On Thursday, iShares released three new transparent actively managed ETFs, and an index ETF offer client choice and flexibility to access BlackRock’s best thinking on long-term, transformative growth trends. These funds are the first active transparent ETFs from BlackRock’s Fundamental Active Equity portfolio managers.
The structural shifts influencing the future of the global economy and society have accelerated in 2020, leading to increased investor demand for strategies that go beyond the traditional sector, market capitalization, and geographic classifications.
To help clients seek exposure to these transformative forces, BlackRock is expanding its Megatrend with the launch of these three active transparent ETFs (BMED, BTEK, BFTR), which are managed by experienced investors from BlackRock’s Fundamental Active Equity franchise and one index-tracking ETF. The funds are designed to provide unique exposure to technology and healthcare innovation.
Active Transparent ETFs:
BlackRock Future Health ETF (NYSE: BMED): Provides access to innovative and emerging companies in the healthcare sector
- Lead Portfolio Manager: Erin Xie, PhD
- Reference Benchmark: MSCI All Country World Index (ACWI)
- Lead Portfolio Manager: Tony Kim
- Reference Benchmark: MSCI All Country World Index (ACWI)
- Lead Portfolio Manager: Phil Ruvinsky
- Reference Benchmark: Russell 2500 Growth
Additionally, there is also an index-tracking ETF. The iShares Virtual Work and Life Multisector ETF (NYSE: IWFH) seeks to track an index of developed and emerging market companies that provide products, services, and technologies that empower individuals to work remotely and support an increasingly virtual way of life. IWFH tracks the NYSE FactSet Global Virtual Work and Life Index.
“Megatrends are driving the world’s economic, social, and technological transformation, presenting tremendous investment opportunities and investor demand. We are still in the early days of growth for these funds. iShares projects that the megatrend category is projected to grow 500% to $250bn by 2024,” said Armando Senra, Head of iShares Americas. “The iShares Virtual Work and Life Multisector ETF will be the first to capture the globally diversified exposures representative of the trends that have been accelerated over the last six months. Around the world economic activity has already begun to shift as we become increasingly comfortable with a virtual and internet-dependent way of life and investors are looking for strategies to capture that change.”
Industry-Leading Alpha Seeking Expertise Accessible Through ETFs
BlackRock’s Active Equity platform delivers the combination of human insight with the power of the firm’s technology and risk platforms, along with the benefit of fundamental and quantitative global research and expertise in trading and market intelligence.
“The ability to innovate and capture disruption caused by innovation is critical to the success of active investors. Through these funds, our portfolio managers will be able to focus on secular changes disrupting our economy without being constrained by industries and sectors,” said Tony DeSpirito, Chief Investment Officer for Fundamental U.S. Active Equities. He continues, “We are excited to leverage iShares’ infrastructure to deliver these funds as active transparent ETFs, a first for our team.”
The managers for BMED, BTEK, and BFTR bring six decades of combined experience and demonstrated the ability to generate alpha by deploying high conviction strategies informed by the evaluation of the financial prospects of companies, analysis of market behavior, and exploitation of market trends. They are responsible for more than $80 billion AUM and are each the manager of five-star and medal rated funds, as rated by Morningstar.
Expanding Choice and Flexibility to Meet Client Needs
The launch of these four ETFs is representative of the unique combination of capabilities and expertise in stock selection, ETF infrastructure, analytics, and portfolio modeling that BlackRock leverages to deliver choice and flexibility to clients.
BlackRock’s commitment to helping clients build better financial futures is further represented through a commitment to launch active ETFs when the exposures are believed to add value for clients, have clear alpha potential, and complement existing active and index ETFs and mutual funds.
“Because we offer a full spectrum of funds, we focus on delivering our capabilities in ways that seek to maximize the benefit to our clients. Today’s introduction of active and index ETFs is another example of that,” said Martin Small, Head of BlackRock’s U.S. Wealth Advisory business. “In order to help our clients better navigate our offerings, our index-based strategies will continue to be branded as iShares funds, and our alpha-seeking ETFs will be branded as BlackRock funds, reflecting the firm’s history as a premier active investor.”
Comparing Index and Active ETFs
Traditional index ETFs seek to track an index, typically constructed by a third-party index-provider, and reallocate at a pre-determined time period (e.g. on a semi-annual or annual basis). Index ETFs publish holdings daily, and the goal of the fund is to deliver returns in-line with their stated benchmark.
Transparent active ETFs also publish holdings daily but do not seek to track a specific index and have a stated objective of maximizing income, long-term capital appreciation, or total return. Investment decisions are made by BlackRock active portfolio managers, who use their IP to make changes to holdings within the ETF in accordance with the fund’s objective– therefore, the frequency in which holdings change will vary.
BlackRock’s preexisting lineup of actively managed ETFs includes:
- BlackRock U.S. Equity Factor Rotation ETF (DYNF)
- iShares Short Maturity Municipal Bond ETF (MEAR )
- iShares Short Maturity Bond ETF (NEAR )
For additional information on BlackRock, please visit www.blackrock.com/corporate
This article originally appeared on ETFTrends.com.