BlackRock rolls out two new active ETFs in Europe

Jan 23rd, 2025 | By | Category: Latest news

BlackRock has expanded its active ETF offering in Europe with the launch of two innovative global equity funds: one targeting thematic exposure to artificial intelligence (AI) and another employing a dynamic factor rotation strategy.

Jane Sloan, EMEA Head of Global Product Solutions at BlackRock

Jane Sloan, EMEA Head of Global Product Solutions at BlackRock.

Jane Sloan, EMEA Head of Global Product Solutions at BlackRock, commented: “With the addition of these funds, BlackRock is able to offer European investors active ETFs across both systematic and fundamental investment strategies. The launch of an active ETF as part of our existing AI suite provides clients the choice to tailor their exposure using the wrappers that work best for them.”

AI Innovation

The iShares AI Innovation Active UCITS ETF (IART) is now available on the London Stock Exchange in pound sterling, on Euronext Amsterdam in US dollars, and on Xetra and Euronext Paris in euros.

The fund focuses on companies driving innovation across the AI value chain, spanning enabling infrastructure and real-world applications. It adopts a high-conviction approach, holding just 20 to 40 stocks, with portfolio management led by Tony Kim and Reid Menge of BlackRock’s Fundamental Equities Technology Group.

IART comes with an expense ratio of 0.73%.

BlackRock highlights AI’s transformative potential, forecasting it will revolutionize the global economy by accelerating scientific discovery and creating new industries. Investments in AI infrastructure—including hardware, cloud computing, and semiconductors—are projected to exceed $270 billion in 2024, with a long-term market outlook surpassing $1 trillion.

Concurrently, AI-driven applications, such as virtual assistants and automated business solutions, are expected to expand significantly over the next decade, offering compelling investment opportunities.

The ETF builds upon BlackRock’s European AI suite, which already includes the iShares AI Infrastructure UCITS ETF (AINF) and iShares AI Adopters & Applications UCITS ETF (AIAA). Both index-tracking ETFs launched last month, offering investors exposure at a lower expense ratio of 0.35%.

Factor Rotation

The iShares World Equity Factor Rotation UCITS ETF (FACT) has also been listed on the London Stock Exchange, Euronext Amsterdam, and Xetra.

FACT employs a systematic strategy that tactically allocates to well-established investment factors—size, value, quality, low volatility, and momentum—based on a proprietary model. This dynamic factor rotation approach seeks to enhance returns and mitigate risks by capitalizing on the cyclical nature of factor performance.

Unlike single-factor strategies, which may be overly exposed to specific market risks, and multi-factor strategies, which provide diversification but may dilute exposure to outperforming factors, a factor rotation strategy adapts to market conditions. This flexibility enables it to overweight factors expected to perform well, offering a robust approach to navigating market environments.

The fund, led by Philip Hodges, BlackRock’s Head of Investments for Factors, integrates bottom-up stock selection with tactical factor exposure. The team evaluates individual stocks’ alpha potential and aligns the portfolio with the most favorable factors identified through a data-driven process.

FACT’s portfolio is anticipated to hold between 150 and 250 stocks, with an annual turnover exceeding 100%.

The ETF has an expense ratio of 0.30%.

Ahmed Talhaoui, Head of the BlackRock Systematic Group for EMEA and APAC, noted: “We believe offering a global and dynamic style factor strategy can deliver diversified sources of return through the economic cycle. Through the combination of human insight, big data, and cutting-edge technologies, FACT will help investors access alpha opportunities by effectively allocating to those factors expected to outperform.”

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