Deepening use of ETFs by institutional investors and wider use of active ETF strategies helped drive a 19% rise in BlackRock’s iShares assets under management in 2017.
Total organic growth rose $246bn in 2017 compared to a 13% rise in the year previous. iShares AUM for 2018 ended the year at $1.75trn.
The rise at BlackRock contributed to the rise in the entire industry’s AUM to over $4.5trn.
In Europe, iShares UCITS ETFs enjoyed a 15% rise in AUM to end the year at $359bn with $41bn on net inflows over the course of the year.
BlackRock said that institutions accelerated their usage of iShares across asset classes and in tactical and buy-and-hold portfolios. It added that institutions continued to expand their usage of iShares ETFs as financial instruments, alongside swaps, futures, and single-name securities, and as a reference asset for OTC and listed derivatives.
BlackRock said it also saw continued interest in smart beta and factor products. iShares now has a global line-up of 142 smart beta ETFs with an industry-leading $108bn in AUM.
Another theme evident form the iShares numbers for 2018 is the rise of fixed-income ETFs, BlackRock said the use of bond ETFs as trading instruments expanded as bond markets continued to evolve from exclusively over-the-counter, dealer-intermediated trading to more open, so-called all-to-all networks. Net inflows for iShares’ fixed-income products grew by 13% with more than $68bn in new flows.
Mark Wiedman, global head of iShares and index investments, said the company was predicting the global ETF market to more than double AUM in the next four years. “Three global trends should power this growth,” he added. “Fee-based wealth management, networked bond and derivatives trading, and alpha-seeking usage by active fund and wealth managers.”
Another factor particularly relevant to the European sector is the introduction of Mifid II just this week. Stephen Cohen, head of iShares EMEA at BlackRock, said the new rules would “resound across the region” and set the European industry for a new phase of growth.