Globally, iShares ETFs surpassed USD2 trillion in assets under management (AUM) in 2019, ending the year with USD185 billion in net new assets and 33 per cent global market share.iShares also passed a series of milestones across its diverse product lines.
Fixed income ETFs eclipsed USD1 trillion globally with iShares Fixed Income ETFs accounting for over 47 per cent of these assets at year end and USD112 billion in flows.
The iShares Factor ETFs gathered a record USD34 billion of inflows, ending 2019 with over USD179 billion in assets.
iShares Sustainable ETFs gathered USD12 billion globally, including the most successful launch of any new ETF strategy in 15 years.
“Clients are increasingly using iShares as instruments of active return,” says Salim Ramji, Global Head of iShares and Index Investments. “In 2019, clients scaled their use of iShares across our Fixed Income, Factor and Sustainable ETFs, with record flows in each; investors are using iShares not just for Core building blocks but as tools to seek better outcomes across their entire portfolio.”
Globally, iShares ETFs ended 2019 with a record USD2.2 trillion in assets under management and USD185 billion in net new assets. Strong, steady inflows across product lines demonstrate the diversified mix and the variety of ways in which clients are using iShares to manage risk in volatile markets; access investment classes more conveniently and at lower cost; and better align their values with their portfolio objectives.
Fixed income ETF assets eclipsed USD1 trillion across the industry.1 iShares, which pioneered the first fixed income ETF in 2002, reached over USD565 billion in assets globally and traded USD2.2 trillion on exchange in the US and Europe.
Around the world, investors accelerated the adoption of fixed income ETFs – from long-term exposures in wealth models to hedging instruments for institutions to market access tools for active fixed income managers.
“In 2019, iShares Fixed Income ETFs were about more than indexation – they became an enabling technology in the modernisation of the bond market,” Ramji says. “Active fixed income managers added them to help improve alpha through tactical allocation and liquidity management; central banks used them to access securities markets more conveniently; institutions used them to execute their portfolio trading strategies at lower cost.”
In 2019 iShares made significant investments in its Sustainable ETF line-up, ending the year with USD22 billion in assets, USD12 billion in flows (USD17 billion including iShares Index Mutual Funds) and nearly tripling the number of ETFs to 81.
Sustainable ETFs became iShares’s fastest-growing category, driven largely by interest in and usage of environmental, social and governance (ESG) ETFs from every region and client type, from asset owners and wealth managers in Europe to financial advisors in the US. iShares is planning a series of actions this year to bring greater access to sustainable investing through its offerings.
iShares commends the Securities and Exchange Commission’s (SEC) unanimous approval of the ETF Rule in September, which will help support future ETF growth and increase ETF market transparency. iShares also partnered with Intercontinental Exchange (ICE) to launch the ICE ETF Hub, a marketplace utility that will standardise ETF creation and redemption processes for a broad range of participants. Additional functionality, including support for the negotiation of custom baskets and international expansion are planned for this year. Taken together, the efforts in 2019 to bolster the architecture that supports the ETF ecosystem will help ensure that ETFs operate efficiently in 2020 and beyond.
“ETF adoption in Europe accelerated to a record level last year, crossing USD1 trillion in assets, in response to changes in client demands, in markets and regulation,” says Stephen Cohen, Head of iShares EMEA at BlackRock. “Overall, new money into European iShares ETFs increased to an annual record of USD60 billion. As these forces gather strength, investors are increasingly shifting their processes from traditional security and fund selection to holistic portfolio construction with more indexing. Two trends in particular are accelerating in EMEA: the growth of sustainable ETFs, where iShares is the leading provider, with USD11 billion in assets under management, and the adoption of fixed income ETFs where iShares remains the leading provider, gathering USD43 billion in 2019.
“The use of fixed income ETFs is the biggest development in the European industry with year-on-year trading volumes growing by more than 50 per cent, largely driven by European credit, as investors take advantage of the liquidity offered by ETFs. Overall, MiFID II-mandated transparency continues to paint a clearer picture of the true liquidity available in European ETFs – nearly USD2.5 trillion in volumes in 2019 (versus USD500 billion visible before implementation) – creating greater comfort for investors.”