Tag Archives: blackrock

ETF News

BlackRock Chief Says Investors Using ETFs to Buy Stocks

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etftrends logo imagesCourtesy of Tom Lydon

Exchange traded funds are one of the most popular vehicles that investors are using to buy stocks. Passive funds tracking U.S. stocks are gaining popularity as equity markets are on the mend, according to BlackRock’s chief executive.

“What we are seeing, and the industry overall, are still a majority of flows moving more into passive,” Larry Fink, CEO of New York-based BlackRock (NYSE: BLK), said in a recent report. [BlackRock Sees Secular Shift to ETFs]

BlackRock’s ETF suite iShares had attracted $759 billion in ETF inflows. Stock ETFs for iShares drew in $30.1 billion in inflows over the fourth quarter of 2012 alone, reports Alexis Leondis for Bloomberg. Active stock funds lost $5.4 billion over the same time period. [ETFs Boost BlackRock Profit]

Last week, equity based mutual funds drew in $17.8 billion in new money, the highest since 2007. The U.S. equity market had been dodged since the financial crisis in 2008. Institutional investors generally favor ETFs, while retail investors still favor mutual funds. This pattern is expected to tilt with more individual investors using ETFs as the tax benefits and lower fees become more evident.

“Analysts agree the big sums moving into stock-based mutual funds represent a change from last year, when investors yanked a total of $129 billion out of equity funds while pouring $258 billion into fixed-income funds,”Johanna Bennett wrote for Barron’s.

“I’m not here to say people are bullish and rerisking,” Fink said. “If they’re not bearish on the world, but not bullish, they probably have overallocation to bonds, and they’re probably looking and re-orienting that.” Continue reading →

ETF News

BlackRock To Buy Credit Suisse European ETF Business

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reuters(Reuters) – BlackRock Inc has won the bidding for Credit Suisse Group AG’s European exchange-traded fund business, according to a source familiar with the situation.

The deal is expected to be announced shortly, said the source, who declined to be identified because the deal is not yet public. The value of the deal could not be determined.

A BlackRock spokeswoman and a Credit Suisse spokeswoman declined to comment.

Credit Suisse put its $17.6 billion ETF unit up for sale in October, sources told Reuters at the time.

In November, Credit Suisse said it was integrating its private banking and asset management divisions into a new wealth management unit.

BlackRock and State Street Global Advisors, the asset management arm of State Street Corp, were among the companies bidding for the business, but State Street dropped out of the bidding in December.

Credit Suisse is the fourth largest ETF provider in Europe, with 58 ETFs and a 5.3 percent market share as of December 31, according to ETFGI, a London-based ETF research firm.

BlackRock is the largest ETF provider in Europe, with more than 42 percent of the $331 billion European ETF market. Its 202 European iShares ETFs had $139.6 billion in assets as of December 31, the research firm said.

Credit Suisse’s ETF business would be the second international ETF business BlackRock has acquired in the past several months.

BlackRock bought Toronto-based Claymore Investments, a Canadian ETF operation, from Guggenheim Partners LLC, in March.

“This acquisition shows BlackRock’s further commitment to being the dominant player in ETFs in every market they are in,” said Dave Nadig, director of research at IndexUniverse LLC, a San Francisco-based firm that tracks ETFs.

In October, BlackRock Chief Executive Laurence Fink told Reuters it was looking at a “fill-in ETF acquisition in another country.

(Reporting By Jessica Toonkel; editing by Carol Bishopric)

ETF News

Industry Sounds Off On Paying ETF Market Makers

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Courtesy of James Armstrong

If issuers of exchange-traded funds could pay to attract market makers to their products, would there be more liquidity in ETFs? Or would paying market-makers create a dangerous precedent and harm long-term investors? Or, is Tim Quast, MD of trading analytics firm “Modern Networks IR” correct when suggesting to the SEC in his comment letter “..paying market makers could constitute a racketeering felony and would increase speculative, short-term trading rather than focusing the markets on capital formation..”?

Both Nasdaq and NYSE Arca have proposed programs allowing ETF issuers to pay fees to the exchanges for market-maker support. The proposals are similar to a program already implemented on the BATS exchange, which has a handful of ETF listings. These proposals, according to comment letters to the Securities and Exchange Commission, are drawing strong reactions from key industry figures.

The Investment Company Institute has come out in favor of the measures, arguing they could result in narrower spreads and more liquid markets. In a letter to the SEC, ICI’s general counsel, Ari Burstein, said the organization has long advocated changes to increase the efficiency of markets. “As ETF sponsors, ICI members have a strong interest in ensuring that the securities markets are highly competitive, transparent and efficient,” Burstein said. “Liquid markets are critical for ETFs, particularly smaller and less frequently traded ETFs.”

Vanguard, the mutual fund giant which also offers a number of ETFs, said it neither supports nor opposes the Nasdaq proposal and certainly does not support the NYSE Arca proposal, at least as it is currently structured.

In a letter concerning Nasdaq’s ETF initiative, Vanguard’s chief investment officer, Gus Sauter, said payments to market makers have the potential to distort the markets and create conflicts of interest. Though Nasdaq proposed several safeguards to prevent that from happening, Sauter suggested a longer review and comment period would be a good idea.

BlackRock, the nation’s largest ETF issuer is opposed to the idea of paying market-makers.

Continue reading →

ETF News

PIMCO’s Eyes Fixed on ETFs

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Courtesy of James Armstrong

You know a market has arrived when the big kids start to play, and it became obvious that fixed-income exchange-traded funds were around to stay when the don of bonds—PIMCO—jumped into the game.

With the current volatility of the equities markets, investors know they need to have exposure to bonds, but they often desire the ease and liquidity of equities, which ETFs can provide. For that reason, PIMCO launched an ETF platform in 2009, which has grown to 19 funds.

Six of those funds are actively managed, including the cash-management strategy fund MINT, currently the largest active ETF in the world, and the BOND fund, which launched at the end of February and is managed by PIMCO co-founder Bill Gross. All of PIMCO’s funds trade on NYSE Arca.

Don Suskind, head of global ETF product management at PIMCO, said some clients prefer to use ETFs for fixed-income investments because they offer all the benefits of trading in the equities market—intraday liquidity, efficient price discovery, access through an exchange—plus they provide portfolios that are transparent.

Still, there are challenges in taking a basket of fixed-income products and getting them to trade like a stock. Fixed-income ETFs, unlike most equity exchange-traded funds, aren’t fully replicating. Bond indexes often have thousands of issues in them, so in tracking an index, an ETF might only hold half the number of issues in the index, sometimes as few as 3 percent. Continue reading →

ETF News

iShares to Introduce EM Corporate Bond ETF Thursday

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Courtesy of Benzinga.com’s  “ETF Professor”–and distributed by Dow Jones MarketWatch..

By far the most prolific issuer of new ETFs in 2012, BlackRock’s BLK +1.83% iShares unit, the world’s largest ETF sponsor, will introduce another new bond ETF on Thursday when the iShares Emerging Markets Corporate Bond Fund (bats:CEMB) debuts.

The iShares Emerging markets Corporate Bond Fund will be the latest iShares offering to list on the BATS Exchange.

CEMB will track the Morningstar Emerging Markets Corporate Bond Index and feature dollar-denominate issues. Eligible individual securities must have a minimum outstanding face value of $500 million or more, and eligible issuers must have aggregate outstanding debt of $1 billion or more to be included in the index and a remaining maturity of 13 months or more at the time of rebalancing and a minimum of 36 months to maturity or greater at time of issuance, according to ETF Daily News.

While there are no ratings restrictions for the issues to be included in the index, the bonds must have at least one rating from Fitch, Moody’s or Standard & Poor’s. Continue reading →

ETF News, People Profiles

Fidelity Snags State Street ETF Czar: Rumors Abound

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In a “if you can’t beat ’em, poach ’em” moment, mutual fund monster Fidelity Investments has apparently thrown in the towel and will finally focus on running their own actively-managed sector-specific ETFs. At least that’s the obvious conclusion being drawn by industry watchers after news of Fidelity, which still only offers one house-branded ETF, announced the hiring of former employee Tony Rochte, who left Fidelity after four years in 2000 to seek his fortunes in the wild west days of ETF pioneering.

The widely-respected Rochte spent his next six years at BlackRock’s bootcamp carrying the iShares flag, and the most recent six years as Senior MD over at State Street Global, where he helped the second largest ETF issuer become, well, the second largest ETF issuer.

Anthony Rochte

According to InvestmentNews:With Mr. Rochte’s background in ETFs and his new role running a division focused on sector investments, it seems like a no-brainer to some that Fidelity would re-launch those strategies as active ETFs.

“It would be a logical next step,” said Robert Goldsborough, an ETF analyst at Morningstar Inc. “Given that the sector funds already exist and they’re popular with advisers, it would make a tremendous amount of sense to move that competency over to ETFs.”  Duh!

ETF News, People Profiles

BlackRock Bulks Up in Europe: Expanding “ETP Education” Campaign

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However much the use of ETF and ETP products in Euro-Land continues to grow,  Global ETF Issuer iShares knows that it can grow faster and bigger.

Consistent with parent company BlackRock Inc.’s focus on staying in front of the pack, and as reported by IndexUniverseEU staff, iShares has recently introduced a “due diligence tool” aimed at helping professional investors obtain granular information about its European exchange-traded products.

According to iShares’ head of EMEA sales, David Gardner, “Our new “Know Your ETP” tool offers a robust framework, and clear standardised processes by which institutional investors can arrive an informed decision more effectively.”

On an objective note, ETF industry veteran Mike McCoy, a senior member of ETF liquidity aggregator WallachBeth Capital, who recently landed on the docks of London to help launch his firm’s new Euro ETF execution desk (in joint-venture with UK-based brokerage NSBO), said, “BlackRock certainly knows that the ‘educating your customer rule’ is integral to the evolution of ETF embracement. As quickly as the market is growing, its critical to maintain the education momentum with the spectrum of investors, however sophisticated they might be.”

For the complete story, click on the IU logo

ETF News, People Profiles

ETF Market’s “Dame Deborah” Fuhr Launches Independent Research Firm

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Debbie Fuhr, the undisputed “Dame” of the exchange-traded-funds industry, and most recently BlackRock’s Managing Director and global head of ETF research and implementation will open the doors of a new independent research firm, “ETF Global Insight” next Monday. Prior to Debbie’s 3-year stint at BlackRock/BGI, she was billeted for 11 years at Morgan Stanley’s London barracks where she was an MD and head of that firm’s  investment strategies group.

photo courtesy of CNBC

As reported by a variety of global business news outlets, Debbie’s new domain “will publish research on the ETF industry as well as providing education and assistance with product comparisons and asset allocation implementation.”  Debbie will be joined in this new  London-based boutique by former co-workers Shane Kelly and Matthew Murray. All three are widely-credited for developing the first ETF industry research reports.

While speaking to FT.com reporter Chris Flood in discussing the new firm, Debbie stated, “All the members of the ETF eco-system have been citing the need for more and better independent education and research to help navigate the now vast array of products that are available.”

Observed  Andy McOrmond, co-head of ETF Trade Execution for institutional broker  WallachBeth Capital and a long-time industry associate of Ms. Fuhr,  “Debbie is an industry icon, and her new focus on providing an independent perspective on the broad array of ETF products will undoubtedly prove to be a bonus for those keeping their fingers on the pulse of the ETF market place.”

 

ETF News

UK Wrap Platforms Wrapping Arms Around ETFs

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As reported by FT.com, retail investors in the UK are rapidly wrapping their arms around ETF products, and platform providers are ramping up their offerings to facilitate the burgeoning growth in what is already a ubiquitous product in the US.

  According to the FT.com story, David Bower, head of iShares UK, said the ETF industry  would be a major beneficiary of RDR which will ban commission payments to financial advisers from the beginning of 2013. ETFs, unlike many other investment funds, do not pay commissions to advisers.

Mr Bower said the strong growth that iShares saw on wrap platforms in 2011 suggested that ETF usage amongst financial advisers and discretionary fund managers would continue to rise.

BlackRock saw assets held in iShares ETFs across six wrap platforms used by IFAs increase 34 per cent in 2011 to £746m at the end of December.

The six platforms are run by Ascentric, Novia, Nucleus, Raymond James, Standard Life and Transact.

Novia saw assets held in iShares ETFs increase 96 per cent last year while Ascentric reported an 88 per cent rise.

Paul Boston, sales and marketing director at Novia, said that ETFs were playing an increasingly important role in both advisory and discretionary portfolios on the Novia platform.

“This is proving to be a well-trodden investment strategy that significantly reduces the overall cost of a client’s portfolio,” Mr Boston said.

Further affirming this trend, UK-based institutional broker North Square Blue Oak (NSBO) has recently aligned with US-based ETF market expert WallachBeth Capital to form WallachBeth International, whose role, according to NSBO principal Laurie Pinto, “will include servicing institutional portfolio managers as well as leading wrap account administrators in the course of their securing best execution in a market place that is still catching up to the level of transparency that is available for US-centric ETF products.”

Added Pinto, whose firm is headquartered in London with an affiliate office in Beijing, “We certainly expect the demand for ETF products in the European market will emulate the growth trajectory which the US market has experienced over the past several years. To the extent that we can introduce best practices for true best execution, we believe we’ll be adding significant value to institutions that are utilizing these products.”

ETF News, People Profiles

Bogle Boggles and Balks re: ETFs

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In the category of  “He who speaks with forked tongue…” Index Icon and Vanguard Group founder John Bogle once again threw a curve ball while speaking at today’s Bloomberg Portfolio Manager Mash-Up.

John Bogle, Vanguard Group founder

Stating “ETFs are the greatest trading innovation of the 21st century,” what the Midas of Mutual Funds added with a big (*) was : “But the question is,  ‘Are they the greatest investment innovation?’ and the answer is ‘no.”

According to coverage of the event, fully credited to InvestmentNews, Bogle pulled no punches by calling out BlackRock for “just making a muddy pool muddier” in reference to BlackRock’s aggressive product launches. Bogle, who is also known as the “Midas of  Mutual Funds”, reminded the Bloomberg conference attendees “There’s something like 2000 ETFs now. That’s almost as many stocks as there are.”

One attendee then asked Mr. Bogle, “How many mutual funds are there?” In lieu of replying, he headed to the loo, where the self-proclaimed Buffet-like Market Bull took a bio break.