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iShares Takes Back the ETF Inflow Crown


BlackRock’s (BLK) iShares exchange traded fund lineup managed to take back the number one spot from Vanguard last year in terms of total ETF inflows. The firm’s strategy included aggressive product and business management, according to a recent industry report.

“Obviously it’s good that the industry had a good year. But if you look at the [iShares] product growth from last year, there are 20 products where the net asset flow was higher than $1 billion. That’s a good indicator of the breadth of where the flows came from, provided our broad offering to clients,” Patrick Dunne, iShares head of global markets and investments at BlackRock, said in an Ignites.com story.

The firm made aggressive efforts to expand into areas of the international equity markets and the bond market. Sources say that the move into fixed-income and international markets was key to expanding assets. iShares rolled out 47 new ETFs in 2012, which helped bring the total asset pool for iShares to over $250 million.

Jackie Noblett for Ignites reports that iShares was able to grow in a market where sentiment was constantly shifting, by allowing investors, advisors and institutional investors to follow personal market views with the array of iShares products. [BlackRock to Acquire Credit Suisse ETF Business]

For the near future, iShares is going to focus on expansion of their fixed-income ETF suite, with a focus on creating  tools that make bonds look like individual fixed-income securities.

The new pricing strategy for iShares Core products in 2012 was another move that helped the provider re-gain the number one position. The provider lowered fees on six of their largest, broad-based U.S. equity and bond market offerings. The target was buy-and-hold investors. The Core generated $4.6 billion in inflows since the October introduction.

“This new iShares Core Series enables us to better serve and capture market share in this important, highly competitive and price-conscious segment of the buy-and-hold investor,” Robert Kapito said in an October earnings call. He added that the Core strategy should help the firm grow market share and generate double-digit organic growth in the United States. [What the Flows Show: A Year of Records for ETFs]

But some question whether the Core initiative will be able to sustain the momentum long-term. “The bigger story is they had a massive increase in advertising spending,” says Morningstar analyst Michael Rawson. [S&P Ranks Largest ETF Managers]

Rawson questions if after the marketing and ad spending has ceased, will the flows continue to add up. An ETF such as the iShares MSCI Emerging Markets ETF (EEM) is now targeted at institutional investors and traders. The Core MSCI Emerging Markets ETF (IEMG) , which took EEM’s place, did see a boost in sales at the end of 2012.

BlackRock shows no signs of slowing down domination of the ETF industry, as the provider recently acquired Europe’s fifth largest such business, Credit Suisse. This addition is intended to strengthen the firms  presence in Europe and boosting overall growth, reports Zacks.

Tisha Guerrero contributed to this article.

Full disclosure: Tom Lydon’s clients own EEM.

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.