(k)s already offer tax efficiency (one of the benefits of ETFs), don't offer intra-day trading (making ETFs function kind of like mutual funds) and the existence of non-ETF index mutual funds (already in use inside some 401(k) plans). Vanguard even told the WSJ that it hasn't added ETFs to its 401(k) offering since it already offers index mutual funds.

Salisbury wonders if the lack of revenue sharing in ETFs will help boost their popularity with 401(k) advisors, though given that revenue sharing is used to pay administrative and advisor costs, DC industry insiders see that as more of a barrier to advisor adoption.

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