BlackRock launches two new active ETFs with exposure to AI and factors
22 JAN, 2025
BlackRock has announced that it is expanding its offering of active European ETFs with the launch of two funds, the iShares AI Innovation Active UCITS ETF (IART) and the iShares World Equity Factor Rotation UCITS ETF (FACT).
iShares AI Innovation Active UCITS ETF
IART follows the same investment strategy as the BGF AI Innovation Fund, which was launched in Europe in December 2024. IART is based on BlackRock's existing European AI suite, which also includes two indexed ETFs (iShares AI Infrastructure UCITS ETF (AINF) and iShares AI Adopters & Applications UCITS ETF (AIAA)).
The iShares AI Innovation Active UCITS ETF aims to expose the entire AI value chain and is a relatively concentrated "best ideas" portfolio, composed of 20-40 stocks. The ETF is actively managed by Tony Kim and Reid Menge, who lead BlackRock's Fundamental Equities Technology Group. The fund trades on LSE, Euronext and Xetra with a TER of 0.73%.
Investments in AI infrastructure, which include hardware, cloud computing and chips, as well as AI-driven applications such as virtual assistants and automated business solutions, are poised for significant growth in the next decade. This offers strategic opportunities for investors seeking innovation and long-term value.
iShares World Equity Factor Rotation UCITS ETF
Similarly, BlackRock has also launched the iShares World Equity Factor Rotation UCITS ETF, a systematic investment strategy that seeks to outperform the global equity market by tactically allocating to historically rewarded factors, using proprietary insights.
The new fund is based on the broad range of UCITS ETFs that invest in BlackRock's investment factors, providing investors seeking factor strategies with a wider variety of tools for their portfolios.
Factors, such as momentum, value or quality, are broad and persistent drivers of market return and risk. Historically, they have generated strong long-term returns with more favorable risk-return profiles. FACT's goal is to generate alpha by rotating factors, focusing on long-term diversified factor premiums and navigating short-term cyclicality through dynamic factor tilts.
The team assesses the alpha potential of each value through an ascending selection and determines whether the exposure to the value factors fits the tactical perspectives of each factor, following a systematic process based on data. Then, the portfolio is built by combining multiple factors and giving greater weight to the values with greater exposure to the most favorable factors, which helps to mitigate short-term cyclicality and provides a solid strategy for complex market environments.
The fund will vary its exposure over time, trying to capture short-term alpha opportunities, with about 150-250 holdings and an expected annual turnover of over 100%. The ETF is actively managed by Philip Hodges, PhD, Head of Factor Investments, and He Ren from BlackRock. The fund is listed on the LSE, Euronext and Xetra with a TER of 0.30%
With the introduction of these funds, BlackRock can offer European investors active ETFs that cover both systematic and fundamental investment strategies. The launch of an active ETF as part of our current AI range offers clients the opportunity to tailor their level of exposure using the options that best suit them.
Jane Sloan, Head of Global Product Solutions for EMEA at BlackRock
We believe that offering a global and dynamic style factor strategy can provide diversified sources of return throughout the economic cycle. Through the combination of human knowledge, big data and modern technologies, FACT will allow investors to access alpha opportunities by effectively allocating to those assets that are expected to outperform.
Ahmed Talhaoui, Head of the BlackRock Systematic Group (BSYS) for EMEA and APAC
