The rollout in October 2012 of iShares' "Core" lineup of products stands as a great strategic pivot that enhanced its ETFs' growing reputation as the great democratizers in the world of investments. In one gesture, the world's biggest ETF company hit the "reset" button and set out on a new trajectory.
The executive behind that move was Mark Wiedman, global head of iShares, the largest ETF issuer in the world. He stresses that the "Core" initiative was generally misunderstood at the time of its unveiling. Many saw it solely as a measure designed to finally give iShares bragging rights that it was offering ultra-cheap ETFs. He insists it was a lot more.
For Wiedman, the "Core" epiphany occurred around the iShares MSCI Emerging Markets (EEM | B-97). The story goes like this: Yes, EEM's status as the world's biggest emerging market ETF was toppled in January 2011 when the significantly cheaper Vanguard FTSE Emerging Markets ETF (VWO | C-82) earned that mantle. But through that changing of the guard, EEM continued to haul in assets.
To Wiedman and his entourage—notably, Ruth Weiss, the iShares executive who heads the "Core" effort—that meant EEM's users were different from VWO's. They were and are often institutions; are certainly more tactical than the retail buy-and-hold crowd that has historically favored Vanguard's VWO; and are essentially unconcerned that EEM costs more than four times as much as VWO.
"The ETF industry is not a monolith—the uses of ETFs are many, and the kinds of clients that use ETFs are many," Wiedman said. "That's the fundamental insight of the 'Core' series, which we've now expanded to Canada and Europe."
Wiedman said the "Core" lineup is, at its root, a cheap offering for the growing numbers of investors—retail and institutional—who embrace the buy-and-hold-and-rebalance mentality. That insight spawned some of the cheapest-available ETFs—including EEM's cousin, the now-$6.2 billion iShares Core MSCI Emerging Markets ETF (IEMG | A-99).
In broadest terms, the company is now looking at product development through this lens of understanding that clients have varying needs. Wiedman tells ETF Report the company is planning a number of rollouts this year that reflect this very granular way to approach new products.
"Once we arrived at that insight, we said: 'Now we know where to go from here,'" he noted. "There are different product segments and there are different client segments, and we just need to organize around that."