After expanding their exchange traded fund partnership less than a year ago, BlackRock (NYSE: BLK) and Fidelity Investments are already experiencing improved organic growth.
BlackRock revealed that growth of iShares ETFs on Fidelity’s broker platform, which provides commission-free trades on over 60 iShares ETFs, was 15% over 2013, compared to the 8% growth rate for the iShares business as a whole, reports Jackie Noblett for Financial Times. [ETFs Driving BlackRock Profit Growth]
“The expansion of the partnership earlier in the year probably contributed to that growth rate,” Ben Johnson, director of passive fund research at Morningstar, said in the article.
Meanwhile, Fidelity launched a line of 10 sector ETFs subadvised by BlackRock. The ETFs have an expense ratio of 0.12%, the lowest for sector ETFs on the market.
“We’re not in the beta space; that’s not who we are, and that’s not how we’re going to add value, but that’s what our clients are looking for, and it’s important for us to offer them what they want,” Greg Friedman, senior vice-president and head of product development and strategy at Fidelity SelectCo, said at the ETF Virtual Summit last week.
BlackRock and Fidelity strengthened their partnership in March last year, expanding the number of commission-free iShares ETFs available to 65 from 30 and partnering on Fidelity passive ETF products. [Fidelity, BlackRock in ETF Partnership]
The two money managers play well into each other’s strengths. BlackRock has benefited from Fidelity’s strong distribution channels while Fidelity benefited from expertise on ETF products.
“We are raising our profile through our branding efforts, evolving our product set in anticipation of changing market trends and deepening our distribution relationships,” BlackRock chief executive Larry Fink, said. “BlackRock’s strategic alliance with Fidelity, which we enhanced in 2013, is another example of our commitment to buy-and-hold investors.”
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Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.