Commission ban boosts BlackRock ETF assets

The banning of commission to financial advisers as of 2013, on the introduction in the UK of the Retail Distribution Review legislation, is making ETFs more popular with investors, says BlackRock.

David Bower, head of iShares UK, said: “The ETF industry is set to become a major beneficiary of the RDR, and this is already evident from the strong growth iShares saw on key wrap platforms in 2011.

iShares, the exchange traded funds platform of BlackRock, saw its assets held on wrap platforms increase by 34% in 2011, reaching £746m. On a cumulative basis since Q1 2010, the increase was 175%.

Of the platforms – Ascentric, Novia, Nucleus, Raymond James, Standard Life and Transact – assets held on Ascentric and Novia increased most substantially, growing 88% and 96% respectively.

Bower said: “With the banning of commission to financial advisers as of 2013, ETFs will be on a level playing field with other investment products. This, combined with the fact that ETFs offer low cost and transparent access to a broad range of markets, means that ETF use among financial advisers and discretionary fund managers is likely to continue to rise.”

The fund flows on the platforms indicate investors put money to work across a range of asset classes. BlackRock says the two most popular iShares ETFs on the platforms by net flows were fixed income products, with combined net flows of £78.4m, and six of the top ten were equity products. The top iShares funds by asset flows in 2011 were:

– iShares Market iBoxx £ Corporate Bond 1-5 ETF, a UK corporate bond fund that saw £42m in net flows;

– iShares FTSE Gilts 0-5 ETF, a UK government bond fund that saw almost £34m in net flows;

– iShares FTSE EPRA / NAREIT Developed Markets Property Yield ETF, with net flows of £18m;

– iShares FTSE UK Dividend Plus ETF, with net flows of £13m; and

– iShares FTSE 100 ETF, which also attracted net flows of £13m.

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