BlackRock gets serious about thematics
BlackRock has started listing new thematic ETFs in the United States again, after taking a few years off. The firm has poached Jay Jacobs from Global X in New York to help lead their new push.
IVEG will track the Morningstar Global Food Innovation Index. The index is made up of companies that are expected to benefit from creating or using agricultural technologies or innovative food products or services. The index is essentially actively managed by Morningstar’s team of analysts. These analysts judge how likely companies are to make profit or revenue in the theme.
IBLC tracks the NYSE FactSet Global Blockchain Technologies Index. It is made of companies that develop or use blockchain and crypto technologies. Companies are identified using FactSet’s RBICS classification system, as well as proprietary research. The index is dominated by bitcoin miners.
Both funds charge 0.47%.
Bernie’s commentary – BlackRock’s share price; Morningstar’s absurd hypocrisy
BlackRock gave up launching riskier new ETFs after its share price got crunched in 2018. Larry Fink fired heaps of iShares people and deprioritised the firm’s ETF growth. Fink then started saying the path forward for BlackRock was as a technology company, led by its Aladdin platform. Fink said he wanted BlackRock making one third of its revenue from technology by 2022.
Four years later the results are in. BlackRock makes less than 10% of its revenue from tech (nowhere close to one-third). And the company’s share price has only rebounded thanks to its bread-and-butter asset management business, supported crucially by iShares. This share price rebound is presumably what’s made Larry Fink happy hiring more ETF people and building more ETFs (like today’s).
Meanwhile, I question Morningstar’s participation in thematic ETFs. Morningstar has done more than anyone to discredit thematic ETFs. Morningstar’s researchers have provided a steady drip of innuendo about thematic ETFs to mainstream media outlets for years, with a view to turning investors against them.
Perhaps they like Blackrock, have now decided to pivot and embrace thematics