BlackRock is the leading investment company in the world managing and investing money for all sorts of global customers. They serve institutions, governments, companies and many private individuals from all over the world.
To say that they are just a leading investment firm is a bit of an understatement, they really are the absolute number 1 around the world investing more than 5 Trillion Dollars for their customers. Our question here is what the relation of BlackRock is with ETF’s and how ETF’s add value to BlackRock as a whole.
ETF’s opens the gate to retail investors
In the world of investing there are mainly 2 sorts of investors: institutional investors and retail investors. Institutional investors consists of banks, insurance companies, pension funds and also ETF’s themselves (as they need to buy or sell the underlying assets in case of physical ETF’s).
Retail investors is a somewhat confusing word to describe individual investors, you and me in short. While ETF’s are traded massively on behalf of institutional investors their real value lies with individual investors who are now able to invest globally in all sorts of market sectors and investment niches by simply buying an ETF that covers that area. Through ETF’s the retail investors market has opened widely to BlackRock.
Profiting from a rapidly changing investors market
In this digital area where people take matters into their own hands individual investors do not rely on banks to handle their investments, they want to take control themselves and ETF’s are ideally suited for doing just that.
By creating and supplying ETF’s BlackRock is able to get a grip on this exploding individual investors market. By providing ETF’s to the market BlackRock is able to manage the money of millions of relatively small individual investors in a very effective and efficient way.
The impact of ETF’s on BlackRock’s performance
Today ETF holdings are good for about 20% of the total assets invested by BlackRock. Of course BlackRock’s 100% daughter iShares is holding these assets. So ETF’s have become a major factor in the day-to-day business of BlackRock.
With the increasing popularity of ETF’s and the market domination of iShares one may expect that the impact of ETF’s on the total turnover of BlackRock continues to rise.
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