19% annual organic growth driven by minimum volatility, single and multifactor funds
World’s largest smart beta ETF provider launches nine new multifactor sector ETFs
Record demand for smart beta products ‘democratizing’ factor investing and driving innovation
BlackRock’s (NYSE:BLK) iShares business, the world’s largest manager of exchange traded funds (ETFs), projects that smart beta ETF assets will reach $1 trillion globally by 2020 and $2.4 trillion by 2025.1 With current smart beta ETF assets at $282bn, 2 this reflects an annual organic growth rate of 19%, double the growth rate of the overall ETF market. Minimum volatility and factor (multi and single) funds are expected to be key drivers of future growth and represent over 60% of new smart beta flows through 2025.1
BlackRock’s Factor-Based Strategies Group, led by Andrew Ang, PhD, oversees the broadest suite of factor-based products and capabilities, with more than $142 billion assets under management. BlackRock’s iShares business is the largest provider of smart beta ETFs, managing over $67 billion in ETFs across 96 products globally. 2
Smart beta ETFs have become increasingly popular strategies for investors seeking to manage risk and obtain precise exposure to historically return driving factors, and saw $31bn in new flows globally in 2015. Minimum volatility ETFs were a major contributor in 2015 with over $11bn of inflows, and have led the way in 2016 with a record-breaking $12.6bn of inflows year-to-date.1
Against a backdrop of continued expected growth, BlackRock is launching a series of initiatives to enhance the smart beta investing experience for its clients:
Nine new iShares multifactor sector ETFs. Investors are now able to gain targeted exposure to single sectors including technology, financials and energy, powered by a combination of four historically rewarded factors: value, quality, momentum and size.
Launches BlackRock’s factors website and publishes the iShares smart beta guide. The newly launchedBlackRock.com/factors website is an online resource providing clients with educational content, tools and analytics to help them to better understand factor investing and smart beta strategies. BlackRock is also rolling out an iShares smart beta guide, helping to educate investors how to evaluate and implement factors in smart beta strategies.
Introduces iShares Edge, a clearly defined suite of iShares factor ETFs, covering minimum volatility, single and multifactor funds. This included renaming 26 existing funds and the inclusion of 9 new multifactor sector funds, representing more than $28bn in assets under management. 3
Martin Small, BlackRock’s Head of U.S. iShares, said:
“Smart beta ETFs are growing increasingly popular, as evidenced by their record flows in 2015 and the first quarter of 2016 with investors using them to manage risk and obtain precise exposure to historically return driving factors. In response to continued demand and strong expected future growth, BlackRock is introducing the iShares Edge MSCI Multifactor Sector ETFs. These funds represent the next phase of sector investing: using a factors-based approach to target companies with the potential to outperform their broader respective sectors over multiple market cycles.
“As a leader and innovator in smart beta investing, clients look to BlackRock for information and insight. In response, we’ve launched a range of educational tools to bring our clients greater clarity and help them to navigate the market. We’ve also consolidated our smart beta ETF products that provide precise factor exposures under a single, unified brand.”
Andrew Ang, Head of Factor Investing Strategies at BlackRock, said:
“The rise of smart beta - propelled by advances in technology and data analytics - is helping to democratize factor investing, putting investment solutions once only accessible to large institutions within the reach of all investors.”
“Smart beta consists of long-only, benchmark driven strategies built to capture one or multiple factors while pursuing a variety of outcomes, such as reducing risk, enhancing returns or improving diversification. This investment style is predicated on the understanding that the risks and returns of all investments, no matter how nominally diverse, can be mapped to a common set of underlying factors. Today, these factors can be captured with cost effective and efficient smart beta ETFs.”
The iShares Edge MSCI Multifactor ETFs: The next phase of sector investing
Today’s launch of nine new iShares Edge MSCI Multifactor Sector ETFs expands the iShares suite of multifactor ETFs to 15 funds, and includes sector exposures for the first time. The funds target select companies within each U.S. stock sector and focus on financially healthy firms (quality), inexpensive stocks (value), smaller companies (size), and trending stocks (momentum).
The new funds launched today are:
Ticker Fund name
iShares Edge MSCI Multifactor Energy ETF
- MATF iShares Edge MSCI Multifactor Materials ETF
- INDF iShares Edge MSCI Multifactor Industrials ETF
- CNDF iShares Edge MSCI Multifactor Consumer Discretionary ETF
- CNSF iShares Edge MSCI Multifactor Consumer Staples ETF
- HCRF iShares Edge MSCI Multifactor Healthcare ETF
- FNCF iShares Edge MSCI Multifactor Financials ETF
- TCHF iShares Edge MSCI Multifactor Technology ETF
- UTLF iShares Edge MSCI Multifactor Utilities ETF
Investor education: launch of BlackRock factors website and smart beta guide
BlackRock is pleased to introduce a new website dedicated to factor investing, BlackRock.com/factors. Investors will be able to access a wealth of online content including interactive analysis, tools and videos, helping them better understand factors and factor-based strategies like smart beta.
iShares is also launching a smart beta guide for clients interested in investing in smart beta ETFs. The brochure will help them navigate the smart beta landscape, and provides insights on how to evaluate smart beta products and practical portfolio implementation examples of smart beta ETFs.
BlackRock’s factor investing platform
With over $142bn in AUM in factor-based strategies, BlackRock is currently one of the largest managers in the space and has the broadest suite of factor-based products and capabilities. The firm manages over $67bn in iShares smart beta ETFs, across 96 products globally. 2
BlackRock’s factor investing platform is led by Andrew Ang, PhD. Prior to joining BlackRock in 2015, Dr. Ang was Chair of the Finance and Economics Division and the Ann F. Kaplan Professor of Business at Columbia. Dr. Ang’s recent book “Asset Management: A Systematic Approach to Factor Investing”, published by Oxford University Press in 2014, has been lauded by the investment community.