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New BlackRock ETFs Target ‘Underestimated Investment Opportunities’

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What You Need to Know

  • The new funds are the iShares Emergent Food and AgTech Multisector ETF (IVEG) and iShares Blockchain and Tech ETF (IBLC).
  • Millennial consumers, automation and medical breakthroughs are creating
  • Like the recently announced Fidelity Crypto Industry and Digital Payments ETF, IBLC doesn't directly invest in crypto.

BlackRock has expanded its line of iShares “megatrends” exchange-traded funds with two new ETFs that the asset manager said Wednesday reflect “underestimated investment opportunities” that have been created by new consumers and technologies resulting in “permanent changes” to the market.

Those trends were also the subject of a 28-page report, “The Great Acceleration,” that BlackRock released Wednesday.

“I think that we are just scratching the surface” when it comes to thematic investing, Armando Senra, head of Americas ETF and Index Investing at BlackRock, said Wednesday, during a roundtable briefing with reporters, held in New York and virtually.

This is still the “very early days” for thematic investing, he said. After all, thematic ETFs account for “only 3% of the total U.S. ETF industry,” he noted. So, despite the “tremendous growth” seen so far, most of the expected thematic ETF growth is “yet to come,” he added.

Senra pointed to three specific areas that he said are experiencing significant permanent changes.

Those areas are the new consumer, an “industrial renaissance” in technology, and health/medical breakthroughs.

New consumers include millennials, who BlackRock said in the report are “emerging from lockdowns as the major spenders driving the global economy.” Their ascendance “means their unique preferences for decentralized digital ecosystems and greener goods will transform commerce as we know it,” the report said.

Automation is a significant part of the industrial renaissance, according to BlackRock. “Just as the leap to lockdowns drove virtual technologies, the leap back will likely drive physical technologies,” the report said. “Global inflation and supply chain disruption could make industrial investments in automation, infrastructure, and the future of transportation immediately critical.”

Medical breakthroughs that BlackRock pointed to were progress made in genomics, immunology and precision medicine technologies.

“We recognize that the future of healthcare has been transformed. Pioneering mRNA vaccines used to fight COVID could be applied to diseases from influenza to HIV,” the report said. “The lessons learned through the speed with which COVID vaccines came to market could help accelerate precision medicine treatments fighting cancer and neurological disorders.”

The New ETFs

The firm’s two new funds are the iShares Emergent Food and AgTech Multisector ETF (IVEG) and iShares Blockchain and Tech ETF (IBLC), each with an expense ratio of 0.47%.

IVEG offers investors access to companies that BlackRock said are “shaping the future of food by investing in agricultural technologies and innovative food products and services.”

Meanwhile, “IBLC seeks exposure to global companies at the forefront of development, innovation, and utilization of blockchain and crypto technologies,” the company said.

However, IBLC doesn’t invest directly in cryptocurrencies or crypto derivatives, Rachel Aguirre, head of U.S. iShares Product at BlackRock, told reporters. “What we’re looking to do here is really capture the companies and the equity securities of companies that are involved in the entire ecosystem of blockchain and the surrounding technologies,” she explained. The new ETF “presents a very compelling entry point for investors,” she said.

That makes it similar to the Fidelity Crypto Industry and Digital Payments ETF (FDIG) announced earlier this month, which Fidelity said provides an “opportunity to invest in companies that support the broader digital assets ecosystem.”

The new ETFs increase BlackRock’s iShares megatrends offerings to a total of 20 index and active ETFs, Senra told reporters.

“I think we are at a very powerful inflection point in the ETF industry,” Jay Jacobs, U.S. head of Thematics and Active Equity ETFs at BlackRock, told reporters.

(Pictured: Blackrock Headquarters in New York; Photo: AP)