BlackRock is one of the largest asset management companies in the world, managing over $10 trillion in assets. One of their investment products is the BlackRock Short-Term Investment Fund, which is a low-cost money market mutual fund designed for short-term cash investments. In this article, we will take a comprehensive look at the pros and cons of investing in this BlackRock short term investment account.
Low expense ratio and no account minimums make it accessible
One of the biggest advantages of the BlackRock Short-Term Investment Fund is its low expense ratio of just 0.26%. This is significantly lower than expense ratios of most actively managed short-term bond funds. There are also no account minimums required to invest, making it accessible even for small investors who just want a place to park cash. The easy accessibility and low costs of this BlackRock short term fund make it a good option for cash investments.
Very conservative investments mean low risk
The BlackRock Short-Term Investment Fund invests at least 97% of its assets in highly liquid, investment-grade money market instruments. The weighted average maturity of investments is 60 days or less. This ultra-conservative investment approach results in very low volatility and risk. The fund strives to maintain a stable $1 net asset value, although this is not guaranteed. Overall, the short-term nature of investments makes this a lower risk cash investment option.
Lackluster returns comparable to savings accounts
While the conservative investment strategy helps minimize risk, it also results in rather lackluster returns. Over the past decade, the BlackRock Short-Term Investment Fund has averaged annual returns of just 0.8%, underperforming the broader bond market. The returns are comparable to many high-yield online savings accounts. So investors should not expect to earn substantial income from this vehicle. However, it provides stability of principal, which is the priority for short-term cash investments.
BlackRock reputation provides peace of mind
With over $10 trillion in assets under management, BlackRock is the largest asset manager in the world. They have enormous resources and a reputation for disciplined risk management. While there are never any guarantees, the size and reputation of BlackRock provides an added level of confidence for conservative investors looking for a short-term parking place for cash. However, the fund itself has a short track record, being launched in 2018 after BlackRock acquired the First American money market fund business.
Highly liquid investments can be accessed easily
The BlackRock Short-Term Investment Fund invests almost exclusively in highly liquid money market instruments like commercial paper, certificates of deposit, and short-term Treasury bonds. This means investors have very quick access to their money. There is no redemption fee or holding period. The excellent liquidity makes it a good option as a short-term cash management vehicle for both institutional and retail investors.
Overall, the BlackRock Short-Term Investment Fund provides a low-cost, low-risk, and easily accessible cash investment option suitable for short-term horizons. While returns are lackluster, the accessibility, liquidity, conservative investments and BlackRock reputation make it an appealing choice for parking cash.