Tag Archives: blackrock

european etf

European ETFs Displace Futures Products

(MarketsMedia) European ETFs and ETPs have gathered record net new assets in the first 11 months of this year, in many cases using as a displace to futures products. ETF Issuer BlackRock expects the size of Europe’s exchange-traded product market to double over the next three to four years.

ETFs/ETPs listed in Europe had gathered $72.6bn in net new assets at the end of last month, 18% above the record set at the same time last year, according to consultancy ETFGI’s Global ETF and ETP insights report.  ETFGI said in the report: “This marks the 14th consecutive month of positive net inflows.”

Source, the European ETF issuer, estimated that $100bn of assets have been switched globally into ETFs from futures over the last two years as ETF fees have fallen. Source added that investors who switch out of futures contracts into ETFs during the quarterly ‘roll’ this December could make record savings of 30 to 50 basis points on an annualised basis. December stock market futures expire on the 18th and investors would typically roll in the week leading up to this expiry date.

So far this year equity ETFs gathered the largest net inflows of $42.3bn, followed by fixed income with $24.9bn and then commodities with $1.2bn.

BlackRock’s ETF arm, iShares gathered the largest net inflows of $28.7bn in Europe in the year-to-date followed by Deutsche Bank’s db x/db ETC with $10.3bn. In third place was Societe Generale’s Lyxor AM with $8.6bn.

Robert Kapito, president of BlackRock, said this month that the asset manager remains very optimistic on its organic growth opportunities given secular tailwinds in ETFs and solid performance in active equity according to an analyst note from Goldman Sachs. Kapito presented at the Goldman Sachs US Financial Services Conference in New York on December 8.

The analysts said: “BlackRock expects the ETF industry to double over the next three to four years driven by an increasing number of uses for ETFs, specifically as an alternative to futures, increased adoption by broker-dealers to hedge risk and portfolio precision instruments.”

For the full story from MarketsMedia, please click here

race-to-zero blackrock

ETF Fees-BlackRock Leads Race To Zero

Unless you are Rip Van Winkle, you don’t need to be a MarketsMuse to know that the primary value proposition put forth by the ETF industry has always been: “Lower Fees Vs. Mutual Funds!” Yes, the secondary ‘advantage’ is “liquidity,” given that investors can move in and out of exchange-traded-funds throughout the trading day, whereas mutual funds are priced on an end-of day basis.

Well, Issuers of exchange-traded funds are now eating their own lunches, as competing Issuers are now pursuing a “race-to-zero” path when it comes to administration fees—adding a further crimp to the mutual fund industry’s marketing complex—which is being rocked by allegations from PIMCO’s former top honcho Bill Gross who has alleged in a recent lawsuit that PIMCO’s administrative fees are equal to the management fees the firm charges (but, that’s another story!)

Courtesy of today’s column by WSJ’s Daisy Maxey ETF Fees: “The Arms Race to Nothing”, the story at hand is worth two in the bush…here’s an excerpt:


Daisy Maxey, WSJ
Daisy Maxey, WSJ

BlackRock Inc. exchange-traded fund can now claim the title of the lowest-cost stock exchange-traded fund—but it probably won’t have that distinction to itself for long.

BlackRock, the largest global provider of ETFs, on Tuesday cut fees on seven of its iShares Core ETFs. That included trimming the annual expenses of the $2.7 billion iShares Core S&P Total U.S. Stock Market ETF to 0.03% of assets from 0.07%, bumping a pair of Charles Schwab Corp. ETFs from the lowest-cost spot.

Within hours, Schwab vowed to match the cut on its $4.9 billion Schwab U.S. Large-Cap ETF, which currently has expenses of 0.04%.

“Our intention has always been to be the price leader in the ETF space, and we’re going to maintain that,” said a spokesman for Schwab, who didn’t give an exact time frame for the company’s planned move.

Low fees have been one of the big attractions of ETFs and providers have competed fiercely to whittle down their charges by additional hundredths of a percentage point. The latest cuts by BlackRock are being viewed as a challenge to Vanguard Group, the No. 2 in ETF assets, as well as a sign of the success of BlackRock’s iShares Core ETF lineup, launched three years ago.

The giants of the ETF business are BlackRock, with $818 billion in U.S. ETF assets under management; Vanguard, at $479 billion; and State Street Global Advisors, the asset-management business of State Street Corp. , at $418 billion, according to Thomson Reuters Lipper. Schwab is a distant No. 7, with $38 billion in U.S. ETF assets, according to Thomson Reuters Lipper.

BlackRock’s iShares Core ETFs, which now number 20, are marketed as simple and low-cost portfolio building blocks.

The lineup has grown to $160 billion in assets as of Sept. 30, according to BlackRock.

For the full story from WSJ, click here

Buyside Block Trading Venue Luminex Readies Launch

As if there were not enough electronic trading platforms,  the buyside remains determined to have their own equities trading platform open only to buy-side block trading peers. MarketsMuse Tech Talk Editors tip our hats to FierceFinanceIT.com  for the following update re  Luminex Trading & Analytics, the ATS block trading venue backed by a consortium of large asset managers, which recently announced an updated management team in preparation for the venue’s Q4 launch.

The new management team in place is led by Jonathan Clark, former managing director and head of U.S. equities trading a BlackRock, who will serve as Luminex Trading’s CEO. Clark replaces interim CEO Michael Cashel, who will return to his position as SVP of Fidelity Trading Ventures. Plans for Clark to take over as permanent CEO were previously announced, and as of Tuesday he has officially begun the role.

Plans to build the Luminex Trading venue, which is backed by nine leading investment managers that collectively manage approximately 40 percent of U.S. fund assets, were first announced in January.

The venue will be a buy-side only block trading platform “open to any investment manager primarily focused on the long term and with the desire to trade large blocks of stock with other investment managers,” according to an earlier announcement from the company. The nine investment managers in the consortium backing Luminex are BNY Mellon, BlackRock, Capital Group, Fidelity Investments, Invesco, JPMorgan Asset Management, MFS Investment Management, State Street Global Advisors and T. Rowe Price.

David Hagen, Luminex
David Hagen, Luminex

Luminex Trading announced four other members of the management team this week. Brian Williamson will be head of sales, tasked with further building the client base. Williamson was previously senior global relationship manager with Liquidnet. James Dolan is chief compliance officer, joining the company from Fidelity, where he was previously vice president of compliance for Fidelity Institutional. David Hagen will head product development as Luminex Trading’s new head of product. He was previously director at Pico Quantitative Trading. David Consigli is the company’s new controller, joining from IDB Bank.

Luminex says its platform will offer investment managers lower-cost and more efficient block trading, with transparent trading rules and protocols.

BATS is Best For ETFs..Thanks to BlackRock

BATS Global Markets now is the leading U.S. marketplace for exchange traded funds (ETFs), executing 26.1 percent of all ETF trading in May.

MarketsMuse ETF and Tech Talk depts merge to provide following update, courtesy of James Dornbrook Kansas City Business Journal

On Thursday, the Lenexa-based stock exchange welcomed the 22nd ETF to be listed on its trading platform, the iShares Convertible Bond ETF (BATS: ICVT), an indexed bond fund that operates as a subset of the Barclays U.S. Convertibles Cash Pay Bonds Index. The index measures the performance of the U.S. dollar-denominated convertible bond market, which consists of bonds that a holder can convert into a specified number of shares of common stock of the issuing company. The bonds typically are used by companies with low credit ratings but huge growth potential.

More than half of the ETFs listed on BATS are from BlackRock Inc.’s (NYSE: BLK) iShares Exchange Traded Funds business. So the relationship with iShares has been key to BATS growth in listings for ETFs.

BATS excels at listing ETFs because offering companies are more interested in getting access to the liquidity BATS excels at offering than they are in buying marketing services, where the New York Stock Exchange and Nasdaq have a commanding advantage.

In addition to being the No. 1 ETF trading platform in the United States, BATS is also the No. 2 trader in overall U.S. equities, with a 21.2 percent market share in May.

How To Score In The 2nd Quarter: Which ETFs To Invest In

With all of first quarter’s numbers in seeing the success of some ETFs, like the solar ETFs, where should you invest for the second quarter? MarketMuse blog update looks to panel of investment strategists with experience of managing billions of dollars for which ETFs to invest  in this quarter. MarketsMuse blog update is courtesy of Reuter’s Trang Ho and her article, “Q2 Investing Strategies: Top Five ETF Buys From Powerhouses With $1 Billion+ In Assets Under Management“, with an excerpt below.

If you were stranded on an island in the second quarter and could only take one exchange traded fund with you, what would it be? We asked a panel of investment strategists whose firms manage more than a billion in assets to share their best ETF investing idea for Q2.

1. Market Vectors Agribusiness ETF (MOO)

The Market Vectors Agribusiness ETF (MOO) should do well when we have a bad weather summer. The constituents of this ETF are lagging because grain prices have been so low. The May 2015 futures contract for corn is $3.92 a bushel. In 2012, a bushel was almost $8. The May 2015 contract for soybeans is $9.63 a bushel. In 2012, it was close to $18. So when will this change? When we have a summer that is way too dry or way too wet. Or, as with any commodity, the cure for low prices is low prices–farmers will stop planting grains if the prices are too low and supplies could fall, thus increasing prices. Seven billion people can’t be wrong. Those seven billion people need to be fed.

The fund only has a fee of 0.55%. Not bad. It is truly global with companies from Israel to Russia, denominated in every currency from the Norwegian kroner to the Russian ruble. You won’t find that type of diversity too often. The SEC dividend yield is 1.58%. Not horrible.

– Holmes Osborne, principal of Osborne Global Investments with $1.5 billion in assets under management in Santa Monica, Calif.

2. iShares Currency Hedged MSCI Germany ETF (HEWG)

The European Central Bank (ECB) has embarked on an ambitious quantitative easing program in the Eurozone, creating investment opportunities in European equities. We think European equities represent a good value relative to expensive US stocks, both from a price-to-earnings and price-to-book perspective.

Furthermore, Germany, the strongest economy in Europe, represents a potentially attractive way to access the driving forces behind Europe’s momentum higher-quality, cyclical tilt. First, there are few attractive opportunities for German investors outside of stocks as most German sovereign bonds currently offer negative real yield. Second, Germany, as the fifth largest exporter to the U.S., appears poised to capitalize on a strong dollar/weak euro and an improving American economy.

U.S. dollar-based investors can consider accessing the strong momentum and potential opportunities presented by Europe’s quantitative easing and seek to mitigate the risk of a depreciating euro through the iShares Currency Hedged MSCI Germany ETF (HEWG). HEWG invests in large- and mid-cap German equities and seeks to mitigate exposure to fluctuations in the value of the euro and the U.S. dollar. Investors should consider risks including a potential global economic slowdown, strengthening of the euro, and a rally in European bonds. We will also be watching the outcome of the ECB’s bond buying program, Greece’s economic situation and its impact on the eurozone, and European debt issues.

– Heidi Richardson, global investment strategist, BlackRock with $4.652 trillion AUM in New York City.

To see the complete list from Reuters, click here.

Survey Says: Retail Investors Need An ETF Education

MarketMuse update profiles a recent study done by Fidelity Investments and BlackRock, inc., have discovered a huge reason why retail investors are not comfortable investing in ETFs. The study which survey 1,000 individual investors and 250 advisors found that in order for retail investors to get on board the ETF train, they need some basic ETF education. MarketMuse update is courtesy of Nasdaq’s article, “ETF Watch: Retail Investors Still Shy Away From ETFs“, an a excerpt from the article is below.

The exchange-traded funds or ETFs, are lagging in popularity among retail investors due primarily to the lack of familiarity with the investment products, according to a new study.

While the ETF industry in the U.S. has grow at a breakneck pace to more than $2 trillion in assets in just more than two decades, most of that interest has come from institutional investors.

Two-thirds of retail investors have not yet moved ETFs in their portfolios.

The study revealed that the key to further growth for ETF adoption among retail investors and advisors lies in educating them on ETF basics.

“While ETF investments have more than doubled in the last five years , there is still significant opportunity to raise awareness as more than two-thirds of investors report they have yet to tap the potential benefits of ETFs in their portfolios,” said Andrew Brownsword, SVP Fidelity retail brokerage. “ETF adoption will keep growing.”

The study showed that current ETF owners are increasingly turning to ETFs for long-term holdings, while 80 percent of them see benefit in combining ETFs and mutual funds in a portfolio.

To read the entire article from Nasdaq, click here.




BlackRock New Bond ETF To Trade Like Common Stock

BlackRock is the world’s largest asset manager with over $4.59 trillion in assets under management. iShares is a section of BlackRock that is in control of hundreds of ETFs. As noted on iShares page and continued to ring true today, Many people are turning to ETFs for diversified, low-cost and tax efficient investing. ETFs can be a powerful addition to your investment portfolio.

MarketMuse blog update is courtesy of the New York Times’ Landon Thomas Jr. with an extract from Thomas’s article, “BlackRock’s New Breed of Exchange-Traded Bond Fund Prizes Stability Over Swagger

While he may not live the life of a swaggering bond market pro, Mr. Radell, a bond manager at the fund giant BlackRock, is challenging a strategy that has rewarded some of his flashier peers: the pursuit of high-risk, high-return investments.

The weapon that Mr. Radell will be using is a new variety of exchange-traded fund, or E.T.F., which tracks an index of stocks or bonds but trades like a common stock, allowing investors to jump in and out.

For years now, these funds have been a hit with passive investors. Now, BlackRock is introducing a new breed of bond E.T.F. that aims to blend the best of active investing (security selection) with index investing (cost and consistency).

Scott Radell has been with BlackRock since 2003 and currently is in charge of more than 80 ETFs for BlackRock’s iShares. 

To read the entire article on the new bond ETF from BlackRock found in the New York Times, click here.

BlackRock Slashes Investing Cost Creating ETF War

MarketMuse update profiles BlackRock’s huge slash in investing cuts to cause pressure on rival is courtesy of Reuters’ Simon Jessop 10 March story “1-British ETF price war heats up with BlackRock FTSE 100 fee cut”

BlackRock, the world’s largest asset manager, has slashed the cost of investing in Britain’s oldest FTSE 100 exchange-traded fund, ratcheting up the pressure on rival providers such as Vanguard.

Demand for exchange-traded funds (ETFs) has surged in recent years as a result of often anaemic returns from more actively managed funds.

BlackRock said on Tuesday that it would now charge 7 pence a year per 100 pounds invested in its ETF that pays out dividend income, down from 40 pence previously, to make it the cheapest such tracker on the market. Both Vanguard and Deutsche Bank charge 9 pence, it said.

“It really doesn’t leave much more room to fall, but I don’t think the price war has ended,” said Adam Laird, head of ETFs at fund supermarket Hargreaves Lansdown. “In the U.S., you can get mainstream ETFs with fees as low as 0.03 percent.”

However, he said he expected rival providers to wait and see if clients switched their money before responding.

The iShares FTSE 100 UCITS ETF (Dist) fund was the first ETF to launch on the London Stock Exchange in 2000 and currently holds 3.8 billion pounds ($5.7 billion) of assets under management.

To read the entire story on how BlackRock is starting a war with its competitors from Reuters, click here.

Bond ETFs Are Growing At Fastest Pace On Record

MarketMuse update profiles the billions of dollars that have flowed into bond ETFs over the past few years and an in depth look at the reasoning behind it courtesy of the Wall Street Journal .

wall_street_journal_logoInstitutions are piling into exchange-traded bond funds at the fastest pace on record, driven by forces reshaping the increasingly illiquid corporate-debt market and their desire to stay nimble ahead of expected interest-rate moves.

Bond ETFs took in $32 billion globally this year through Feb. 26, according to data from Bloomberg LP, in what has been the strongest start to any year since the funds began in 2002.

More than half the $20 billion that flowed into fixed-income ETFs atBlackRock Inc. ’s iShares unit in the first eight weeks of this year came from institutions such as insurers and endowments. In some large funds, institutional money in ETFs has more than doubled in the past few years, the firm said.

The shift is the latest good news for providers of exchange-traded funds, which essentially are index-tracking funds that trade like stocks. Bond ETFs are already popular with individual investors because they have low fees and are easy to trade, qualities that are now appealing to more sophisticated investors who typically focus on hand-picking individual debt securities to beat their benchmarks.

“There was a monster rotation into fixed-income ETFs in February,” coming out of sector-based stock funds, said Reginald Browne, global co-head of ETF market making at Cantor Fitzgerald & Co. He said a client recently traded $1.8 billion in bond ETFs in a single trade.

A host of factors is behind institutions’ adoption of bond ETFs, analysts say. Among them: Deteriorating liquidity in corporate bonds has frustrated large investors as many individual bonds have become difficult to buy or sell quickly at a given price, thanks in part to rules limiting banks’ risk-taking.

For the entire article from the Wall Street Journals’ Katy Burne, click here.

New Rules: SEC Set to Level Playing Field for ETF Issuers

Are you beginning to wonder why there is an avalanche of news stories profiling corporate bond ETFs? As we’ve posted here at MarketsMuse.com, one good reason might be rising concerns that when interest rates tick up and bond prices tick down, there could be a rush to the exits on the part of investment managers seeking to sell their corporate bond ETFs (or looking to sell select ETFs so as to hedge portfolio exposure in underlying issues held by these managers). Reuters’ Jessica Toonkel and Ashley Lau touch on that topic in recent story profiling a plan on the part of the SEC to “level the playing field” for newer firms entering the ETF Issuer club.

Here’s the extract:

By Jessica Toonkel and Ashley Lau

Reuters – The U.S. Securities and Exchange Commission may strip Vanguard Group, BlackRock Inc and State Street Corp, the oldest and biggest providers of exchange-traded funds, of an advantage they hold over newer rivals in how they assemble the shares of their funds, said sources familiar with the SEC.

etf-issuer-sec-level-playing-fieldsBut BlackRock, Vanguard and a few others, who were among the first to apply with the SEC to create ETFs, are allowed greater leeway: if they need a difficult-to-find security to create shares of their funds, they are permitted to use a similar security – not necessarily the same one – in the fund. This greater flexibility makes it easier and cheaper to run the older funds, and harder for newer entrants into the market such as Northern Trust, Van Eck Global and Charles Schwab Corp to compete.

The agency’s tentative plan – still in its early stages – would affect how companies manage their portfolios in illiquid markets, such as bonds. It may result in allowing the likes of Schwab to compete better with their older rivals, as well as manage their existing bond products at a lower cost.

The agency’s tentative plan – still in its early stages – would affect how companies manage their portfolios in illiquid markets, such as bonds. It may result in allowing the likes of Schwab to compete better with their older rivals, as well as manage their existing bond products at a lower cost.

For the full story from Reuters’ Jessica Toonkel and Ashley Lau, please click here

Issuers Get Pickier Over Which ETFs to Launch

MarketMuse update courtesy of ETF Trends’ Tom Lydon.  

In 2014, just over 200 new exchange traded products launched in the U.S., more than double the nearly 90 that closed, but even with launches continuing to easily outpace closures, some major ETF issuers are getting choosy about the new number of rookie products they bring to market.

For example, BlackRock (NYSE: BLK), the parent company of iShares, the world’s largest ETF sponsor, launched 29 new ETFs in 2014, a number that matches the ETFs shuttered by the firm, reports Victor Reklaitis for MarketWatch.

The bulk of iShares’ closures came by way of an August announcement declaring 18 closures. Ten of those 18 ETFs, all of which ceased trading in mid-October, were target date funds. In early 2014, iShares announced the closure of 10 ex-U.S. sector ETFs.

Some of the more successful ETFs launched by iShares last year include the $146.1 million iShares Core Dividend Growth ETF (NYSEArca: DGRO), the $206.2 millioniShares Core MSCI Europe ETF (NYSEArca: IEUR) and the $140.3 million iShares MSCI ACWI Low Carbon Target ETF (NYSEArca: CRBN).

Increased selectivity by issuers when it comes bring new ETFs could become a more prominent theme as the battle for investors’ assets intensifies. Simply put, many new ETFs struggle out of the gates and go months if not years with nary a glance from advisors and investors. As of late December, 92 of the ETFs launched last year had over $10 million in assets under management and none of 2014’s crop of new ETFs came within spitting distance of the over $1 billion accumulated by the First Trust Dorsey Wright Focus 5 ETF (NasdaqGM: FV). FV debuted last March and by November had over $1 billion in assets

There are more than 7,500 U.S. open-end mutual funds, MarketWatch reports, citing Morningstar data, implying there is room for the U.S. ETF industry to grow from the current area of about 1,700 products.

One thing is clear: Different issuers are taking different approaches to new ETFs. For example, Vanguard, the third-largest U.S. ETF issuer, did not bring a new ETF to market in 2014 but still managed to add $75.3 billion in new ETF assets, a total surpassed only by iShares. Earlier this month, Pennsylvania-based Vanguard said it expects to launch its first municipal bond ETF early in the second quarter.

First Trust, one of the fastest-growing U.S. ETF sponsors, launched 15 new products last year, including FV.

For the original article from ETF Trends, click here.


Arab Spring Comes to Saudi Bourse; BlackRock Leads ETF Charge in Advance of Doors Opening to Foreign Investors;

broker_dealer_logo_light Below courtesy of brokerdealer.com blog update

Based on recent developments, global investors are now slated to drill for stakes in Saudi Bourse offerings thanks to yesterday’s announcement from ETF behemoth BlackRock, coupled with the next year’s scheduled opening of markets to foreign investors, whose appetite for stakes in Middle East companies is expected to surpass demand for oil, currently the country’s primary export.

Excerpts below courtesy of Bloomberg LP reporting by Arif Sharif

arab spring
BlackRock Inc. (BLK) plans to start an exchange-traded fund for Saudi Arabian shares as the biggest Arab bourse prepares to open its market to foreigners. The world’s largest money manager has sought approval for its iShares MSCI Saudi Arabia Capped ETF from the U.S. Securities & Exchange Commission, according to a filing posted on the SEC’s website. The fund will seek to track the results of an MSCI provisional Saudi Arabia index, according to the filing.

Continue reading

non-transparent ETFs

SEC SmackDown of Non-Transparent ETFs-No Secret Sauces!

In an effort to reign in a powerful campaign to launch secret sauce ETFs that have no business being used by ordinary investors, the SEC scored a smackdown on the creation of non-transparent ETFs in a recent ruling that blocks plans by ETF giant BlackRock as well as Precidian Investments to issue ETFs’ whose underlying constituents would otherwise be, well, non-transparent.

The topic of non-transparent ETFs has been a focus of several MarketsMuse articles in recent months. As reported last week by Bloomberg LP, The U.S. Securities and Exchange Commission rejected plans by BlackRock Inc. and Precidian Investments to open a new type of exchange-traded fund that wouldn’t disclose holdings daily, setting back efforts to bring more actively managed ETFs to market.

The SEC, in preliminary decisions announced yesterday, denied BlackRock’s September 2011 and Precidian’s January 2013 requests for exemptive relief from the Investment Company Act of 1940. The move puts on hold plans by the firms to start the first non-transparent ETFs.

The Precidian proposal falls “far short of providing a suitable alternative to the arbitrage activity in ETF shares that is crucial to helping keep the market price of current ETF shares at or close” to its net asset value, Kevin O’Neill, a deputy secretary at the SEC, wrote in the letter.

The ruling hinders plans by asset managers to sell funds run by traditional stock-picking managers in an ETF package. Firms including Capital Group Cos. have asked for similar regulatory approval as they seek to expand offerings in the fastest-growing product in the asset-management industry.

Money managers have been discouraged from introducing active ETFs, which combine security selection with the intraday trading and some of the cost-saving features of traditional ETFs, because the SEC’s requirement for daily disclosure of holdings would make it easy for competitors to copy, and traders to anticipate, a manager’s portfolio changes.

‘Not Surprised’

“We want to work with the SEC — we believe it’s part of the process,” Daniel McCabe, Precidian’s chief executive officer, said in a telephone interview. “We’re not surprised by the fact that they have questions, but questions can be answered.”

ETF providers must disclose holdings every day to enable market makers to execute trades that keep the share price in line with the underlying value of the fund’s assets. Firms including BlackRock, Precidian and Guggenheim Partners LLC proposed structures that they say would allow the funds to remain priced in line with assets, without revealing specific positions.

T. Rowe Price Group Inc. in Baltimore and Boston’s Eaton Vance Corp. are also among fund firms seeking SEC approval for non-transparent active ETFs. None of the applications has been approved.

“We are still pursuing our own proposal to offer non-transparent active ETFs,” Heather McDonold, a spokeswoman for T. Rowe, said in a telephone interview.

Commercial Opportunity

Melissa Garville, a spokeswoman for New York-based BlackRock, and Ivy McLemore, a spokesman for Guggenheim, declined to comment. Robyn Tice, a spokeswoman for Eaton Vance, and Elizabeth Bartlett for State Street Corp. didn’t immediately respond to an e-mail and telephone messages seeking comment.

BlackRock was one of the first U.S. fund managers to ask the SEC for approval, after spending three years crafting the product. Their leading role in seeking approval for a non-transparent active ETF has spurred excitement within asset management for the product’s prospects, according to Todd Rosenbluth, director of mutual-fund and ETF research at S&P Capital IQ in New York.

Mark Wiedman, BlackRock’s global head of its iShares ETF unit, said in May that the firm was confident the products would work, “but we don’t actually think it will be much of a commercial opportunity.”

For the full story from Bloomberg reporter Mary Childs, please click here

Blackrock ETF Blocked By SEC; Non-Transparency is Not Good Says Regulator..Duh…

MarketsMuse post courtesy of extract from report by Barron’s Johanna Bennet..our Editorial team leads in with “How could anyone think that an ETF (actively-managed or passive) that doesn’t disclose the underlying components to its investors could pass muster with regulators, no less investors?

The SEC has denied requests that would have allowed non-transparent active ETFs to hit the U.S. market.

In decisions issued earlier today, the regulatory agency denied applications by Precidian Investments and Blackrock’s (BLK) Spruce ETF Trust unit seeking to launch a novel type of actively managed exchange-traded fund that would not be required to disclose its portfolio holdings on a daily basis.

Investors can read the SEC rulings for Precidian here and review the Blackrock decison here.

Active ETFs are available in the U.S. But SEC rules require the funds disclose their holdings daily, which has discouraged firms from offering active products. The proposed non-transparent ETFs would disclose holdings quarterly, as mutual funds do, and often with a 60-day lag.

Precidian and Blackrock are among several firms proposing non-transparent active ETFs, including Eaton Vance (EV), State Street (STT) and T. Rowe Price (TROW). According to ETF.com, proponents of the rule change argue that it allows fund managers to protect their investing ideas and tactics and prevents front running.

Eaton Vance and State Street did not immediately respond to requests for comment. T. Rowe said it would still pursue its own proposal.

But at the heart of the SEC’s ruling regarding Precidian is a concern that the mechanism proposed to keep the market price of such funds in line with their net asset values is insufficient. As the SEC ruling reads: Continue reading

Fidelity to Open Cheapest Single-Industry ETFs in Asset Push


Fidelity Investments, the second-biggest mutual-fund provider, plans to open the cheapest lineup of single-industry exchange-traded funds as it seeks to break into a market dominated by Vanguard Group Inc. and BlackRock Inc. (BLK:US)

Fidelity on Oct. 24 will start 10 funds, focused on industries ranging from energy to telecommunications, with an annual expense ratio of 0.12 percent, cheaper by 2 basis points than Vanguard Group Inc.’s lineup of similar ETFs, according to a regulatory filing and data compiled by Bloomberg. The ETFs, distributed by Fidelity, will be managed by BlackRock, the world’s biggest money manager. A basis point is one-hundredth of a percentage point.

“That tells me they want to be aggressive,” Michael Rawson, a fund analyst in Chicago-based research firm Morningstar Inc. (MORN:US), said in a telephone interview. “It’s going to be very difficult for them to build scale and liquidity in these products, but it’s a space they have to be in.”

Fidelity has been surpassed in assets by Vanguard and BlackRock in the past five years, in part because of the growth of index-based offerings such as ETFs. Fidelity, which offers only one ETF, has seen assets in its mainstay stock mutual funds decline 16 percent over the past five years, while management and advisory fees dropped an estimated 13 percent.

For the full story from Bloomberg BusinessWeek, please click here.

Bats Lands BlackRock To Start European ETF Exchange;New Regional Bourse Seeks to End ‘Fragmentation’ in Market

wsjlogoCourtesy of WSJ reporters Tim Cave and Sarah Krouse                                                                

Bats Chi-X Europe, the region’s largest equities trading platform, has been endorsed by BlackRock Inc. BLK -1.77% for its new exchange-traded fund platform.

From next month, the fledgling stock exchange will list two of BlackRock’s iShares ETFs as secondary listings: the iShares MSCI Emerging Markets Ucits ETF andiShares MSCI World Minimum Volatility MINV.LN -0.11% Ucits ETF.

BlackRock is the first to list ETFs on Bats Chi-X Europe, which received a stock exchange license from the UK’s Financial Conduct Authority in May. Until now Bats has been a secondary equities trading venue, but the exchange license allows it to diversify into primary listings for companies, derivatives products and ETFs.

Trading in European ETFs is highly fragmented, with issuers forced to list their products across a number of different exchanges. In Switzerland, for example, issuers are not permitted to market their products in the country without a local listing.

Bats is attempting to solve the issue of “fragmentation, transparency and liquidity” by creating a pan-European ETF listing venue, according to Mark Hemsley, chief executive of Bats Chi-X Europe, which is operated by BATS Global Markets, Inc. Continue reading

BlackRock Opens Bond ETFs Aimed at Institutional Clients

bloombergCourtesy of Bloomberg LP

BlackRock Inc. (BLK), the largest provider of exchange-traded funds, is opening four fixed-income ETFs today with defined maturity dates to appeal to institutional investors such as bank treasurers.

BlackRock’s iSharesBond ETFs, which invest in a basket of investment-grade corporate bonds, have set expiration dates when the portfolios will be liquidated and payouts made to investors, according to Matt Tucker, head of iShares’ fixed-income strategy team at New York-based BlackRock. The funds, maturing in 2016, 2018, 2020 and 2023, provide monthly income and may be favored by clients with specific liquidity needs in a climate of low yields and volatile interest rates, according to the firm.

“For some institutional investors, the idea that an ETF never matures or liquidates has been a hurdle,” Tucker said in a telephone interview yesterday. “These funds have the pricing and liquidity of an ETF plus the finite life you get with an individual bond portfolio.”

BlackRock, whose $3.9 trillion in assets make it the world’s biggest money manager, said first-quarter profit rose 10 percent as investors flocked to its equity iShares products. President Robert Kapito said in February the firm will continue to grow through fixed-income ETFs, which represent less than 0.5 percent of the $98 trillion global bond market. BlackRock created a series of lower-fee ETFs in 2012, and in March it announced a partnership with Fidelity Investments to sell more iShares funds directly to retail investors.

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Credit Suisse ETF sale sparks outflows

ftimesCourtesy of FT’s Madison Marriage


BlackRock’s move to buy Credit Suisse’s exchange traded fund arm has triggered heavy outflows from the unit, experts say.

In January, the US fund house announced it had entered into an agreement to buy Credit Suisse’s ETF business for an undisclosed amount, subject to regulatory approval.

However, Credit Suisse registered $655m (€511m) of outflows from its ETFs over January and February, data from consultancy ETFGI show – the heaviest withdrawals of any ETF provider in Europe during that period.

The redemptions were more than triple the total ETF outflows ($208m) the Swiss company experienced over the entire 2012. Credit Suisse Asset Management has €13.5bn of ETF assets.

Experts say the withdrawals are a result of uncertainty generated by the BlackRock deal, as well as investor demand for provider diversity and declining interest in Credit Suisse’s gold ETFs.

Deborah Fuhr, managing director at ETFGI, says: “[The outflows] are really down to the fact that [Credit Suisse] announced it is selling the business. “Based on the uncertainty of what will happen, people decided not to put more assets in. It is not surprising that they would redeem from these products.”

BlackRock and Credit Suisse both declined to comment on the outflows.

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