Jane Sloan, head of iShares, EMEA, at BlackRock, has revealed her biggest priorities for the business are sustainable investing and the growth of retail investors using ETFs, especially in Germany.
Speaking to ETF Stream in her first interview since being appointed to the role in April 2021, Sloan (pictured) stressed the importance of “relentlessly” innovating in order to stay ahead of the competition and meet investor demand.
BlackRock has been a dominant force in the European ETF market since acquiring Barclays Global Investors and its iShares business in 2009, in what has been described in some corners as the deal of the decade.
The world’s largest asset manager has grown rapidly since and now houses €615bn assets under management (AUM) across its European ETF range, a 43.5% market share, according to data from Morningstar, some distance ahead of its nearest rivals.
However, Sloan is keenly aware of the responsibility of being Europe’s largest ETF issuer as the market continues to evolve on this side of the pond.
“We see ourselves as leaders that never stand still,” she stressed. “There is huge excitement to be part of such a dynamic industry.”
This dynamism was highlighted last April when Amundi announced the planned acquisition of Lyxor from Société Générale for €825m, a move that has created an ETF issuer with €190bn AUM and a 13.5% market share.
The news incidentally came five days before ETF Stream revealed Sloan had been appointed to take over the reigns as head of BlackRock’s European ETF business from Stephen Cohen, who was promoted to head of EMEA for the whole company.
Despite the threat of a new giant taking market share, she is relatively sanguine about overall competition in the market.
“We welcome competition as it has a positive effect on market quality,” Sloan continued. “The European ETF industry is such a broad market and we see product innovation happening across all asset classes. This keeps us on our toes.”
While stressing a continuation of the work of her predecessors Cohen and Rachel Lord, who now runs BlackRock’s Asia business in Hong Kong, Sloan highlighted two developments in the ETF market that the firm has doubled down on since her appointment.
The first is the inexorable rise of ESG investing. Amid a record year for ETFs in Europe, ESG ETFs accounted for 51% of total flows versus 40% in 2020 and just 10% in 2019, according to data from Morningstar.
However, this is not an area of the market that is standing still. With regulation such as the Sustainable Finance Disclosure Regulation (SFDR) and improving data, demand for ESG ETFs is constantly evolving as Sloan is all too aware.
“The intensity of our ESG work has massively increased over the past 12 months,” she said. “The space is one where there will be continuous evolution as the market increases the availability of ESG data.
“Eventually, ESG integration will be across all segments of portfolios as climate becomes more important and product innovation continues.”
The second area of focus has been the growth of retail investing, especially in Germany. In order to capture this trend, Sloan highlighted the importance of partnerships and education as more savers become investors. In Germany, for example, BlackRock has forecasted that 20 million could be making monthly contributions to ETF savings plans by 2026, up from 4.9 million currently and 1.9 million at the end of 2019.
The country now accounts for approximately 27% of the European ETF market, according to data from Blackwater Search & Advisory, ahead of the UK which has a 25% market share. As a result, Sloan said Germany is the most important ETF market for BlackRock followed by the UK and Switzerland.
“We are partnering with innovative distributors to make investing accessible for millions,” she added. “Germany is a great example of where we have seen significant growth. Factors such as low interest rates, lockdown, ease of digital access and zero-fee trading have accelerated the growth of ETFs.
“A big focus for me is orientating the business into these two key areas of ESG and the rise of retail,” Sloan said. “It is extremely exciting to be participating and shaping this industry at such a growth inflection point.”
One of area of the European exchange-traded product (ETP) market that has developed rapidly over the past 12 months is cryptocurrencies. BlackRock is yet to enter the space, however, there are now over 70 crypto ETPs listed in Europe with approximately €7bn AUM, according to Bloomberg Intelligence.
While the firm’s radar is on the crypto space, Sloan said it has no “immediate plans” to launch a crypto ETP in Europe. “We have got our eyes on the space,” she added.
Harmonisation in Europe
While the European ETF market is in rude health after seeing €42.7bn inflows in Q1 and its AUM at €1.4trn, there are still several structural issues facing the ecosystem that Sloan highlighted including market fragmentation, retrocession fee models and the lack of a consolidated tape.
In Europe, the market is highly fragmented with over 80 issuers operating across 30 exchanges in 25 countries and 13 currencies, according to Blackwater Search & Advisory. As a result, Sloan said she welcomes anything that brings harmonisation to the market such as the differences between exchanges regarding listing processes, market-making incentives, auction mechanisms, minimum quote and spread thresholds and circuit breakers.
“We are big advocates of harmonisation where it makes sense and we are strong proponents of a consolidated tape in Europe.”
Finally, she concluded by noting the importance of role models for women in finance. Sloan, herself, was approached by Rachel Lord to join BlackRock in 2016 and said the firm is very focused on diversity across all levels from recruitment to executive.
“There is not a typical path to leading an ETF business. Role models are very important for women coming through financial firms and this is something my predecessors and myself do a lot of work on.”
This article first appeared in ETF Insider, ETF Stream's monthly ETF magazine for professional investors in Europe. To access the full issue, click here