ETFs Set For Growth
Friday, May 21, 2010

A new educational campaign to support new and existing users of exchange traded funds (ETFs) make greater use of this increasingly popular investment tool within their portfolios has been launched by iShares, the ETF platform of BlackRock.

Entitled ‘Keep Evolving,’ the campaign highlights how ETFs can empower investors to take advantage of an increased range of opportunities presented by the constantly changing markets. With recent research from iShares indicating that 25% of Europe's professional investors are yet to use an ETF, iShares aims to raise awareness of the opportunities presented by this flexible and cost effective instrument.

Analysis of iShares research shows investors use ETFs both tactically and strategically. Over the past two years in Europe, during times of high market volatility, the growth in ETF trading volumes has outpaced equity trading volumes 90% of the time, showing how investors are increasingly using ETFs to manage risk in their portfolios and their tactical exposures. This is based on monthly data where the index has moved more than 5% and comparing the increase in equity turnover to ETF turnover.

iShares has developed a range of white papers and case studies to support the initiative. They demonstrate how ETFs can be used tactically, establishing core and strategic market exposure; how they can be integrated with other products and used in combination with futures, swaps and directly held securities. 

Rory Tobin, Head of iShares International, commented: “With over 90% of those currently using ETFs declaring that they will be increasing or maintaining their use in the next six months, we are aiming to attract, motivate and support investors who have yet to discover the opportunities presented by iShares ETFs. Our ‘Keep Evolving’ campaign is designed to demonstrate how iShares can enable investors to exploit wider investment opportunities than ever before, particularly in the implementation of effective asset allocation strategies."

An ETF is an investment company with shares which trade intraday on stock exchanges at market-determined prices. Investors can buy and sell them in the same way as they currently trade in equities on an exchange. First listed in the US in 1993, and in Europe in 2000, it is believed that there are now well over 2,000 ETFs being traded globally.

BlackRock announced in January that global ETFs assets hit an all time high of USD1 trillion at the end of December 2009 – 45.2% above USD710.9bn at the end of 2008.

Research by BlackRock found that, during 2009, many investors considered that ETFs met their desire for greater transparency in relation to the issues of cost, transparency of holdings, transparency of price, liquidity, product structure, risk and return as they relate to investment alternatives.

“In a world where investment products come and go with the blink of an eye, ETFs might be considered one of the most innovative financial products in the last two decades," said Deborah Fuhr, Global Head of ETF Research & Implementation Strategy at BlackRock.

"They have fundamentally changed how both institutional and retail investors construct their investment portfolios," she added.