BlackRock launches four US equities ETFs

Added 17th October 2016

BlackRock has added four US equity-focused exchange-traded funds (ETFs) to its iShares range, each exploiting a different factor.

BlackRock launches four US equities ETFs

Focused on value, size, momentum and quality, each factor strategy hones in on a particular source of risk and return that underpin smart beta strategies.

The physically replicated funds – meaning they buy the actual underlying securities rather than synthetics, which buy derivatives - will offer investors greater choice to tilt their portfolios to the areas of the US equity market they believe will outperform.

The value fund will be exposed to undervalued stocks based on fundamentals, the size-led product will look at the smaller end of the market capitalisation spectrum, momentum looks at the companies showing the strongest risk-adjusted return over the past six and 12 months, while the quality tilt will focus on companies demonstrating balance sheet strength and stable earnings.

All will track stocks listed on the MSCI USA index. The four ETFs are UCITS vehicles, with a total expense ratio of 20 basis points, or 0.20%.

BlackRock said the European factor and smart beta industry has now passed $30bn (24.7bn) in assets – a 40% rise in AUM since last year.

iShares now offers 31 Europe-domiciled funds across dividend strategies, minimum volatility, single and multi-factor exposures, and has $13.2bn in assets under management.

Manuela Sperandeo, head of iShares EMEA specialist sales said: “Faced with growing political uncertainty, market volatility and low yields, investors tell us that they want a comprehensive set of tools with which to diversify risk in their portfolios.

“Different factors tend to perform in different market environments, and these four funds complement our European equity and global equity factor range allowing investors to express their views on the major global developed equity markets.”

BlackRock said with political uncertainty across the region hitting markets, investors are expected to increasingly consider minimum volatility strategies to reduce the risk from their equity allocations.

The group said its smart beta strategies were most popular with investors from the UK, Switzerland and Germany.

Further, it said in benign or rising equity markets, cyclical strategies such as value, size and momentum could gain favour.

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