ETFs
BlackRock launches two active ETFs
A stock fund targets the S&P 500, while a bond fund uses a high-yielding index.
BlackRock launched the BlackRock Long-Term US Equity ETF (Nasdaq: BELT) and the BlackRock High Yield ETF (Nasdaq: BRHY) on Tuesday, expanding its active lineup of exchange-traded funds.
“Active ETFs have become an integral part of investors’ portfolios around the world, with financial advisors increasingly integrating them into their model-based practice,” said Jessica Tan, head of global product solutions for the Americas at BlackRock. .
The BELT ETF has an expense ratio of 0.75%, while the BRHY ETF’s expense ratio is 0.45%.
Alister Hibbert and Michael Constantis manage the BELT fund, which uses the S&P 500 as its benchmark, and David Delbos and Mitchell Garfin manage BRHY, which uses the Bloomberg US Corporate High Yield 2% Issuer Capped Index.
Evolving market conditions and changes in distribution dynamics have driven the growth of active ETFs, BlackRock said.
Registered investment advisors using active ETFs in model portfolios accounted for nearly half of all active ETF assets at the end of 2023, up from 31% in 2019, the company said, citing the study from Broadridge Global Market Intelligence.
BlackRock has nearly doubled its number of active ETFs over the past year, managing $25 billion in assets under management across 40 active ETFs in the United States as of Tuesday.
Ninety-three percent and 79% of BlackRock’s actively managed taxable bond assets and fundamental stocks, respectively, outperformed the benchmark or peer median over the past five years, the company said.
The BlackRock Long-Term US Equity ETF seeks long-term growth by investing in 20 to 25 positions that the team believes can compound growth in ways that the market does not sufficiently appreciate.
Portfolio managers focus on a company’s ability to maintain high returns, its reinvestment opportunities, and its ability to differentiate itself from competition over the long term.
The BlackRock High Yield ETF seeks to maximize total return by investing primarily in non-investment grade bonds with maturities of up to 10 years.
Photo: Bloomberg