BlackRock: iShares ETFs in 2019 – New Milestones for Investor Progress

BlackRock: iShares ETFs in 2019 – New Milestones for Investor Progress

ETFs
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Globally, iShares ETFs surpassed $2 trillion in assets under management (AUM) in 2019, ending the year with $185 billion in net new assets and 33% global market share, solidifying iShares’ place as the leading ETF provider for clients.

iShares also passed a series of milestones across its diverse product lines:

• Fixed income ETFs eclipsed $1 trillion globally with iShares Fixed Income ETFs accounting for over 47% of these assets at year end and $112 billion in flows.

• The iShares Factor ETFs gathered a record $34 billion of inflows, ending 2019 with over $179 billion in assets.

• iShares Sustainable ETFs gathered $12 billion globally, including the most successful launch of any new ETF strategy in 15 years.

“Clients are increasingly using iShares as instruments of active return,” said Salim Ramji, Global Head of iShares and Index Investments. “In 2019, clients scaled their use of iShares across our Fixed Income, Factor and Sustainable ETFs, with record flows in each; investors are using iShares not just for Core building blocks but as tools to seek better outcomes across their entire portfolio.”

Stellar growth in a volatile year

Globally, iShares ETFs ended 2019 with a record $2.2 trillion in assets under management and $185 billion in net new assets. Strong, steady inflows across product lines demonstrate the diversified mix and the variety of ways in which clients are using iShares to manage risk in volatile markets; access investment classes more conveniently and at lower cost; and better align their values with their portfolio objectives.

A surge in fixed income ETF adoption

Fixed income ETF assets eclipsed $1 trillion across the industry. iShares, which pioneered the first fixed income ETF in 2002, reached over $565 billion in assets globally and traded $2.2 trillion on exchange in the U.S. and Europe.

Around the world, investors accelerated the adoption of fixed income ETFs – from long-term exposures in wealth models to hedging instruments for institutions to market access tools for active fixed income managers.

“In 2019, iShares Fixed Income ETFs were about more than indexation – they became an enabling technology in the modernization of the bond market,” Ramji said. “Active fixed income managers added them to help improve alpha through tactical allocation and liquidity management; central banks used them to access securities markets more conveniently; institutions used them to execute their portfolio trading strategies at lower cost.”

Focus on sustainable investing

In 2019 iShares made significant investments in its Sustainable ETF line-up, ending the year with $22 billion in assets, $12 billion in flows ($17 billion including iShares Index Mutual Funds) and nearly tripling the number of ETFs to 81.

Sustainable ETFs became iShares’s fastest-growing category, driven largely by interest in and usage of environmental, social and governance (ESG) ETFs from every region and client type, from asset owners and wealth managers in Europe to financial advisors in the U.S.

 

iShares is planning a series of actions this year to bring greater access to sustainable investing through its offerings.

Priming the ETF ecosystem for scale and growth

iShares commends the Securities and Exchange Commission’s (SEC) unanimous approval of the ETF Rule in September, which will help support future ETF growth and increase ETF market transparency. iShares also partnered with Intercontinental Exchange (ICE) to launch the ICE ETF Hub, a marketplace utility that will standardize ETF creation and redemption processes for a broad range of participants. Additional functionality, including support for the negotiation of custom baskets and international expansion are planned for this year. Taken together, the efforts in 2019 to bolster the architecture that supports the ETF ecosystem will help ensure that ETFs operate efficiently in 2020 and beyond.

Europe: Growth driven by a view of the whole portfolio

“ETF adoption in Europe accelerated to a record level last year, crossing $1 trillion in assets, in response to changes in client demands, in markets and regulation,” said Stephen Cohen, Head of iShares EMEA at BlackRock. “Overall, new money into European iShares ETFs increased to an annual record of $60 billion. As these forces gather strength, investors are increasingly shifting their processes from traditional security and fund selection to holistic portfolio construction with more indexing. Two trends in particular are accelerating in EMEA: the growth of sustainable ETFs, where iShares is the leading provider, with $11 billion in assets under management, and the adoption of fixed income ETFs where iShares remains the leading provider, gathering $43 billion in 2019.

“The use of fixed income ETFs is the biggest development in the European industry with year-on-year trading volumes growing by more than 50%, largely driven by European credit, as investors take advantage of the liquidity offered by ETFs. Overall, MiFID II-mandated transparency continues to paint a clearer picture of the true liquidity available in European ETFs - nearly $2.5 trillion in volumes in 2019 (versus $500 billion visible before implementation) - creating greater comfort for investors.”