BlackRock’s Push Into Active ETFs Continues With Large Cap Filing

BlackRock Inc. is expanding further into the fast-growing area of actively managed funds with a new filing for an ETF that focuses on large cap stocks. 

New York-based BlackRock, whose iShares unit is the world’s biggest exchange-traded fund issuer, with $2.32 trillion under management, submitted its filing for the BlackRock Large Cap Core ETF on July 28. The fund will invest at least 80% of its assets in the large cap stocks in the Russell 1000 Index. The filing does not yet mention the fund’s expense ratio.  

The proposed fund continues a push by BlackRock into actively managed ETFs, which have been growing in popularity as fees come down and investors search for ways to beat market indexes. Through the end of May, 30% of flows went into active ETFs, which make up 6% of total ETF assets, according to data from Bloomberg.  

In May, the company launched an active stock ETF, the Large Cap Value ETF (BLCV) and an active bond ETF, the BlackRock Flexible Income ETF (BINC). The bond fund’s flows have far outstripped money going into the stock fund, as BINC pulled in $75 million since launch, while BLCV has garnered just about $1 million, with total assets of $6.5 million.  

For comparison, one of the largest actively managed large cap value ETFs, the Avantis U.S. Large Cap Value ETF (AVLV), took in about $147 million over that same period. 

Active ETFs 

The new large cap core fund is tasked with outperforming large cap index funds, a mainstay of passive investing. According to the S&P Indices Versus Active (SPIVA) scorecard, over the 20-year period ending Dec. 31, 97% of all active large cap funds underperformed their benchmarks on a risk-adjusted basis. 

Value funds did somewhat better, with only 84% underperforming, while 98% of large cap core funds failed to beat their benchmarks. Core typically refers to a fund that’s intended to be a main, broad-based holding, usually without a value or growth tilt. 

For U.S. equity funds, the only category that did worse was large cap growth funds, with 99% underperforming.  

Contact Gabe Alpert at [email protected]