BlackRock's 'Accelerated' ETF Aims at Topping IVV

iShares’ TWOX, aimed at doubling the return of the S&P 500, also sets an initial 5.8% quarterly performance cap.

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RonDay
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Contributing Editor
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Reviewed by: Paul Curcio
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Edited by: Kiran Aditham

BlackRock Inc., the world’s largest ETF issuer, launched its first so-called "accelerated" exchange-traded fund, aimed at doubling the performance of the firm’s giant S&P 500 tracker, the iShares Core S&P 500 ETF (IVV)

The iShares Large Cap Accelerated ETF (TWOX) was little changed in its first day of trading on the CBOE Thursday. It started with $10 million, according to the company’s fund description. 

Investors have poured billions over the past few years into funds launched with the goal of topping the return of an index or a stock, typically referred to as leveraged funds. BlackRock calls TWOX its first “accelerated” ETF, saying in a document that it differs from the daily return focus of leveraged funds with a quarterly return emphasis. TWOX also differs in that it caps quarterly gains, with the cap for the current quarter at about 5.8%. 

In 2021, Innovator Capital Management issued a handful of what it called accelerated ETFs, including the Innovator U.S. Equity Accelerated ETF – January (XDJA), which aimed to at least double the S&P 500 ETF Trust (SPY) and the Invesco QQQ Trust (QQQ)

TWOX Tracks $582 Billion IVV

TWOX will track the world’s third-largest ETF, the $581.6 billion IVV, which gained 24% over the past year. IVV investors would have made roughly 6% gains each quarter, meaning the leverage would not have been required. 

Its 50-basis point management fee appears well below the typical cost of a similar fund. Fund managers buy and sell options to outpace IVV.

New York-based BlackRock, whose iShares business manages 414 ETFs valued at $3.01 trillion, referred to TWOX as an outcome-oriented ETF, and said those funds have grown to a $160 billion portion of the ETF universe from $5 billion five years ago. 

The fund comes as “uncertainty associated with trade and international policy could lead to slower growth,” the firm said in a statement

Ron Day is Contributing Editor at etf.com. He joined the company in October 2022 and has served as Managing Editor, deputy managing editor and editor.

Ron covered business and financial news at Bloomberg News for 20 years, working on the breaking news, technology, commodities, headlines and First Word teams. He was previously senior editor at ESG news outlet Karma Impact and filled the same role at Boundless Impact. He also covered a variety of beats at New Jersey daily papers including the Daily Record in Parsippany, the North Jersey Herald & News and the Asbury Park Press. Ron's freelance work has been published in AARP.com, Investopedia.com and BigThink.com.

Ron is an advocate and fan of literacy. He hopes to one day master his Telecaster, rather than the other way around. His wonderful family includes a 10-lb. maltipoo named Emmy. 

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