BlackRock's ETF manufacturing arm iShares has recorded its fastest year of expansion ever, recording US$246 billion in new flows throughout 2017.
At the start of the new year there was a staggering US$4.5 trillion in ETFs worldwide, and BlackRock reckons that could "more than double" by 2022 – leading some to warn the investment class is approaching 'bubble' territory.
In August 2017, Providence Wealth Advisory warned that ETFs have "distorted" markets, and Bell Direct chief executive Arnie Selvarajah cautioned against "blind allocation" to ETFs later that month.
But BlackRock head of iShares Australia Jon Howie insists that Australian investors should stick with ETFs, noting they have turned to them for “convenience, low cost and range of exposures”.
“Three global trends will power this growth,” he said. “Fee-based wealth management, networked bond and derivatives trading, and alpha-seeking usage by active fund and wealth managers.”
Business in the Asia-Pacific region has doubled over the span of three years and the number of fixed income clients has doubled over two, BlackRock head of Asia-Pacific iShares Susan Chan said.
“The Korean and Taiwanese markets have made bigger contributions to our business over the course of this year as ETFs are increasingly used for portfolio construction across multiple applications,” Ms Chan said.
