“We are in a secular bull market for ETFs,” BlackRock, Inc. (NYSE:BLK) CEO Larry Fink said during the company’s second-quarter earnings call Thursday.
BlackRock iShares ETFs outflows
BlackRock, Inc. (NYSE:BLK) saw net outflows in its iShares ETFs in the second quarter as investors sold fixed-income and alternatives products on worries the Federal Reserve would taper its bond purchases. However, iShares flows have rebounded strongly so far in July and the firm’s chief executive is upbeat on the future of the ETF business.
The overall iShares business experienced net outflows of $963 million in the quarter, driven by redemptions in the fixed-income and alternatives segments. However, equity ETF flows were solid with about $2.7 billion moving in, according to BlackRock, Inc. (NYSE:BLK)’s quarterly results.
“iShares are used as an investment vehicle but also used as an exposure tool by our clients,” Fink said Thursday.
Clients use iShares to take on fresh risk
“The ability to exit quickly, the ability to exit efficiently and in bulk is part and parcel of our value proposition to an important client segment, trading oriented investors,” Fink remarked. “They use iShares when they want to take on fresh risk as they did earlier in the year and the fourth quarter of 2012 and when they want to exit following the Fed comments on tapering. The consequence is that the quarterly flows and our market share will be volatile.”
For example, since the end of the second quarter, iShares ETFs have seen inflows of more than $6 billion, taking year-to-date flows to over $30 billion.
iShares running at the same rate of growth as 2012
During the market volatility in June, investors used ETFs to express their views on emerging markets and bonds — they sold.
On May 22, Fed chief Ben Bernanke first indicated the Fed could scale back its bond-buying program. In the three weeks following May 22, iShares experienced redemptions of nearly $15 billion.
Despite the June outflows, Fink said iShares is running at the same rate of growth as 2012.
Larry Fink: iShares performed in a challenging period
“So, overall our products performed in a challenging period but we welcome continued dialogue around the mechanics of ETF,” the BlackRock, Inc. (NYSE:BLK) CEO said. “We are constantly working with market makers and exchanges to make sure that they are working appropriately. As the market leader in the industry, we believe we have a responsibility to lead the charge on market practices and investor education. Not just with respect to iShares but in the ETF market globally at large.”
He said BlackRock, Inc. (NYSE:BLK) “will both drive the growth and benefit from the growth of the market.”
Via : ETF Trends