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Highlights
- BlackRock unveils active US equities ETF on ASX
- Six-factor strategy aims to outperform broad US market
- Low-cost access to machine learning-driven portfolio
Australian investors now have access to a new, data-driven investment opportunity as BlackRock introduces its first actively managed ETF on the Australian Securities Exchange, targeting the US market. The fund, called iShares US Factor Rotation Active ETF (ASX:IACT), is designed to provide a differentiated equity exposure by applying a sophisticated multi-factor strategy.
A Shift in Australia's ETF Landscape
Historically slow to adopt global innovations in active ETFs, Australia is now witnessing a significant shift. The listing of (IACT) marks BlackRock’s first active ETF launch in the country, and notably, it focuses on US equities rather than domestic markets. This is a strategic move considering the depth and breadth of the US equity universe.
With an investment fee of 0.45%, the ETF aims to offer investors a cost-effective vehicle to potentially generate returns above the US broad market index. The approach combines six well-researched factors: value, quality, momentum, size, growth, and minimum volatility. It relies on a bottom-up, data-rich selection process to choose stocks, leveraging BlackRock’s systematic and real-time data analytics framework.
A Technology-Backed Strategy
The active ETF is powered by insights from its US-listed counterpart, iShares U.S. Equity Factor ETF (NYSE:DYNF), which has demonstrated strong historical performance. Over the past five years up to March, (NYSE:DYNF) delivered a 19.4% annualised return and manages assets worth US$17.4 billion. This performance is supported by machine learning and BlackRock’s extensive research infrastructure.
This systematic investing strategy integrates both traditional financial analysis and advanced technology, aiming to dampen short-term market fluctuations while enhancing long-term outcomes. According to BlackRock, this structure is intended to provide consistent excess returns across varying market environments.
A Complement to Traditional Index Investing
Unlike traditional index ETFs that passively mirror market indices, (IACT) takes an active role in selecting securities with the potential to outperform. It could serve as a complementary holding to standard passive products like the iShares S&P 500 ETF (IVV), offering diversified exposure beyond market-cap-weighted benchmarks.
For those seeking a blend of innovation and strategy in their US equities exposure, (IACT) presents an intriguing alternative. As global markets remain dynamic, this active ETF offers a new lens through which to explore growth opportunities across cycles.
