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BlackRock plans to change the benchmarks of 10 iShares ETFs which total approximately $ 20.7 billion in assets under management, the manager said.
The funds will switch from the Dow Jones benchmarks to the indices provided by FTSE Russell, according to the filings, on or about September 20.
The largest of the funds, the $ 7 billion iShares US Technology ETF, will change its underlying index and target benchmark to the Russell 1000 Technology RIC 22.5 / 45 Capped Index. The main constituents of this index, as of March 31, include Apple, Microsoft, Facebook, Alphabet and Nvidia, according to the index provider’s website.
The ETF currently tracks the Dow Jones US Technology Capped Index. The main constituents of the existing index, as of May 28, overlapped those of the new index but with different weights, according to the Dow Jones website.
The ETF lost $ 571 million in the 12-month period ended May 31, according to data from Morningstar Direct.
Last year, the iShares US Technology ETF returned 47.31% in the one-year period ended May 31, according to the group’s website. It underperformed the Dow Jones US Technology Capped Index by 0.6 percentage point, its website says.
Two of the funds will also undergo name changes. The $ 1.5 billion iShares US Consumer Services ETF will be renamed the iShares US Consumer Discretionary ETF, and the $ 690 million iShares US Consumer Goods ETF will change its name to the iShares US Consumer Staples ETF.
Source: Regulatory documents, Morningstar Direct. * As of May 31.
The Russell indices that ETFs look to are expected to launch in July, the index provider confirmed.
Cost often drives index changes if the components of benchmarks are comparable, said Cindy Zarker, relationship manager at Fuse Research Network. The changes could lead to lower costs for investors if the new index provider charges less, she explained.
BlackRock declined to comment on the licensing fees for the indices or whether price was a factor in the manager’s decision to trade the indices.
“BlackRock is making product enhancements to iShares ETFs as part of an ongoing process of reviewing its product line,” said BlackRock.
The 10 ETFs garnered $ 2.4 billion in net inflows in the 12-month period ended May 31, according to Morningstar Direct.
BlackRock’s rival Vanguard announced similar changes earlier this month, as reported. Vanguard changed the benchmarks of three dividend-focused funds from the Nasdaq indices to the recently launched S&P versions.
Recently, index providers have reaped the benefits growth of assets in passive funds, including ETFs. Index providers achieved record revenue of $ 4.1 billion last year, up nearly 10% from the previous year, according to a May report from Burton-Taylor International Consulting. MSCI recorded the largest share of industry revenue, at nearly 25 percent. The S&P Dow Jones Global Indices were 24%, according to the report, and FTSE Russell 19%.
Traditional stock indexes again brought in the lion’s share of revenue – to around $ 2.7 billion last year, according to the report. Index providers hope to achieve similar success with next-generation indices, including those focused on environmental, social and governance themes, factors or research, executives said. indicated.
* Ignites is a news service published by FT Specialist for professionals working in the asset management industry. It covers everything from new product launches to regulations and industry trends. Trials and subscriptions are available at ignites.com.