So-called synthetic ETFs, offered in Europe by firms including Societe Generale's Lyxor Asset Management, introduce a layer of complexity and counterparty risk that investors may not be aware of, Fink said at a conference in November.
All Lyxor ETFs are fully regulated with levels of transparency and risk management that typically exceed regulatory requirements, Simon Klein, head of European ETFs at Lyxor, said in an e-mailed statement. Lyxor has said that BlackRock's warnings distract from the risk associated with securities lending by physical ETFs, which is that a borrower will collapse and fail to return them.
'Married With Performance'
BlackRock is also advocating for better corporate governance at companies it invests in. In January, the firm sent letters to 600 companies in which it holds at least 5 percent of the shares to adopt more shareholder-friendly practices. And BlackRock recently filed with the Securities and Exchange Commission to open a fund that excludes companies that have ties to countries where there are human rights violations.
The firm's efforts won't translate into results overnight, said Geoff Bobroff, a mutual-fund consultant in East Greenwich, Rhode Island.
"Building awareness and creating a brand is years in the making, not weeks or days or months," Bobroff said. "It ultimately has to be married with performance."