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BlackRock’s iShares Tops $600B In Assets

Hannah Tool

 

BlackRock’s iShares unit, the biggest ETF company in the world, hit a milestone on Wednesday, April 10, exceeding the $600 billion mark for total U.S.-listed ETF assets under management and cementing its reputation in the ETF industry as both pioneer and juggernaut.

The San Francisco-based asset manager pulled in $568 million yesterday, helping lift total assets under management to $601.2 billion. The Nos. 2 and 3 fund sponsors, State Street Global Advisors and Vanguard, ended the day with assets of $346.73 billion and $279.77 billion, respectively, according to IndexUniverse’s ETF Issuer League Table .

Markets rallied to records yesterday as well, with both the Dow Jones and S'P 500 hitting record highs at the close. Overall U.S.-listed ETF assets spiked to a record $1.476 trillion , with the top three fund sponsors garnering more than 80 percent of that asset total.

BlackRock’s iShares—or, more precisely, its predecessor organization—got its start in the mid-1990s with the launch of the “WEBS,” the single-country exchange-traded mutual funds from Morgan Stanley and Barclays Global Advisors (BGI). Those single-country funds and other ETFs that followed were branded “iShares” by BGI, and the entire iShares unit was ultimately sold to BlackRock in 2009.

iShares’ single-country funds—the biggest of which is the $8 billion iShares MSCI Japan fund (EWJ), have grown to a family of more than 40 funds, and constitute a large part of iShares’ big footprint in the ETF industry. No ETF sponsor comes close to the breadth of iShares’ single-country fund offering.

Firing On Many Cylinders

But they’re hardly the whole story, and the rebranding of the young ETF franchise into iShares did herald the opening up of a new marketing front, namely retail investors.

The biggest iShares fund, the iShares MSCI Emerging Markets Index Fund (EEM), is emblematic of the company’s leadership role and has been popular to both institutional and retail clients alike. Rolled out 10 years ago in April 2003, EEM holds $45 billion in assets and is the fourth-biggest ETF in the world.

The only bigger funds are the SPDR S'P 500 ETF (SPY), the physical bullion ETF SPDR Gold Shares (GLD) and the EEM’s competing fund the Vanguard FTSE Emerging Markets Index ETF (VWO).

But even though no iShares funds are among the top three in terms of assets, five of its ETFs were among the top biggest at the end of the first quarter—more clear evidence of how long a shadow iShares casts.

Also, successful iShares product launches in the recent past clearly place the company in the middle of some of the more important trends in the contemporary ETF industry.

The iShares MSCI USA Minimum Volatility Index Fund (USMV) has gathered $3 billion since its launch in October 20111, demonstrating the company’s marketing acumen in seeking to capture one of the more vibrant pockets of the fund universe in the choppy aftermath of the Great Recession of 2008.

 

 

And just months ago, the company rolled out the iShares Core MSCI Emerging Markets ETF (IEMG) as part of a 10-fund lineup of “Core” funds meant to signal that the firm was ready to get on board with the low-cost trend sweeping the industry.

The fund, an inexpensive cousin of EEM, has gathered $933.2 million, another clear sign iShares is and will remain a force to be reckoned with as ETFs continue to expand their presence in the world of money management and investing.

In fact, the rollout of the 10 “Core” funds last October was accompanied by a high-end advertising campaign that includes slick TV ads that are airing broadly—from popular news programs to big-time sporting events, echoing the way the appearance of mutual fund advertising a generation ago signaled a new chapter in the history of financial markets.

Some analysts view the exchange-traded fund as the most important innovation in the financial services industry since the automatic teller machine, and the fact that iShares is the first to aggressively flood the airwaves preaching the ETF gospel shows the company is not only still relevant, it’s still blazing trails nearly 20 years since the advent of the WEBS.

2013 First-Quarter ETF Giants ($, Millions)

Ticker Name Issuer Flows AUM ($, M) Turnover
SPY SPDR S'P 500 SSgA - 5,271.46 129,835.33 1,225,852.09
GLD SPDR Gold SSgA - 6,622.91 62,729.74 105,775.33
VWO Vanguard FTSE Emerging Markets Vanguard 518.74 58,489.10 50,987.89
EEM iShares MSCI Emerging Markets BlackRock - 1,437.56 45,582.19 140,539.11
EFA iShares MSCI EAFE BlackRock 673.84 41,503.35 65,852.76
IVV iShares Core S'P 500 BlackRock 2,358.67 41,031.36 37,185.60
QQQ PowerShares QQQ Invesco PowerShares - 350.89 31,868.73 139,595.77
VTI Vanguard Total Stock Market Vanguard 2,154.40 29,037.49 10,479.93
LQD iShares iBoxx $ Investment Grade Corporate Bond BlackRock - 1,379.37 23,676.84 16,151.44
TIP iShares Barclays TIPS Bond BlackRock - 1,471.22 20,704.68 9,520.18

 

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