BlackRock's iShares exchange traded funds (ETFs) have become such an incredibly popular way for investors, both retail and institutional, to diversify their portfolios. With a wide variety of funds across different spectrums, BlackRock has allowed investors to spread out their risk, while still maintaining a percentage of the upside seen in different asset classes.
A year ago, BlackRock (BLK) launched the iShares Core Series for buy and hold investors to use as building blocks for the heart of their portfolio. Based on the positive investor feedback on the funds, BlackRock is launching a Core Tool, to better educate investors on how to use these funds for their investment needs.
I recently sat down with Patrick Dunne, head of iShares Global Markets and Investments at BlackRock, to discuss the company's initiatives with the iShares Core Builder tool, and what it means for investors.
Chris Ciaccia: What is the iShares Core Builder tool? What does it tell investors?
Patrick Dunne: A year ago we launched the iShares Core Series, which includes 10 funds that cover domestic and international equity and U.S. fixed income. Investors have asked how to use the funds in their portfolio. We created a simple tool for investors to figure out their needs, preferences and risk tolerances, and to then create a customized ETF portfolio comprised of the iShares Core Funds. Investors can either buy the funds directly through their brokerage or from a financial advisor.
Ciaccia: Who is the iShares Core Builder tool for?
Dunne: The tool is directed toward institutional and retail buy and hold investors. It's perfect for the core of anyone's portfolio. I'd say it's more suited towards retail, and people who need to figure out their risk tolerances and how to build an ETF portfolio. These investors could be self-directed, working on their own, or someone who works with an advisor.
Ciaccia: Why did iShares build the tool?
Dunne: A number of clients wanted guidance on how to put them [the funds] together. The tool allows them to do that. It doesn't take much time to answer the questions using the tool, which then suggests an allocation across the different funds.
Ciaccia: Why are investors using iShares ETFs more, particularly in the core of their portfolios as long-term holdings?
Dunne: Well, more and more investors are using ETFs generally and increasingly in the core of their portfolios. The iShares Core Funds are designed to fit together to provide broad domestic and international equity and U.S. fixed income exposure and can be tailored to match their individual choice. They're competitively priced and liquid. The expense ratios are on our website.
Ciaccia: How successful are the iShares Core Funds one year after launch?
Dunne: They're very successful. We've just passed $100 billion in AUM (assets under management). The iShares Core MSCI Emerging Market ETF (IEMG) has over $2 billion in AUM. We've gotten great feedback from retail and institutional investors. We expect that kind of growth going forward.
Ciaccia: What's iShares planning next to help investors use ETFs more in the core of their portfolio?
Dunne: Our focus remains on continuing to meet investor demand for new and diversified solutions to navigate today’s markets through responsible innovation. We filed with the SEC for new products – the iShares Core Allocation Series. The four products covered by the SEC filing are: iShares Core Allocation Conservative ETF, iShares Core Allocation Moderate ETF, iShares Core Allocation Moderate Growth ETF and iShares Core Allocation Growth ETF. These funds represent the next step in helping buy and hold investors more easily access a package of iShares Core Funds in one ETF based on their risk profiles.