BlackRock has announced that its global iShares ETF business expanded at its fastest pace ever last year, collecting a record $246 billion in net new flows. The firm reported that growth was powered by investors of all types, including those using ETFs for core portfolio building blocks as well as for more targeted, niche exposures.
BlackRock’s iShares recorded $246bn in net inflows globally during 2017.
Total assets under management (AUM) across all iShares funds came to $1.754 trillion at year-end, comprising $1.33tn in equity ETFs and $427bn in fixed income and commodities products.
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.”
He added: “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.”
The firm’s global range of ‘core’ ETFs – those designed as low-cost portfolio foundation blocks – crossed $500bn to end the year at $514bn in AUM, growing at 58%, including a record $123bn in net inflows. The range has gathered $273bn in net inflows since its initial launch 2012.
Net inflows for iShares’ fixed income products grew 13%, with more than $68bn in new flows globally. BlackRock notes that the use of bond ETFs as trading instruments expanded in 2017 as bond markets continued to evolve from exclusively over-the-counter, dealer-intermediated trading to more open, “all-to-all” networks.
Globally, bond ETFs are on track to hit $1.5tn by 2022.
The firm’s US-listed fund range led the growth, with net inflows of $201bn. BlackRock highlights individual investors and financial advisors as instrumental to this surge in net inflows, noting that the shift to fee-based wealth management has encouraged the use of low-cost funds. Turning to institutions, BlackRock notes this class of investor accelerated their usage of iShares ETFs across asset classes and in tactical and buy-and-hold portfolios.
In the US, the iShares core range grew its market share to 41%, totalling $105bn in flows for the year.
The European-listed UCITS range of iShares ETFs saw organic growth of 15% with a record $41bn of net inflows during the year, primarily bought by investors across Europe, Asia, and Latin America. Total AUM in European-listed iShares ETFs crossed $300bn this year, closing the year at $359bn.
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 the 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 such as the physically replicating Global Aggregate bond fund and helping clients tap into economic development stories using the likes of our Robotics ETF.”