“BlackRock will be joining and building many active ETFs,’’ Laurence Fink said on the company’s conference call discussing its earnings in the second quarter.
Out of the $50 billion of new investment put into exchange-traded funds last year, only about $800 million of it was placed in active funds, where managers move in and out of positions to maximize returns. This, he said, represents an opportunity.
That could mean losses, though, early on, until much more investment is made into actively managed ETFS.
“In the first few years, the industry is going to lose money in it,’’ he told analysts. “It'd be very hard to make much money in active ETFs until you start seeing greater growth rates.”
BlackRock managed about $474.7 billion in assets placed in exchange-traded funds, in June. In its earnings report, BlackRock said it generated $500 million in revenue from its iShares exchange-traded products that invest in stocks and $77 million from iShares products that invest in bonds.
Uncertainty about the direction of the global economy, he said, favors investments in ETFs, which institutional investors can move into and out of during every trading day.
“ETFs are a great vehicle for liquid tactical allocation,’" he said. “I do believe we are going to continue to see large-scale growth in global ETFs.”
