Product Panel: BlackRock’s multi-asset ESG ETF range

Three-strong ETF range

Tom Eckett

a group of trees

BlackRock has brought to market Europe’s first multi-asset ETF range with an environmental, social and governance (ESG) tilt.

The three-strong range invests solely in iShares ESG ETFs and will be co-managed by Rafael Iborra and John Wang.

The firm has been pushing its ESG ETF multi-asset offering this year having also added an ESG multi-asset index fund to its MyMap Range in June.

Mark Northway, investment manager, Sparrows Capital

One problem with ESG is that the requirements of the more sophisticated investors vary widely according to asset class, so it is difficult to produce a successful “one size fits all” ESG multi-asset solution. This suggests that the product range will appeal more to the less sophisticated investor who is merely looking for a token ESG label for his/her portfolio.   

The launch information is scant at this stage, but assuming this is a whole of market product at 25bppa all in (including the OCF of the underlying funds) then it takes the fight to Vanguard in both the advised and unadvised markets. Demand for a single-ISIN solution is higher in the unadvised space, so that’s where it will have an impact.

Europe leads the way with ESG passives amid favourable regulatory backdrop

As a global leader in both ETFs and ESG, we expect better launch information and a clearer picture of the product, the BlackRock “edge” and the target market.

Nicolas Rabener, founder and CEO, FactorResearch

BlackRock continues to push the sustainability theme by launching three ESG-focused multi-asset ETFs for European investors. The pricing is highly competitive at 0.25% per annum, especially when compared to significantly more expensive multi-asset mutual funds from the sustainability category. 

However, as usual with ESG products, there is not much clarity on the security selection, except that at least 65% of the underlying securities must have an MSCI ESG Research rating, which is not particularly meaningful information.

The multi-asset ETFs are fund-of-funds and invest in other iShares ETFs, which increases the complexity of analysis. It would also be helpful for investors to understand if the 0.25% management fee is all-in and includes the management fees of the underlying ETFs, or if there is a second layer of fees.

Athanasios Psarofagis, ETF analyst, Bloomberg Intelligence

After launching a similar "ESG aware" suite in the US, looks like a natural move to bring these to Europe as well, where ESG adoption is more widespread.

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Single ticker complete solutions sound great on paper but have not really been a huge success in general so I am a bit sceptical on the growth potential for these.

Kenneth Lamont, senior analyst, passive strategies, manager research, Morningstar

The introduction of ESG asset allocation ETFs follows the launch of similar product ranges in the US and Canada earlier this year. These launches form part of the firm’s commitment to sustainable investing, outlined in a letter to clients in In January 2020. Blackrock aims to increase sustainable assets under management by tenfold within a decade.

Allocation ETFs have existed in Europe for over ten years and have met with mixed success. Currently, only 4 of the 10 other allocation ETFs listed in Europe have more than €100 Million in AUM.

That said, with an ongoing charge of just 0.25%, the new launches are the cheapest allocation ETFs listed in Europe and as a one-click ESG solution, there is a lot to like.


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