Investment returns

As the recent skirmishes show, both firms see room for more large players in the ETF market.

The argument for this investment approach looked weak in the first half of 2016.

Speculation is mounting that Fed officials, in a statement scheduled for release on Sept. 21, will signal that higher U.S. interest rates are on the way.

Assets in fixed-income ETFs swelled to A$2.32 billion ($1.7 billion) at the end of August.

Kim is leading Principal's charge into ETFs, which he called a natural complement to the mutual funds that the insurer already offers.

"A sooner-than-expected hike could result in these stocks trading up sharply, but the options market is largely discounting / overlooking this possibility," strategists wrote in a client note.

The S&P 500 Index's 2.5% selloff left 52% of its members at a 20-day low.

BlackRock is joining firms including Paulson, Manikay Partners and Arrowgrass Capital Partners that have recently raised dedicated merger funds.

Even in the meltdown, investors continued to show aversion to the defensive industries that led the market in the first half, with utilities, phone companies and REITs bearing the worst of the losses.

Low-beta ETFs plunged even more than the broader market, extending a move that began two days earlier.