iShares Adds 7 Active A.I.-Backed Sector ETFs

Branching from its normal line of business, BlackRock’s iShares has launched seven actively managed sector-focused ETFs that implement artificial intelligence screens.

On Friday, iShares launched seven active sector ETFs, including:

  • iShares Evolved U.S. Technology ETF (Cboe: IETC)
  • iShares Evolved U.S. Consumer Staples ETF (Cboe: IECS)
  • iShares Evolved U.S. Discretionary Spending ETF (Cboe: IEDI)
  • iShares Evolved U.S. Financials ETF (Cboe: IEFN)
  • iShares Evolved U.S. Healthcare Staples ETF (Cboe: IEHS)
  • iShares Evolved U.S. Innovative Healthcare (Cboe: IEIH)
  • iShares Evolved U.S. Media and Entertainment (Cboe: IEME)

Each of the new ETFs comes with a 0.18% expense ratio.

The ETFs are managed by BlackRock’s Systematic Active Equity group, which is now backed by more than 80 portfolio managers, researchers and strategists.

The active sector ETFs powered by machine learning try to expand upon traditional sector classification systems. The funds take components from large-, mid- and small-cap segments and incorporate data analysis tools taken from artificial intelligence technology, including machine learning, natural language processing and clustering algorithms, among others.

These artificial intelligence screens ensure the ETFs keep up with changing conditions and also seek out links between companies potentially operating in various sectors that have been overlooked. In contrast, traditional sector classifications tend to cluster companies together that have similar characteristics, which may leave evolving companies stuck in old sector classifications.

A Dynamic Approach to Sector Investing

“The worst orthodoxies are the ones no one even bothers questioning, and late 1990s sector classifications are among the worst offenders. That is why iShares is leading the ETF movement of progress, modernizing the ways people invest,” Martin Small, Head of U.S. iShares at BlackRock, said in a note. “BlackRock’s evolved sector approach uses data science and borrows from systematic active management to offer investors an updated way to invest in America’s changing economy.”