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iShares Enters the Actively Managed ETF Arena


BlackRock’s iShares pulled the trigger on two actively managed exchange traded fund strategies, and in collaboration with a pension fund, added three passive “factor” funds

According to a press release, the actively managed iShares Enhanced U.S. Large-Cap ETF (IELG) and iShares Enhanced U.S. Small-Cap ETF (IESM) started trading Thursday, April 18.  The funds will follow market factors, such as quality, value and size, while utilizing BlackRock’s expertise in risk management. IELG has a 0.18% expense ratio and IESM has a 0.35% expense ratio. [iShares Files More Actively Managed ETFs]

“The iShares Enhanced ETFs seek to provide competitive risk-adjusted returns compared to the broad large-cap or small-cap market,” the press release stated.

IELG’s has 110 components, and the top holdings include Gamestop 2.2%, Pfizer 2.1%, Johnson & Johnson 2.1%, Merck 2.1% and Abbot Laboratories 2.1%.

IESM’s has 263 components, and the top holdings include World Acceptance Corp. 2.1%, Buffalo Wild Wings 2.1%, Arbitron 2.1%, Zoetis 2.1% and Symetra Financial 2.1%.

The fund sponsor also launched three passive, factor-based, “intelligent-beta” ETFs: iShares MSCI USA Momentum Factor ETF (MTUM) , iShares MSCI USA Size Factor ETF NYSEArca: SIZE) and iShares MSCI USA Value Factor ETF (VLUE) . The three ETFs each have a 0.15% expense ratio.

The “Factor” ETFs were developed at the request of the Arizona State Retirement System, which has seeded $100 million to each of the three funds, reports Cinthia Murphy for IndexUniverse.

“The expansion of iShares Factor ETFs demonstrates how iShares has raised the bar of ETF development by working alongside clients,” Patrick Dunne, Head of iShares Global Markets and Investments, said in the press release. “The iShares MSCI Factor ETFs compliment iShares’ suite of Minimum Volatility products and the iShares Enhanced ETFs can benefit from BlackRock research, portfolio implementation, and risk management expertise for our clients.”

MTUM will track large- and mid-cap stocks with higher-than-average price momentum, compared to traditional market-cap indices. SIZE consists of traditional U.S. large and mid-cap stocks, but it reweights the holdings based on a rules-based methodology that leans toward stocks with smaller average market-cap and lower-volatility. VLUE tracks large- and mid-cap stocks but gives greater weightings toward stocks with higher accounting values, such as book value, and three-year moving averages of sales, earnings, and cash earnings.

For more information on new product launches, visit our new ETFs category.

Max Chen contributed to this article.

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.