Investors are about to get a new way to play themes like urbanization and tech. We spoke to BlackRock's new Americas head of iShares to get the inside scoop.
- BlackRock is launching a five-theme suite of ETFs to give investors a way to put money into long-term trends the $6.5 trillion firm thinks are reshaping the world, like climate change and demographics.
- The firm's new Americas head of iShares told Business Insider it's a way for investors to tap into trends without over-exposing their portfolios to risky stock bets.
- BlackRock is introducing two new ETFs, one to invest in cybersecurity and another for genomics immunology and healthcare.
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BlackRock can't see the future, but the $6.5 trillion firm is betting on five major themes that it thinks are re-shaping the world.
On Thursday, the $6.5 trillion firm introduced a thematic lineup of eight exchange-traded-funds that correspond with five changes in the global economy, along with two new ETFs.
The trends don't include traditional fund parameters like sector, geography, or market capitalization. Instead, they focus on "the future of the global economy and society:" technological breakthrough; emerging global wealth; climate change and resource scarcity; demographics and social change; and rapid urbanization.
Armando Senra, who took over as Americas head of iShares in April, told Business Insider in an interview that the five themes are "not a marketing gimmick." Instead, he said they're trends that should attract investments for the next 10-20 years and form a "more cohesive narrative" for investors and financial advisers alike.
"We were launching some products that are part of these mega-trends, but what we realized, talking with clients and talking across BlackRock, was that we needed to have a suite that represented the five themes and think about existing and new products," Senra said.
In conjunction with the investment suite, BlackRock launched two new ETFs, one that invests in cybersecurity and technology, and the other that focuses on genomics immunology and healthcare.
More ETFs that fit the five trends are coming in the "medium term," said Chad Slawner, the head of US iShares product. The firm plans to double the number of ETFs within the trends over the next two years. Slawner said BlackRock wants each ETF to get to $100 million in the short term.
"Over the long term, we'd love for these to be billion-dollar products," Slawner said
He said BlackRock had received many requests for this kind of product suite, partly because advisors said it's easiest to guide their clients to long-term investments with trends that relate to consumers. For example, individual investors may read about the advent of autonomous cars but may not know how to invest in that trend beyond buying Tesla stock. One of BlackRock's ETFs, meanwhile, could invest in autonomous cars as a theme, with holdings ranging from battery producers to navigation system companies, not just the companies developing self-driving cars.
"That's something that's easy for clients to understand, it's easy for advisors to explain," Senra said, noting it's easier for individuals to stay invested long-term when a trend resonates. "We're trying to give people access to the investment themes they believe in and resonate with so they can stay invested, as opposed to stock picking, which can be very risky for the end investor."
He compared the tech theme, which has three corresponding ETFs, to investing in single stocks during the dot com boom. An Amazon investor did very well, but other companies "disappeared completely from the map," Senra said.
Other asset managers have launched similar thematic efforts. In March, for example, Goldman Sachs Asset Management announced five ETFs that also invest across sectors, market caps and geographies, with an eye toward trends "driving transformational changes to the global economy." GSAM's five ETFs are themed by data-driven world; finance reimagined; human evolution; manufacturing revolution; and new-age consumer.
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