BlackRock Launches Two Active ETFs
A stock fund targets the S&P 500, while a bond fund uses a high-yield index.
BlackRock launched the BlackRock Long-Term U.S. Equity ETF (Nasdaq: BELT) and the BlackRock High Yield ETF (Nasdaq: BRHY) on Tuesday, expanding its active exchange-traded funds lineup.
“Active ETFs are becoming an integral part of investor portfolios around the world, with financial advisors increasingly incorporating them into their models-based practice,” said Jessica Tan, BlackRock’s head of Americas for global product solutions.
The BELT ETF has a 0.75% expense ratio, 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 index, and David Delbos and Mitchell Garfin manage BRHY, which uses the Bloomberg U.S. Corporate High Yield 2% Issuer Capped Index.
Evolving market conditions and changes in distribution dynamics have boosted growth for active ETFs, BlackRock said.
Registered investment advisors using active ETFs in model portfolios accounted for nearly half of all active ETF assets at year-end 2023, up from 31% in 2019, the firm said, citing Broadridge Global Market Intelligence research.
BlackRock has nearly doubled its number of active ETFs in 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 fixed income and fundamental equity assets under management, respectively, have outperformed the benchmark or peer median over the past five years, the company said.
The BlackRock Long-Term U.S. Equity ETF seeks long-term growth by investing in 20 to 25 positions that the team believes can compound growth in a way that the market doesn’t sufficiently appreciate.
The portfolio managers focus on a company’s ability to sustain high returns, its reinvestment opportunity and its ability to differentiate itself from the competition long term.
The BlackRock High Yield ETF seeks to maximize total return by investing primarily in non-investment grade bonds with maturities up to 10 years.
Photo: Bloomberg