The record cements exchange-traded funds (ETF) as the premier technology for investors seeking accessibility and risk management, according to Stephen Cohen, chief product officer and global head of iShares at BlackRock.
“ETFs have become the technology of choice to access markets, build better portfolios, and manage risk with transparency and scale,” he said.
The announcement follows last week’s news that the wealth manager will reposition its tech ETF to focus on Nasdaq’s leading non-financial firms, effective early October.
This change forms part of an ongoing review of BlackRock’s local iShares product suite, in line with its new scenario-based investment approach amid rising global uncertainty and AI-driven structural shifts.
Going forward, Cohen anticipates that passive ETFs will continue to be the primary driver of growth. However, he also noted that other strategies are becoming more significant.
“We believe that indexing will continue to be the predominant growth driver for ETFs, but innovation is opening new frontiers – from more granular indices to fixed income, active, and digital strategies – and we believe this is just the beginning,” he said.
This prediction echoes comments from Betashares senior investment strategist Cameron Gleeson, who spoke to InvestorDaily last month.
At the time, Gleeson explained that the increasing success of Betashares’ Nasdaq 100 ETF was partly due to its role as a gateway to global tech leaders and as a means of diversifying beyond the ASX’s heavy reliance on banks and resources.
“Most Australian investors would acknowledge that our local market is somewhat limited in the opportunity set. The ASX 200 is dominated by miners and banks, which are typically mature and often cyclical industries,” he said.
“What NDQ has offered [Australian investors] an opportunity to participate in the future. These are global companies, obviously listed in the US, and it’s been a great tool to drive portfolio outcomes and diversification.”
Gleeson highlighted that substantial investments from Nasdaq companies are bolstering broader economic growth, creating ripple effects in sectors like construction and manufacturing, even as some economists foresee a US economic slowdown. As well as this, he noted that technology-driven growth is structurally resilient, offering stability against cyclical pressures.
Likewise, the upcoming changes to BlackRock’s iShares Future Tech Innovators ETF highlight mega-cap exposure to leading tech companies as an area of focus for the wealth manager, which has previously identified AI as a significant long-term growth driver.
Another area of significant growth Cohen identified in iShares’ ETF range was their rapid adoption in Asia-Pacific, particularly beyond Australia. In the last two years alone, iShares has launched 27 new APAC-domiciled ETFs, expanding its total to 112 across markets such as Japan, Hong Kong, Singapore and Australia, with Taiwan soon to follow.
This expansion reflects the heady moment currently experienced by emerging markets as sentiment shifts around the US-centric narrative, and, notably, Taiwan’s significant contribution to the AI sector.
As APAC head of global product solutions at BlackRock Aarti Angara explained, ETFs provide investors with better choice, more convenient access, and increased affordability across the region.
“From institutional investors using bond ETFs to access ever-more precise areas of global bond markets, to wealth and retail users using ETFs as core building blocks to build diversified portfolios, these powerful tools are empowering investors of all types to realise their goals,” Angara said.
Cohen concluded that the current growth in ETFs is just one chapter in a much broader, ongoing narrative.
“Today, ETFs represent just 6 per cent of the global capital markets. We believe the ETF industry will nearly double, from US$15 trillion to US$27 trillion, in the next five years.”
