Advisers drive growth in iShares active ETFs
BlackRock’s iShares active ETF division is targeting to achieve $500 million in revenue by 2030, the firm has shared at its latest Investor Day.
Speaking at the Investor Day last week, the global asset manager discussed the growth of active ETFs in recent years which have grown significantly over the last five years, helped by financial advisers.
The firm launched its first active ETF in Australia just last month – the iShares US Factor Rotation Active ETF – and is keen to expand this with more local versions of its US active ETFs for Australian investors.
Jessica Tan, head of Americas for global product solutions at BlackRock, said: “Active ETFs have seen tremendous growth. In 2019, active ETFs made up 2 per cent of the market and today, they make up 9 per cent and we don’t anticipate this trend to slow down. We have aspirations for iShares’ active suite to become a $500 million revenue-generating business by 2030.
“Over the last three years, we’ve launched 40 active ETFs spanning core portfolio strategies and innovative ones like our first liquid alternative ETF and money markets.
“Our differentiator is providing BlackRock’s best active management IP with iShares’ quality and convenience with our distribution reach across both wealth and institutional clients.”
She specifically highlighted the firm’s Equity Factor Rotation (DYNF) and Flexible Income (BINC) ETFs as being active ETFs which were among the top five for active ETF flows for the company in 2024. The first is $15.2 billion in size and was the top active ETF for flows last year, while the second is $8.6 billion. DYNF is the ETF that forms the basis for its aforementioned first Australian active ETF.
Many of these flows came from wealth platforms and model portfolios, Tan said.
“Establishing new iShares clients is a major growth driver for us, globally and in the US. The shift in wealth management is accelerating from individual stock and fund selection to a portfolio-based approach. Specifically, the demand for models is growing and this presents a critical opportunity to further scale iShares.
“Large fast-growing advisers are increasingly outsourcing their portfolio construction to inject scale into their business. The rapid growth of models is fuelled by four big trends: more custom models, more tax-aware investing, the evolution of the 60:40 portfolio, and the increase of hybrid mutual and ETF fund models.”
Research by JP Morgan Asset Management (JPMAM) and Trackinsight earlier this year found active ETFs in Australia have recorded a compound annual growth rate of around 53 per cent in assets under management which is more than double 27 per cent over the same period for passive products.
AUTHOR
Laura Dew
Recommended for you
The possibility of a private credit ETF is looking unlikely for now with US vehicles seeing limited uptake, according to commentators, but fixed income alternatives exist that can provide investors with a similar return.
Ahead of the approaching end of the financial year, State Street has shared five tips for advisers who are using ETFs in their client portfolios.
Global asset manager BlackRock has identified bringing private markets to the wealth channel as a key business area for the firm that could generate US$500 million in revenue in the future.
Flows into cash and fixed income ETFs soared in May, rising from $366 million in April to more than $1.3 billion, data from Betashares shows.
