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iShares captures one third of global ETF flows

BlackRock attracted $102.8bn in new inflows in its iShares business in 2014, driven by interest in its US and European products, particularly from Asian and Latin American clients.

According to the asset manager, its iShares business led the global industry by capturing 31% of the “record-breaking” $330.7bn global exchange traded fund market flows.

“IShares growth this year was driven by two global product lines. Clients from Asia and Latin America continue to use both our US and European ETF suite in record numbers, contributing $19.8bn in net new assets through 30 November,” said Mark Wiedman, global head of iShares.

Contribution of Asian clients to 2014 inflows were over $9bn with the US, Asian, and the Eureopean ETFs each garnering about $3bn.

The investment manager said the US and European product lines continued to be adopted by investors across the globe. 

The iShares US product line led the way with a record $82.8bn of new assets in 2014, surpassing the previous record for US iShares ETFs of $62.0bn in 2012.

In Europe, the business captured $20.3bn in net new flows.

“We’re seeing ETFs truly come of age, as more investors around the world recognise and embrace the versatility of these vehicles – whether it’s for their strategic buy-and-hold investments or precision exposures to express a view on virtually any market,” Wiedman said.

“ETFs have also been discovered by capital market participants, who are using them as efficient substitutes for futures and swaps.

In the fixed income space, iShares captured $40.3bn globally or 48% of all new flows into fixed income ETFs.

As of 31 December, the assets under management of iShares globally exceeded $1trn compared to $914bn as on 31 December 2013.

ETFs – Asian appetite 

In Asia, ETFs have typically had difficulty gathering assets due to the lower incentive that advisers earn on selling these products, which are cheaper compared to actively managed investment vehicles. 

However, following the unveiling of Stock Connect initiative, Rob Hughes, head of index and advisor solutions at Nasdaq, said there is a big potential for exchange-traded funds in Hong Kong as well as in China.

In November, BMO Global Asset Management launched three Hong Kong-domiciled ETFs: the Asia USD Investment Grade Bond ETF, Hong Kong Banks ETF and the Asia High Dividend ETF.
Prior to that, Vanguard unveiled three ETFs in Hong Kong in June, including the SAR’s first ETF providing investors with exposure to European equities.

Part of the Mark Allen Group.