BlackRock Seeks Vanguard-Style ETF Share Class
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BlackRock Inc., the world's biggest ETF issuer, is the latest company to seek permission to carve exchange-traded funds from mutual funds since No. 2 issuer Vanguard Group Inc. lost its exclusivity on the process last year.
BlackRock asked the Securities and Exchange Commission in an Oct. 30 filing to permit its funds to offer both ETF and mutual fund shares. How long an approval would take was not clear; the SEC said it declined to comment on individual filings.
Granting permission would allow the New York-based investment bank, with $11.5 trillion in total assets, to dramatically boost its ETF offerings: it currently lists 584 mutual funds and 438 exchange-traded funds. Those ETFs, mostly issued under the iShares brand, hold $3.04 trillion in assets according to etf.com data; a mutual fund AUM was not immediately available.
Fund issuers from Fidelity to Morgan Stanley to Dimensional are seeking permission to create ETFs from mutual funds using the process that had been exclusively Vanguard's from 2000 until May 2023. Investors are choosing ETFs, with their ease of trade and tax benefits, over mutual funds: and the latter investment vehicle has lost trillions in assets in recent years while ETFs soared to around $10 trillion in assets this year.
BlackRock Eyes Growing ETF Demand
In its application, BlackRock said financial professionals and clients "have reported a greater interest in ETFs," as "ETF model portfolios grow in popularity. Applicants continue to see demand for ETFs to help investors meet their distinct financial goals."
Vanguard is the No. 2 ETF issuer with $2.64 trillion in 86 exchange-traded funds. The exclusive right to create ETFs from mutual funds added $100 billion in gains to Vanguard shareholders, Bloomberg reported last year.
The U.S. arm of Australia’s Perpetual Group was the first company to seek such so-called exemptive relief, applying for it in February 2023.
"The multi-class structure opens an important new avenue of choice for clients to invest in the manner that helps them achieve their distinct financial goals," BlackRock's head of U.S. iShares Product Rachel Aguirre said in an emailed statement.
BlackRock reported $11.3 trillion in total assets for the third quarter without breaking out mutual fund assets.