(February 14, 2013) — Exchange-traded funds (ETFs) will soon join bonds and wines as assets that mature over time.
New York City-based BlackRock will soon roll out a new category of ETFs that reach maturity dates, just as bonds do, a company spokesperson told aiCIO. The firm intends for the new funds to reduce complexity in a major institutional portfolios, such as those managed by bank treasurers.
BlackRock’s ETF unit iShares will be responsible for the products. Last year, one third of ETFs traded flowed through iShares, totaling $85.2 billion, according to a February 13 presentation by BlackRock President Robert Kapito. He listed “innovation in ETF usage” as one of iShare’s three core strategies for global growth. In 2012, the unit was responsible for 22% of BlackRock’s assets under management, and 32% of the base fees it earned.
Institutional investment in ETFs has risen sharply in recent years. On January 18, the exchange-traded product market as a whole was valued at $2 trillion, according to BlackRock. This was double the $1 trillion figure it reached in 2009, some 19 years after the first product was launched.
“The dynamics of the ETP market are changing and developing,” Dodd Kittsley, the firm’s global head of ETP research, said at the time. “As ETPs become better known and understood in different regions and amongst different types of investors, uptake is fast increasing. Added to this, ETP providers are expanding and deepening their coverage of different assets classes and regions, allowing investors to put ETPs to use in new ways and employ them to access areas where they couldn’t before, such as emerging market debt.”