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 launched BlackRock.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:
|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.
The iShares Edge ETF suite
Find below a full list of the funds that are changing names and becoming part of the iShares Edge suite. Including the nine new multifactor sector funds, the iShares Edge suite comprises eight single factor, 15 multifactor, 11 minimum volatility and one fixed income ETF3. The suite represents more than $28bn in assets under management.
|Ticker||Previous Name||New name|
|EMGF||iShares FactorSelectTM MSCI Emerging ETF||iShares Edge MSCI Multifactor Emerging Markets ETF|
|ACWF||iShares FactorSelectTM MSCI Global ETF||iShares Edge MSCI Multifactor Global ETF|
|INTF||iShares FactorSelectTM MSCI International ETF||iShares Edge MSCI Multifactor Intl ETF|
|ISCF||iShares FactorSelectTM MSCI Intl Small-Cap ETF||iShares Edge MSCI Multifactor Intl Small-Cap ETF|
|LRGF||iShares FactorSelectTM MSCI USA ETF||iShares Edge MSCI Multifactor USA ETF|
|SMLF||iShares FactorSelectTM MSCI USA Small-Cap ETF||iShares Edge MSCI Multifactor USA Small-Cap ETF|
|USMV||iShares MSCI USA Minimum Volatility ETF||iShares Edge MSCI Min Vol USA ETF|
|JPMV||iShares MSCI Japan Minimum Volatility ETF||iShares Edge MSCI Min Vol Japan ETF|
|ACWV||iShares MSCI All Country World Minimum Volatility ETF||iShares Edge MSCI Min Vol Global ETF|
|AXJV||iShares MSCI Asia ex Japan Minimum Volatility ETF||iShares Edge MSCI Min Vol Asia ex Japan ETF|
|EFAV||iShares MSCI EAFE Minimum Volatility ETF||iShares Edge MSCI Min Vol EAFE ETF|
|EEMV||iShares MSCI Emerging Markets Minimum Volatility ETF||iShares Edge MSCI Min Vol Emerging Markets ETF|
|EUMV||iShares MSCI Europe Minimum Volatility ETF||iShares Edge MSCI Min Vol Europe ETF|
|HACV||iShares Currency Hedged MSCI ACWI Minimum Volatility ETF||iShares Edge MSCI Min Vol Global Currency Hedged ETF|
|HEFV||iShares Currency Hedged MSCI EAFE Minimum Volatility ETF||iShares Edge MSCI Min Vol EAFE Currency Hedged ETF|
|HEMV||iShares Currency Hedged MSCI EM Minimum Volatility ETF||iShares Edge MSCI Min Vol EM Currency Hedged ETF|
|HEUV||iShares Currency Hedged MSCI Europe Minimum Volatility ETF||iShares Edge MSCI Min Vol Europe Currency Hedged ETF|
|MTUM||iShares MSCI USA Momentum Factor ETF||iShares Edge MSCI USA Momentum Factor ETF|
|QUAL||iShares MSCI USA Quality Factor ETF||iShares Edge MSCI USA Quality Factor ETF|
|SIZE||iShares MSCI USA Size Factor ETF||iShares Edge MSCI USA Size Factor ETF|
|VLUE||iShares MSCI USA Value Factor ETF||iShares Edge MSCI USA Value Factor ETF|
|IMTM||iShares MSCI International Developed Momentum Factor ETF||iShares Edge MSCI Intl Momentum Factor ETF|
|IQLT||iShares MSCI International Developed Quality Factor ETF||iShares Edge MSCI Intl Quality Factor ETF|
|ISZE||iShares MSCI International Developed Size Factor ETF||iShares Edge MSCI Intl Size Factor ETF|
|IVLU||iShares MSCI International Developed Value Factor ETF||iShares Edge MSCI Intl Value Factor ETF|
|INC3||iShares U.S. Fixed Income Balanced Risk ETF||iShares Edge U.S. Fixed Income Balanced Risk ETF|
BlackRock is a global leader in investment management, risk management and advisory services for institutional and retail clients. At March 31, 2016, BlackRock’s AUM was $4.737 trillion. BlackRock helps clients around the world meet their goals and overcome challenges with a range of products that include separate accounts, mutual funds, iShares® (exchange-traded funds), and other pooled investment vehicles. BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions®. As of March 31, 2016, the firm had approximately 13,000 employees in more than 30 countries and a major presence in global markets, including North and South America, Europe, Asia, Australia and the Middle East and Africa. For additional information, please visit the Company’s website at www.blackrock.com | Twitter: @blackrock_news | Blog: www.blackrockblog.com | LinkedIn: www.linkedin.com/company/blackrock
iShares® is a global leader in exchange-traded funds (ETFs), with more than a decade of expertise and commitment to individual and institutional investors of all sizes. With over 700 funds globally across multiple asset classes and strategies and more than $1 trillion in assets under management as of March 31, 2016, iShares helps clients around the world build the core of their portfolios, meet specific investment goals and implement market views. iShares funds are powered by the expert portfolio and risk management of BlackRock, trusted to manage more money than any other investment firm.4
1 Source: BlackRock Global Business Intelligence as of 5/10/16
2 Source: Bloomberg as of 3/31/16
3 iShares Edge U.S. Fixed Income Balanced Risk ETF (whose ticker is being changed from INC to FIBR).
4 Based on $4.737 trillion in AUM as of 3/31/16.
Carefully consider the Funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds' prospectuses or, if available, the summary prospectuses which may be obtained by visiting www.iShares.com or www.blackrock.com. Read the prospectus carefully before investing.
Investing involves risk, including possible loss of principal.
There can be no assurance that performance will be enhanced or risk will be reduced for funds that seek to provide exposure to certain quantitative investment characteristics ("factors"). Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. In such circumstances, a fund may seek to maintain exposure to the targeted investment factors and not adjust to target different factors, which could result in losses. The iShares Minimum Volatility ETFs may experience more than minimum volatility as there is no guarantee that the underlying index's strategy of seeking to lower volatility will be successful.
The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).
The iShares Funds are not sponsored, endorsed, issued, sold or promoted by MSCI Inc., nor does this company make any representation regarding the advisability of investing in the Funds. BlackRock is not affiliated with MSCI Inc.
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