BlackRock’s iShares is taking a stab at actively managed exchange-traded funds by expanding its Factor exchange traded fund line-up on two fronts.
The first new line is the iShares Enhanced ETFs, which includes the iShares Enhanced US Large Cap ETF (IELG) and the iShares Enhanced US Small-Cap ETF (IESM). Both products are managed using BlackRock research instead of tracking an index and were developed with the assistance of Registered Investment Advisors.
The second product is the iShares MSCI Factor ETFs, which track the MSCI Risk Premia Indices. These were designed at the request institutional investors wanting exposure to a specific factor, such as Arizona State Retirement System (ASRS).
Products in this line include: the iShares MSCI USA Momentum Factor ETF (MTUM); the iShares MSCI USA Size Factor ETF (SIZE); and the iShares MSCI USA Value Factor ETF (VLUE).
The funds use sets of factors such as quality, value, size and momentum to determine the risk and return behavior of an asset or stock.
“Increasingly we plan to develop products that are client-led to meet their most pressing portfolio challenges, said Patrick Dunne, Head of iShares Global Markets and Investments, in the release. “While we continue to see tremendous demand from investors for index-based ETF products, there are situations where clients are seeking exposures that cannot be delivered by tracking a third-party index. Launching `active’ ETFs enables us to expand our product suite and meet this client demand.”