BlackRock has launched two active ETFs managed by Rick Rieder and Tony DeSpirito. The firm writes: “This milestone provides clients with the best of BlackRock’s investment insights in a liquid, transparent, and tax-efficient ETF wrapper.”
Alpha is at the heart of BlackRock, starting as an active bond manager in 1988, the firm says. Since the firm’s founding, clients have continued to turn to BlackRock’s active platform to seek to capture investment opportunities and manage risk. In the first quarter of 2023, clients entrusted the firm with approximately USD68 billion of active net inflows.
In addition, BlackRock has a strong track record of delivering alpha, the firm writes, with 90 per cent and 81 per cent of BlackRock’s actively managed taxable fixed income and fundamental equity assets under management, respectively, outperforming the benchmark or peer median over the last five years.
The firm has launched the BlackRock Flexible Income ETF (BINC), benchmarked against the Bloomberg US Universal Index with Rick Rieder as portfolio manager, and the BlackRock Large Cap Value ETF (BLCV), benchmarked against the Russell 1000 Value Index and managed by Tony DeSpirito.
BINC aims to deliver long-term income by primarily allocating to harder-to-reach fixed income sectors, such as high yield, emerging markets debt and securitized assets. The fund is designed to complement core bond exposures and leverages the scale of BlackRock’s USD2.7 trillion Fixed Income platform, providing clients with unparalleled market access.
“Our core investment approach is simple: make a little bit of money a lot of times,” says Rieder, CIO of Global Fixed Income at BlackRock and winner of the 2023 Morningstar Outstanding Portfolio Manager Award. “By staying active, agile, and well-diversified, the BlackRock Flexible Income ETF aims to capture historic opportunities across fixed income markets whenever and wherever they become available.”
BLCV seeks to maximise total return by investing in US large-cap value companies. The fund provides investors with a differentiated product offering from BlackRock’s Income & Value team, led by DeSpirito, and harnesses the expertise of BlackRock’s USD220 billion Fundamental Equities platform.
“Active investment management is essential to navigating today’s market volatility,” says DeSpirito, Global CIO of Fundamental Equities at BlackRock. “By seeking alpha through the ETF wrapper, we can build liquid and transparent portfolios while digging deep in an effort to uncover investment winners for our clients.”
Active ETFs currently have USD402 billion in assets under management, BlackRock writes, with a 54 per cent compound annual growth rate over the last three years. Demand has been particularly strong among fee-based advisers using model portfolios, who are turning to ETFs to efficiently access an expanding world of investments, the firm says.
“BlackRock has a strong foundation in active ETFs, with USD13 billion in assets under management across 20 BlackRock ETFs,” says Rachel Aguirre, Head of US iShares Product at BlackRock. “Today’s launches broaden BlackRock’s active ETF line-up from specialised exposures to active building blocks for the core of investors’ portfolios, opening an important new avenue of choice for clients who no longer have to decide between active management and ETFs.”
