NEW YORK--(BUSINESS WIRE)--In a breakout year for ETFs and indexing, BlackRock Inc.’s (NYSE: BLK) iShares business expanded at its fastest pace ever, collecting a record $246 billion in new flows, taking the global ETF industry beyond $4.5 trillion in total assets under management (AUM) for the first time. iShares growth was powered by surging interest from investors of all types seeking both quality core foundational funds and more targeted fund exposures offering innovative new ways to access markets.
iShares 2017 highlights:
- iShares AUM closed the year at $1.754 trillion, including $1.33 trillion in equities and $427 billion in fixed income and commodities.
- Global investors drove record growth in U.S. iShares, with net inflows of $201 billion. U.S. individual investors and financial advisors drove exceptional growth this year, as the shift to fee-based wealth management encouraged use of low-cost portfolio funds. Institutions in every region of the world accelerated their usage of iShares ETFs across asset classes and in tactical and buy-and-hold portfolios.
- Bought by investors across Europe, Asia, and Latin America, iShares European UCITS saw organic growth of 15% with a record $41 billion of net inflows. European iShares funds crossed $300 billion AUM this year, closing the year at $359 billion.
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iShares fixed income ETFs benefited as more and more investors viewed
bond ETFs as integral parts of a modern bond portfolio. Use of bond
ETFs as trading instruments expanded as bond markets continued to
evolve from exclusively over-the-counter, dealer-intermediated trading
to more open, all-to-all networks. Net inflows for iShares’ fixed
income products grew at 13% pace, with more than $68 billion in new
flows. Bond ETFs are on pace to hit $1.5tn by 2022.
- For more, see our next generation bond market paper: https://go.blackrock.com/ishares-nextgen.
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Global iShares Core funds crossed $500 billion to $514 billion in
assets under management, growing at 58%, adding a record $123 billion
in global net inflows as retail and institutional investors sought
value and quality for their long-term foundational holdings. In the
U.S., iShares Core grew its AUM market share to 41%, totalling $105
billion in flows for the year.
- iShares Core series has gathered $273 billion since the product series was launched in 2012.
- Institutions continued to expand usage of iShares ETFs as financial instruments, alongside swaps, futures, and single-name securities, and as a reference asset for OTC and listed derivatives.
- iShares continued to be a market leader of factor and smart beta products, as investors globally make factors a more deliberate strategy in portfolios. iShares now has a global line-up of 142 smart beta ETFs with an industry-leading $108 billion in AUM.
Mark Wiedman, Global Head of iShares and Index Investments at BlackRock, said:
“Tens of millions of individual and institutional investors have chosen iShares ETFs to invest with simplicity, ease, choice, and at low cost.”
“We project the global ETF market to more than double in assets under management by 2022. Three global trends should power this growth: fee-based wealth management, networked bond and derivatives trading, and alpha-seeking usage by active fund and wealth managers.”
Martin Small, Head of U.S. iShares at BlackRock, said:
“2017 marked the beginning of an accelerated growth era for ETFs, with iShares as the market leader. iShares is helping to drive fundamental shifts in how portfolios are managed. Institutions are moving to iShares as efficient trading exposures, increasingly as a complement to a derivative. Wealth managers are now armed with institutional-quality asset allocation building blocks, at great value. We see these trends as chiefly structural, not cyclical.”
“At BlackRock, we are pioneering new frontiers via iShares ETFs. Index investors can seek not just the market return, but also a targeted outcome. This past year, we launched products targeting dividends and buybacks, the most comprehensive high yield ETF, an ETF focused on companies that derive their revenues chiefly in US dollar markets and sustainable ETFs in both stocks and bonds. There’s more to come. This forward-looking innovation on behalf of clients is something that iShares and BlackRock strive to deliver every day.”
Europe
Stephen Cohen, Head of iShares EMEA at BlackRock, said:
“As the impact of MiFID II rules resound across the region we believe the European ETF industry is set for a new phase of growth. Our European range remains a go-to for investors seeking both broad market exposures for the core of portfolios, and tactical tools for managers to adjust portfolio return profiles. In 2017, we stayed laser focused on providing investors with greater investment flexibility by building a suite of 35 income treatment and currency-hedged share classes, launching market firsts and helping clients tap into economic development stories.”
Peter Scharl, Head of BlackRock’s iShares & Indexing in Germany, added:
“MiFID II is going to set a new standard in terms of cost and transparency in advice, and these factors have historically driven many German investors to ETFs. Germany is also ahead of other European markets when it comes to the use of digital wealth management offerings, which are often built using ETFs and other low-cost funds. We expect MiFID to act as a further catalyst in that space given how price-sensitive the German market is.”
Asia Pacific
Susan Chan, Head of Asia Pacific iShares at BlackRock, said:
“We have doubled our business in APAC over three years, pushing client holdings of iShares in the region to over $100bn for first time. In 2017, we built on the greater fixed income penetration we achieved in 2016, and doubled the number of fixed income clients in Asia Pacific in two years. The Korean and Taiwanese markets have made bigger contributions to our business over the course of this year as ETFs are increasingly used for portfolio construction across multiple applications.”
Latin America
Nicolas Gomez, Head of Latin America & Iberia iShares at BlackRock, said:
“Latin American investors continue to embrace iShares ETFs for building international portfolios. This year organic growth hit 24% as investors turned to our U.S and European funds for convenience, liquidity, breadth, cost-efficiency and transparency. The ETF evolution is in different stages across the Latin American market, with pension funds leading the way and new investors quickly following their lead. Banks, asset managers, insurance companies, wealth managers and individual investors are all turning up their use of ETFs to diversify portfolios with increased exposures to international markets.”
About BlackRock
BlackRock helps investors build better financial futures. As a fiduciary to our clients, we provide the investment and technology solutions they need when planning for their most important goals. As of September 30, 2017, the firm manages approximately $5.977 trillion in assets on behalf of investors worldwide. For additional information on BlackRock, please visit www.blackrock.com
About iShares
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 800 funds globally across multiple asset classes and strategies and more than $1.5 trillion in assets under management as of September 30, 2017, 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 firm1.
1 Based on $5.977 trillion in AUM as of 9/30/17
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.
This material represents an assessment of the market environment as of the date indicated; is subject to change; and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the funds or any issuer or security in particular.
The information included in this material has been taken from trade and other sources considered to be reliable. We do not represent that this information is accurate and complete, and it should not be relied upon as such. Any opinions expressed in this material reflect our analysis at this date and are subject to change. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, but are not guaranteed as to accuracy.
The iShares Funds that are registered with the US Securities and Exchange Commission under the Investment Company Act of 1940 are distributed in the US by BlackRock Investments, LLC (together with its affiliates, “BlackRock”). This material does not constitute an offer or solicitation to sell or a solicitation of an offer to buy any shares of any Fund (nor shall any such shares be offered or sold to any person) in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities law of that jurisdiction.
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