BlackRock’s (NYSE: BLK) iShares unit, the world’s largest issuer of exchange traded funds, said Monday led the global ETF industry with $102.8 billion in 2014 inflows, or 31% of the nearly $332 billion hauled in last year by the industry as a whole.
“Growth was driven by the iShares U.S. and European product lines, which continue to be adopted by investors across the globe. The iShares U.S. product line led the way with a record $82.8bn of new assets in 2014, surpassing the previous record for U.S. iShares ETFs of $62.0bn in 2012. In Europe, the business captured $20.3bn in net new flows,” according to a statement issued by iShares.
In the U.S. last year, three iShares ETFs – the iShares Core S&P 500 ETF (NYSEArca: IVV), iShares Core U.S. Aggregate Bond ETF (NYSEArca: AGG) and the iShares MSCI EAFE ETF (NYSEArca: EFA) – ranked among the top 10 asset-gathering ETFs for the year. Among issuers only Vanguard with four placed more ETFs among the top 10 funds for inflows than iShares. [Equity ETFs Lead 2014 Inflows]
Institutional investors continue to be key drivers of ETF asset growth, a theme that is expected to continue in 2015. In its 2014 U.S. Institutional ETF Usage Report, BlackRock (NYSE: BLK) notes the “results show that institutional use of ETFs is expected to rise across the board. This trend holds true for both existing institutional ETF investors and those who do not currently hold ETFs.” [Institutional Adoption of ETFs on the Rise]
While BlackRock maintains a major presence as a preferred ETF provider among institutional investors, the growth of the iShares core lineup, initially aimed at cost-conscious retail investors, is helping drive asset growth as well.
For example, the iShares Core MSCI Emerging Markets ETF (NYSEArca: IEMG) and the iShares Core MSCI EAFE ETF (NYSEArca: IEFA) added over $5.2 billion in new assets combined last year despite a rough year for international stocks.
The iShares Core MSCI Pacific ETF (NYSEArca: IPAC) and the iShares Core MSCI Europe ETF (NYSEArca: IEUR) were two of the most successful new ETFs to debut last year, accumulating assets under management totals of $223.8 million and $208.6 million, respectively.
BlackRock is also expanding its ETF footprint in Europe as traders look for alternatives to increasingly cost-prohibitive futures contracts. The cost of holding futures contracts has risen due to increased regulatory scrutiny. Pricier cost of futures ownership comes as more ETF providers are trimming in fees in an effort to lure investors’ assets.
“ETFs have also been discovered by capital market participants, who are using them as efficient substitutes for futures and swaps,” said Mark Wiedman, global head of iShares at BlackRock, in the statement.
On a global basis, iShares had more than $1 trillion in AUM at the end of last year.
Tom Lydon’s clients own shares of EFA and IVV.