BlackRock’s ETF assets exceed $ 3 billion

BlackRock’s publicly traded fund assets surpassed the $ 3 billion mark for the first time in May, as global ETF industry assets rose to an all-time high of more than $ 9 billion. dollars.

BlackRock predicted last week that ETF industry assets would reach $ 15 billion by the end of 2025, helped by increased demand for environmentally friendly strategies and increased use by investors in debt.

Currently, ETFs account for only 3 percent of assets in the global equity and bond markets, according to BlackRock.

“There are decades of growth ahead of ETFs,” said Salim Ramji, global head of iShares and BlackRock Index Investments.

Wall Street’s record rise since April 2020 and strong gains for other equity markets have spawned new business for the ETF industry, where the two main rivals, BlackRock and Vanguard, compete in a fierce price war.

Investors around the world invested nearly $ 97 billion in ETFs in May in both funds and products, and net inflows reached $ 559.3 billion so far this year, to surpass the 2020 record. of $ 762.8 billion, according to preliminary data from ETFGI, a London-based consultancy. .

BlackRock’s iShares ETF arm has earned net inflows of $ 123.7 billion in the first five months of this year, compared to $ 37.4 billion during the same period in 2020, when the coronavirus pandemic boosted confidence of investors.

Pennsylvania-based Vanguard has attracted $ 161 billion in ETF entries through 2021, more than double the $ 66.2 billion recorded between January and the end of May last year. About $ 5.2 billion of ETF entry into the United States from Vanguard so far this year has been produced through an agreement that allows clients to convert an existing mutual fund into an ETF.

The global shift of the last decade towards low-cost ETFs that track large benchmarks, such as the S&P 500 or the FTSE 100, has created intense pressure on the entire investment industry, fueling mergers and acquisitions activity. while smaller competitors struggle to respond to the growing power of BlackRock and Vanguard.

“We are witnessing a tectonic shift with the growth of ETFs that will drive significant changes in the global investment industry,” said Deborah Fuhr, the founder of ETFGI.

Patrick Davitt, an analyst at Autonomous Research, said ETF penetration could increase “significantly” in both Europe and Asia, as well as through bond markets, posing a challenge to traditional asset fund managers.

“It is a very hard task for active equity managers [due to their inconsistent performance and higher fees] to gain significant entries against ETFs. Traditionally actively managed bond funds will also face increased competition from ETFs, ”said Davitt.

ETF assets managed by State Street Global Advisors topped the $ 1 billion mark in April. The Boston-based investment manager, the third-largest ETF player behind BlackRock and Vanguard, has posted $ 32.9 billion in revenue so far this year, up from $ 19.3 billion in the first five months of the year. 2020.

Rory Tobin, world head of state street ETFs, said “the whole ETF ecosystem is getting more powerful” as adoption extends beyond the U.S. and use grows in a wide range. range of trading and advisory platforms.

“Growth trends in Europe are very encouraging and we have only scratched the surface to adopt ETFs across Asia,” Tobin said.