• The iShares Edge MSCI Multifactor Utilities ETF

BlackRock is also rebranding 26 of its current smart beta ETFs into the iShare Edge suite. All told, the suite now encompasses 35 funds with more than $28 billion in AUM.

BlackRock projected that smart beta assets, now at $282 billion, will reach $1 trillion globally by 2020 and $2.4 trillion by 2025, reflecting an annual organic growth rate of 19 percent.

“The rise of smart beta—propelled by advances in technology and data analytics—is helping to democratize factor investing, putting investment solutions once only accessible to large institutions within the reach of all investors,” Andrew Ang, BlackRock’s head of factor investing strategies, said in a press release.

Smart beta refers to index strategies that are based on alternative benchmarks that focus on specific sets of market factors.

“Smart beta consists of long-only, benchmark driven strategies built to capture one or multiple factors while pursuing a variety of outcomes, such as reducing risk, enhancing returns or improving diversification,” Ang said. 

BlackRock projects smart beta assets to grow at twice the rate of the overall ETF market, driven by minimum volatility and factor strategies, which are expected to represent more than 60 percent of new smart beta flows through 2025.

In 2015, smart beta ETFs saw $31 billion of new flows globally, with minimum volatility ETFs contribution $11 billion of that total. There have been $12.6 billion of inflows into minimum volatility ETFs in 2016, according to BlackRock.

Martin Small, head of BlackRock’s U.S. iShares, said index investing is exploding because almost anything can become an index. 
 
“If it is transparent, transferrable, if it is rules-based, that’s an index,” he said.
 
He added that the popularity of smart beta is a result of more investors “wanting an outcome that is different than the index.” 
 
Small said the new BlackRock funds are the next step in sector investing, using a factors-based approach “to target companies with the potential to outperform their broader respective sectors over multiple market cycles.”

Gregory Bresiger contributed to this article.

 

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