On 1st December 2009, BlackRock and Barclays Global Investors including, …
iShares, the world’s leading ETF provider, combined to create one of the world’s preeminent investment management firms. BlackRock now manages $3.3 trillion in assets and offers a full range of investment and risk management capabilities with the scale to deliver globally. This combined firm provides us with the ability to help clients worldwide meet their financial objectives by offering a complete range of investment solutions including iShares ETFs. Here we speak to Rory Tobin, CEO of iShares International, about the future of the business and the investor trends he is seeing in the ETF market.
Rory joined BGI in 2004 to run the Transitions Management business, taking responsibility for the Global Index and Markets Group in Europe later that year. Rory became CEO of iShares Europe in 2007 and assumed responsibility for iShares International in December 2009. iShares international business incorporates iShares businesses in EMEA, Latin America and Asia.
What changes can iShares’ clients expect from the new organisation?
Servicing and meeting our clients’ needs will continue to be our number one priority and from this perspective, nothing should change. iShares will focus on expanding our sales and regional presence over time in line with projected ETF growth. iShares is in an excellent position to benefit from this growth and the combined firm will provide even greater opportunities to support new product innovation, portfolio management, research and client service.
iShares has helped establish the ETF industry as it stands today and we will continue to focus on the core values and approach that has driven our success to date, I would summarise these across the following dimensions:
1. Client service – continued investing in our client servicing team in Europe
2. Transparency – continued focus on providing products and service that is transparent.
3. Product range – building innovative and market leading products as a result of thorough research and listening to investor feedback and requirements.
4. Liquidity – working with capital markets partners to achieve maximum liquidity for investors via our unique multi-dealer model.
5. Portfolio management – harnessing our extensive index investment management experience, scale and capabilities across multiple asset classes
What’s in the pipeline for iShares in 2010?
It’s going to be busy! There are several areas in particular that I would like to highlight. First we will continue with our commitment to investor education. The market environment of the last fifteen months or so has caused investors to focus on issues such as transparency, simplicity, counterparty risk and liquidity. iShares is committed to furthering investor understanding as to the ETF marketplace – enabling clients to make a fully informed decision – when choosing to invest.
Second, our product range will continue to grow next year, introducing new products not previously available and responding to client feedback on the products you would like most from us. We launched 34 new products in 2009 across Europe, Asia and Latin America. I would expect a similar level of development in 2010. To give a flavour, clients can expect more products in the fixed income asset class building on the demand for fixed income that we are hearing from investors. In addition, we will launch a further selection of single-country and emerging market ETFs. I firmly believe that one of the key contributors to iShares success has been the constant focus on client service. We will continue to work on this by being 100% committed to providing clients with innovative, transparent investment solutions and excellent client service. iShares will benefit from a world-class pedigree of the combined organisation. We hope to leverage the increased capability of the new organisation on behalf of all our clients.
What investor trends do you see now and what do you expect in the future?
Undoubtedly, Exchange Traded Funds (ETFs) are fast becoming one of the most popular products in the investment landscape. Worldwide, ETF assets under management reached an all time high of $942bn at the end of October 2009* – so we are fast approaching the $1 trillion mark – an endorsement from investors of the benefits ETFs bring to the market! In just over nine years since the first ETF was launched in Europe, assets under management have hit $205bn and have grown by 44% so far this year. This growth is set to continue, with research house, Cerulli, predicting European ETF assets under management are set to grow by 200 percent over the next four years.
The strong growth figures can be attributed to the various ways investors are using ETFs, for example, clients are increasingly blending active and passive investment strategies to achieve investment objectives, using ETFs either as a core component of the core holding, seeking active funds to achieve alpha with satellite investments or the other way round. We are continuing to see a rise in institutional investor usage of ETFs by asset managers, hedge funds and pension funds. In addition, private banks are increasingly using ETFs to implement their asset allocation views and we are seeing an increasing number of firms developing their own fund of ETF propositions for their HNW clients.
A new trend is the uptake by the retail intermediary market in Europe and this is being accelerated by initiatives such as the UK Financial Service Authority’s Retail Distribution Review (RDR). The RDR cites ETFs as one of the packaged products that UK advisers, wishing to consider themselves independent, should familiarise themselves with and consider in their recommendations to clients. This trend is expected to continue as the RDR deadline of 2012 draws near.
On a final note
I would like to take this opportunity to thank you for your continued support for iShares and we will continue to deliver the service you would expect from the world’s leading ETF provider.
Source: ETFWorld – BlackRock