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Tuesday, March 25, 2014 Passive? Active? iShares' Gamba Doesn't Give a Hoot For a man who sells a lot of ETF products, BlackRock's head of iShares americas institutional business Daniel Gamba is remarkably blasé about the subject of the active versus passive ideological wars. "As I was coming here, I was thinking over this big question. Is there going to be a war of passive versus active, and do we care. We actually don't care," Gamba told a room full of financial press folks during an event at Russell Investments that updated the public on the latest trends in the small cap space. The event, formerly titled Small Cap Summit 2014, included a number of important folk, such as Russell's chief market strategist Stephen Wood, Russell investment strategist David Koenig, and Steven DeSanctis, head of small cap strategy at BofA Merrill Lynch Global Research. Also in attendance was Ken O'Keefe, managing director, business development and market solutions for Russell Indexes. (O'Keefe spoke to MFWire in December outlining some of Russell's initiatives in smart beta) But it was Gamba who had a lot to say on the subject of product, in particular specifically refining products so that they become useful to finance wonks of all types, no matter what their particular opinion on passive, aggressive, smart beta, what have you. Illustrating some of the principles behind iShares' strategy for marketing its products, Gamba drilled down on the iShares Russell 2000 Value ETF For example, IWN, created 14-years ago in May 2000, now has $30 billon in assets. In fact, Gamba said that IWN represents close to 30% of total ETFs in the U.S. small cap space, which is $93 billion. In 2013, we had the highest level of flows on the IWN index across the previous five years, add $6 billion of flows into the IWN. "It is clearly one of the the most utilized instruments for exposure in U.S. small caps," he said. A key element of the product's popularity is its liquidity. For example, Gamba noted that ETFs are about 7 percent of small cap trading per day, IWN is $5 billion per day. In other words, 70 percent of small caps is traded through IWN. Gamba then drilled down on those who use IWN. They are: U.S. Pension Funds
2. Asset Managers and Hedge Fund Managers
3. RIAs
4. Non U.S. Investors, such international pension plans
Gamba said that "people are looking at small caps as an active play but because the instrument is used so broadly by active managers, they will continue to use a passive instrument to get active alpha through the ETF." "We are very positive about IWN," he said. Printed from: MFWire.com/story.asp?s=47845 Copyright 2014, InvestmentWires, Inc. All Rights Reserved |