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BlackRock adds four ETFs to US equity sector range

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BlackRock has launched four new ETFs designed to enable European investors to express nuanced views on US equity sectors.

The four iShares ETFs provide targeted exposure to S&P 500 companies in the consumer staples, industrials, materials and utilities sectors. These launches bring the total number of US sector funds to nine, adding to five existing exposures to consumer discretionary, energy, financials, healthcare and information technology sectors.

The firm writes that sectors follow different cyclical patterns. This means that not all segments of the economy perform well at the same time and may go in and out of favour at separate points in the economic cycle.

“Sector ETFs can provide asset allocation opportunities for investors who are interested in achieving broad market exposure using building blocks at a sector level, or expressing a view on the macro environment in a more diversified way than single stock investments.”

US equity ETFs have attracted USD70.5 billion of inflows since the start of the year, of which USD13.3 billion has gone into US sector-specific ETFs.

The funds are physically-replicating, meaning the funds hold the underlying securities of the index.  Each fund has a total expense ratio of 0.15 per cent.

Tom Fekete, Global Head of iShares Product at BlackRock, says: “These funds are the result of a number of conversations we had with clients wanting more granular ways to implement their views on the US equity market rally within portfolios.

“Investors who believe the US economy is in an expansion phase may look to seek exposure to sectors that exhibit the highest beta relative to the broader market.  Those investors who believe the economy is in a contractionary phase meanwhile, may look to allocate to sectors with lower correlation and lower levels of volatility to the broader market. 
 
“Whichever side they are on, investors now have more tools with which to tilt their portfolios in line with their outlook for the US economy.”

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