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Thursday, June 20, 2024

BlackRock Debuts a $105MM-AUM Duo

Reported by Neil Anderson, Managing Editor

The team at a $10.473-trillion-AUM asset manager are rolling out a pair of active ETFs, but not under their usual ETF brand.

On Tuesday, Jessica Tan, head of Americas for global product solutions at BlackRock, unveiled the launch of the BlackRock High Yield ETF (BRHY on the Nasdaq) and the BlackRock Long-Term U.S. Equity ETF (BELT). BELT is a series of BlackRock ETF Trust, while BRHY is a series of BlackRock ETF Trust II. (Neither name fund uses BlackRock's iShares brand.)

BRHY and BELT are both actively managed, non-diversified funds, and their inception date was Monday (June 17). BELT comes with an expense ratio of 75 basis points, while BRHY comes with an expense ratio of 45bps. As of Tuesday, BRHY had $100.388 million in AUM, while BELT had $5.179 million.

BlackRock Fund Advisors (BFA) is the investment advisor to both new ETFs, while BlackRock International Limited (BIL) serves as subadvisor. The PM team for BRHY includes David Delbos and Mitchel Garfin, co-heads of U.S. leveraged finance. BELT's PM team includes: Michael Constantis, portfolio manager; and Alister Hibbert, managing director and head of the strategic equity team.

Tan puts the launch of BELT and BRHY in the context of FAs "increasingly incorporationg [active ETFs] into their models-based practice."

Hibbert claims that "a long-term approach is required" for strong public equities returns.

"True business value is unlocked over years, not quarters; and companies that can deliver high returns over time are often undervalued by the market today," Hibbert states. "A high-conviction strategy like BELT is essential to helping investors capture this significant alpha opportunity."

The BlackRock team notes that BRHY is powered by the same PMs and strategy as an existing mutual fund, the $11.909-billion-AUM BlackRock High Yield Bond Fund.

"By delivering alpha opportunities through the ETF wrapper, we aim to capture the upside in rallying markets while protecting assets when high yield markets decline," Delbos states.

Sidley Austin LLP serves as counsel for BELT, while Willkie Farr & Gallagher LLP serves as counsel for BRHY. The two new ETFs' other service providers include: BlackRock Institutional Trust Company, N.A. (BTC) as securities lending agent; BlackRock Investments, LLC as distributor; PricewaterhouseCoopers LLP as independent accounting firm; and State Street Bank and Trust Company as administrator, custodian, dividend disbursing agent, and transfer agent. 

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