BlackRock’s ETF assets exceed US$3 trillion

As the global assets of the ETF industry soared to a record high of over US$9 trillion, the assets of BlackRock’s exchange-traded fund business exceeded the US$3 trillion milestone for the first time in May.

BlackRock predicted last week that the assets of the ETF industry will reach US$15 trillion by the end of 2025 at the earliest, thanks to increased demand for environmental protection strategies and greater use by debt investors.

According to BlackRock data, ETFs currently account for only 3% of assets held in the global stock and bond markets.

Salim Ramji, Global Head of iShares and Index Investments at BlackRock, said: “ETFs will have decades of growth in the future.”

Wall Street’s record rebound since April 2020 and the strong rise in other stock markets have created new business for the ETF industry. Two major competitors, BlackRock and Pioneer, are competing in a fierce price war.

Preliminary data from London-based consulting firm ETFGI shows that global investors invested nearly US$97 billion in ETFs through funds and products in May, bringing the net inflows so far this year to US$559.3 billion-which will exceed the creation of the 2020s. A record 762.8 billion U.S. dollars.

BlackRock’s iShares ETF unit had a net inflow of US$123.7 billion in the first five months of this year, and in the same period of 2020, when investor confidence was damaged by the coronavirus pandemic, it was US$37.4 billion.

So far in 2021, Pennsylvania-based Vanguard has attracted $161 billion in ETF inflows, more than double the $66.2 billion registered from January to the end of May last year. So far this year, approximately $5.2 billion of Vanguard’s US ETF inflows comes from an arrangement that allows customers to convert existing mutual fund holdings into ETFs.

In the past decade, the global shift to low-cost ETFs that track a wide range of benchmarks, such as the Standard & Poor’s 500 Index or the FTSE 100 Index, has put tremendous pressure on the entire investment industry, as smaller competitors scramble to deal with BlackRock and pioneer.

Deborah Fuhr, founder of ETFGI, said: “As ETFs grow, we are witnessing structural changes that will drive major changes in the global investment industry.”

Patrick Davitt, an analyst at Autonomous Research, said that ETF penetration rates in Europe and Asia and the bond market as a whole could “significantly increase”, challenging traditional active fund managers.

“For active stock managers, this is a very difficult task [due to their inconsistent performance and higher fees] Win meaningful inflows to ETFs. Traditional actively managed bond funds will also face more competition from ETFs,” Davidt said.

The ETF assets managed by State Street Global Investment exceeded the $1 trillion mark in April. The Boston-based investment management company is the third largest ETF participant after BlackRock and Pioneer, with inflows of US$32.9 billion so far this year, up from US$19.3 billion in the first five months of 2020.

State Street Global ETF head Rory Tobin (Rory Tobin) said, “The entire ETF ecosystem is becoming stronger” because of wider adoption outside the United States and on various trading and advisory platforms The usage is also increasing.

Tobin said: “The growth trend in Europe is very encouraging, and our adoption of ETFs across Asia has only just scratched the surface.”