Key Takeaways
Powered by lumidawealth.com
- BlackRock is converting two mutual funds managed by CIO Rick Rieder into ETFs, totaling $3 billion in assets
- The funds will become iShares Dynamic Equity Active ETF (BDYN) and iShares Disciplined Volatility Equity Active ETF (BDVL)
- Conversion driven by demand from BlackRock’s Global Allocation Selects model portfolio platform, which has grown from under $1 billion in January 2023 to $10 billion today
- BlackRock commands approximately $150 billion in model portfolio assets, making allocation changes highly impactful for fund flows
- The move reflects growing investor preference for active ETFs within model portfolios sold to financial advisers
- BDYN focuses on global equities with total return emphasis, while BDVL is a volatility-managed equity strategy
- BlackRock’s Flexible Income ETF (BINC), also managed by Rieder, demonstrates the power of model portfolio inclusion with $12 billion in assets since May 2023
What Happened?
BlackRock converted two actively managed mutual funds overseen by Rick Rieder into ETF structures to better integrate them into the firm’s rapidly growing model portfolio business. The conversion responds to client demand within BlackRock’s Global Allocation Selects platform, which packages funds into ready-made strategies for financial advisers. This strategic shift reflects the broader industry trend toward ETF structures and model portfolio adoption.
Why It Matters?
The conversion highlights the growing dominance of model portfolios in asset management and the preference for ETF structures over traditional mutual funds. BlackRock’s massive scale in model portfolios means that inclusion decisions can drive billions in fund flows, creating significant competitive advantages for the firm’s products. The move also demonstrates how asset managers are adapting their product structures to meet evolving distribution channel preferences.
What’s Next?
Monitor the performance and asset growth of the newly converted ETFs as they benefit from model portfolio inclusion. Watch for similar conversions by BlackRock and competitors as the ETF wrapper becomes preferred for active strategies. Investors should track the continued growth of model portfolio platforms and their impact on fund flows across the industry.
