Index Investing- Institutional

At BlackRock, our approach to index investing is anything but passive. We understand that investors today demand more efficient returns and innovative ways to use index strategies.

Capital at risk. All financial investments involve an element of risk. Therefore, the value of the investment and the income from it will vary and the initial investment amount cannot be guaranteed.

Why BlackRock for index investing?

BlackRock seeks to provide cost-effective access for institutional clients’ desired market exposures through both widely used and customized benchmarks, all through our proprietary, in-house Aladdin technology. In addition to core allocations, clients use our flexible platform of index strategies for a range of investment needs, including risk management, tactical adjustments and cash equitization.

Flexibility

Our flexible range of strategies are designed to meet your needs today and in the future.

Efficiency

We are focused on delivering optimal tracking, consistent returns and lowering the total cost of ownership.

Precision

Our investment track record spans four decades led us to be entrusted with US$4.9 trillion of assets under management1.

Learn more about index investing at BlackRock

Platform capabilities Investment process Use cases BlackRock team

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BlackRock’s Index investing capabilities

With US$4.9tn1 in indexed assets, BlackRock is a global leader in index investing.

Over 2500 strategies

Managed against 1000+ benchmarks

Exposures available across vehicles

Including pooled, separately managed accounts and exchange traded

Breadth of platform

Strategies across market-cap weighted, index “plus,” ESG, smart beta and asset allocation

Distribution by asset class (%)

Source: BlackRock, as of September 31, 2019.

Index investment management cycle

We combine the best of BlackRock technology and benchmark expertise to create a superior experience across the index investment management cycle.

Source: BlackRock, for illustrative purposes only.

- Review cumulative effect of investment decisions to help identify factors contributing to/subtracting from portfolio performance
- Risk & Quantitative Analysis Team (RQA) monitors dozens of risk factors globally on a continuous basis.
- Aladdin advantage: Portfolio engineering tools are integrated on the same platform as risk monitoring tools, making it easy for RQA to provide a third-party risk assessment on portfolios.
- Detailed knowledge of index methodologies
- Experience with predicting and projecting index changes
- Focused on optimal treatment of corporate actions
- Continual research into index events
- Aladdin advantage: Proprietary Aladdin ‘Index Pro’ application makes analyzing benchmark changes a clean and efficient process
- Significant investment in technology
- Market leading portfolio and risk tools provided by our Aladdin® platform
- Integrated cost and liquidity analysis
- Sophisticated optimization tools
- Aladdin advantage: Custom portfolio construction application built by our portfolio engineering team designed especially for index management
- Building smart trading strategies designed to access optimal liquidity
- Large internal marketplace for potential netting of client flows
- Focused trading research and systems
- Aladdin advantage: Aladdin’s extensive global trading platform ensures low costs and optimal access to liquidity

Sustainability

Integrating sustainable solutions into portfolios is becoming an increasing focus for institutional investors. The iShares EMEA sustainable product offering caters to a variety of ESG objectives, offering a broad range of sustainable strategies, across ETFs and mutual funds, to meet the needs of our clients, wherever they are in their sustainable journey.

Risk: This information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any security in particular. This is for illustrative and informational purposes and is subject to change. It has not been approved by any regulatory authority or securities regulator.

The environmental, social and governance (“ESG”) considerations discussed herein may affect an investment team’s decision to invest in certain companies or industries from time to time. Results may differ from portfolios that do not apply similar ESG considerations to their investment process.

Fixed income

BlackRock is a leading provider of indexed fixed income investments, with institutional index mutual fund and ETF strategies spanning the world's investable fixed income markets. Our full spectrum of global index products can provide efficient, cost-effective exposure to specific market segments.

Fixed income ETFs have also become the main reference instrument for liquidity and price discovery in bond markets, and a critical part of every fixed income investor’s toolkit.²

During the extreme market volatility experienced in the first half of 2020, fixed income ETFs passed their biggest test to date, as highlighted in the BlackRock paper “Turning Point”. When volatility struck, fixed income ETF trading surged, reaching US$17.5billion on average from late February through to late March 2020, more than twice the 2019 weekly average. Similarly, on 12 March, one of the worst days for equity markets in modern history and a day during which credit markets sold off sharply, the iShares US$ Corp Bond UCITS ETF (LQDE) traded almost 1,000 times on exchange compared with just 37 times on average for its largest five bond holdings.³

BlackRock is a leading provider of both alpha and indexed fixed income investments. iShares offers over 90 ETFs in UCITS format across a range of fixed income exposures.⁴An extensive range of fixed income ESG ETFs also help investors meet ESG integration requirements. In an increasing number of institutional portfolios, fixed income ETFs are used for both tactical and strategic asset allocation, as well as in liquid beta sleeves.

²BlackRock, Bloomberg, as of 30 June 2020
³BlackRock Turning Point, as of 30 July 2020
⁴BlackRock, as of 30 March 2020

Risk: There can be no guarantee that the investment strategy can be successful and the value of investments may go down as well as up.

Tactical asset allocation

Institutional investors are increasingly using ETFs to invest tactically, for shorter time periods, due to their liquidity, lower costs and wide breadth of exposures available. Given the hunt for yield, the ability to express a view across shorter time periods is essential in the pursuit of higher portfolio returns.

Niche exposures

ETFs offer a more granular range of exposures while our index mutual funds typically offer broader sector exposures. To put that into context, in EMEA the iShares ETF and index mutual fund range has over 750 funds, offering institutional investors the opportunity to use this granularity to target specific sectors, countries, factors and ESG styles. In addition, new areas of focus, such as Gold and China Bonds are becoming increasingly popular. Having more granularity at a time where the hunt for yield across both equities and bonds is becoming harder is essential.

Meet our ETF and Index Investments (EII) team

With 875+ individuals who specialize in ETF and Index Investments across eight offices, our team benefits from a global presence with specialization in local markets.