In this post, we will discuss BlackRock's CoRI product.
To create CoRI, BlackRock first developed an index based on the median purchase price of a single premium immediate annuity, then it used a process involves the following two steps -
While other retirement strategies may attempt to manage asset volatility, CoRI provides a structure to measure and manage portfolios based on volatility and income. BlackRock claims this is the first time you can measure and build portfolios exclusively based on income and managing income volatility.
CoRI is not a bond ladder, which staggers the bonds' maturity dates, this new strategy applies the principles of an institutional approach known as liability-driven investing. In this case, a bond portfolio is built to produce yields that match the future cash flows the investor will need.
CoRI doesn't work for everyone. BlackRock developed it only for investors ages 55 to 75.
If you are younger than that, derivatives would be required to implement the strategy, which will introduce third-party risk.
For people older than 75, annuities may actually provide better value.
To create CoRI, BlackRock first developed an index based on the median purchase price of a single premium immediate annuity, then it used a process involves the following two steps -
- Model cash flows in a manner similar to an insurance company's model for someone purchasing an annuity.
- Build a bond portfolio (consists of Treasuries, Treasury STRIPS and high-quality investment grade bonds) to match those flows.
While other retirement strategies may attempt to manage asset volatility, CoRI provides a structure to measure and manage portfolios based on volatility and income. BlackRock claims this is the first time you can measure and build portfolios exclusively based on income and managing income volatility.
CoRI is not a bond ladder, which staggers the bonds' maturity dates, this new strategy applies the principles of an institutional approach known as liability-driven investing. In this case, a bond portfolio is built to produce yields that match the future cash flows the investor will need.
CoRI doesn't work for everyone. BlackRock developed it only for investors ages 55 to 75.
If you are younger than that, derivatives would be required to implement the strategy, which will introduce third-party risk.
For people older than 75, annuities may actually provide better value.
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