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iShares Core ETFs Gain Institutional Fans


When BlackRock’s (BLK) iShares, the world’s largest issuer of exchange traded funds, rolled out its 10-ETF suite of core funds in October 2012, the intent appeared to be to give retail investors some low-cost options from the iShares stable.

Apparently, big institutional investors like a good deal on fees as well. Head of iShares Americas Institutional Business at BlackRock Daniel Gamba said more than half the inflows to the iShares Core ETFs have come from institutions, Brendan Conway reports for Barron’s.

Those ETFs include the $4.1 billion iShares Core MSCI Emerging Markets ETF (IEMG) , which charges just 0.18% per year compared to the 0.67% charged by the iShares MSCI Emerging Markets ETF (EEM) . [These ETFs Got Big in a Hurry]

The iShares Core MSCI EAFE ETF (IEFA) has raked in over $2.2 billion in assets since October 2012 helped by an annual expense of 0.14%, which is less than half the fee on the iShares MSCI EAFE ETF (EFA) .

Other core offerings include the$671.2 million iShares Core MSCI Total International Stock ETF (IXUS) and the $1.1 billion iShares Core S&P Total US Stock Market ETF (ITOT) , which charge 0.16% and 0.07% per year, respectively.

Earlier this year, BlackRock said it would like to expand its low-cost lineup to include more international offerings. As many as 10 new, low-cost international ETFs could be added to the iShares core group later this year, the firm said in January. [iShares Could Add to Low-Cost Lineup]

On Monday, a new study conducted by Greenwich Associates and sponsored by BlackRock showed institutional investors continue to ratchet up use of ETFs. [Institutions Increase Use of ETFs]

The study shows 46% of institutional ETF investors surveyed allocate 10% or more of total assets to ETFs with 47% saying they expect to boost ETF usage over the next year.

“About 30% of institutional ETF investors report ETF allocations in the 10% to 25% range. RIAs, who are the largest users of ETFs by assets, have the largest ETF allocations with 41% of RIAs investing more than 25% of total assets in ETFs,” according to the study.

iShares Core MSCI Emerging Markets ETF


ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of EEM, EFA and IEMG.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.