A Pending BlackRock ETF to Watch

Even with $2.4 trillion in ETF assets spread across more than 400 ETFs, there’s a pending offering from BlackRock that caught my eye.

Before I lose you, dear reader, I’m not talking about the hopefully soon-to-be-approved iShares Bitcoin Trust. VettaFi expects multiple spot bitcoin ETFs to be trading by mid-February 2024 when we kick off the Exchange conference. BlackRock is likely to offer one of them. No, I’m talking about BlackRock U.S. Industry Rotation ETF.

BlackRock has expanded its active ETF lineup in 2024, tapping into the expertise of some of its established mutual fund managers. However, this industry rotation ETF — which was just filed for this week and should come to market in early 2024 — is notable for a few reasons.

The fund will be managed by a a trio from BlackRock’s model portfolio solutions group. We think this new ETF will help them run a more tax-efficient strategy. This group runs ETF and mutual fund multi-asset portfolios that are available for financial advisors to leverage. Those that do tap into BlackRock’s expertise and free up time to support client objectives outside of money management.

Growth Potential of Model Portfolios

VettaFi spoke recently to Dominik Rohe, head of BlackRock Americas ETF and Index Investments business. He highlighted the growth potential for fee-based model portfolios managed industrywide.

“In the U.S., we expect total assets in managed models will more than double from $4.5 trillion today to over $10 trillion by 2027, explained Rohe. As fiduciary wealth management becomes predominant, managed model portfolios are the main way wealth managers scale their practices, ensuring a more consistent investment experience. As managed models grow, we believe ETFs will also grow well beyond the core.”

We believe BlackRock’s model portfolio solutions group manages close to $100 billion in assets. That’s large enough that when BlackRock makes a move, we often see it days later in the ETF flow leaderboard.