Fintech

BlackRock launches active ETF to tap future of fintech

BlackRock has launched a new active, thematic ETF that will invest in financial technology. 

The BlackRock Future Financial and Technology ETF (BPAY) went live on August 16 and has an expense ratio of 0.70%. The fund is managed by Vasco Moreno, a London-based portfolio manager who specializes in financials and financial technology. 

Moreno, a member of BlackRock’s fundamental equity team, is not named on any US-domiciled mutual funds, but does run two funds available to investors outside of the US, the BGF World Financials fund and BGF FinTech fund. 

The BlackRock Future Financial and Technology fund is the sixth active thematic ETF that the firm launched. These include the BlackRock Future U.S. Themes ETF ($4.5m AUM), BlackRock Future Climate and Sustainable Economy ETF ($4.2m), BlackRock Future Tech ETF ($13.1m), which all launched in 2021, and the BlackRock Future Innovators ETF ($8.1m), and BlackRock Future Health ETF ($7.5m), which went live in 2020. 

The firm also offers a number of index-based thematic funds under its iShares brand. These include the iShares Emergent Food and AgTech Multisector ETF and iShares Blockchain and Tech ETF, both of which launched in April

Around the same time, BlackRock announced that it had hired Jay Jacobs as US head of thematic and active equity ETFs. Jacobs had previously worked for thematic fund specialist Global X.  

‘With a long history in thematic investing, BlackRock is committed to providing access to forward-looking investment themes via targeted, transparent and cost-effective vehicles,’ Jacobs stated in press release. ‘BPAY is representative of the firm’s deep fundamental research expertise, strong active and index platforms, and focus on innovation.’ 

According to BlackRock, the firm now offers 44 thematic products which have a combined $50bn in assets between them. 

Thematic investing was on a tear prior to 2022. For the two years to the end of 2021, the number of thematic funds proliferated, both in the US and globally. Flows flooded in and assets hit new highs.

Last year, there were 589 thematic funds launched, more than double the previous record of 271 set in 2020, according to research by Morningstar.

Over those two years, assets in thematic funds more than tripled to $806bn and represented 2.7% of equity fund assets globally, up from 0.8% a decade prior and driven, partly, by net inflows of $188bn in 2021 and $139bn in 2020, both annual records at the time.

Investor enthusiam for these funds cooled in 2022 as the growth stocks that tend to be favored by thematic funds sold off. 

Read more about thematic investing, here.

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