BlackRock launches active ETF to rotate across global themes
BlackRock has launched an actively managed thematic ETF in Europe, as the world’s largest asset manager expands its range of active ETF strategies.
The iShares World Thematic Rotation Active UCITS ETF (THRW) is designed to invest across global equity themes, rather than giving investors exposure to a single long-term trend. The Irish-domiciled ETF aims to deliver long-term capital growth by identifying, ranking and rotating between short-, medium- and long-term market themes. The fund uses the MSCI World Index (Net) as its constraint benchmark and has a total expense ratio of 0.60%.
It is an accumulating share class and is classified as Article 8 under the Sustainable Finance Disclosure Regulation. Although this ensures a negative-screen and therefore does promote ESG factors, it is not a specifically sustainable fund (such funds have an Article 9 designation). Morningstar data suggests that around half of UCITS funds are now classified as Article 8.
BlackRock says the strategy uses a proprietary systematic thematic rotation model, drawing on data, artificial intelligence and large language models to assess both themes and the companies linked to them. The portfolio is expected to hold around 200 to 300 equities and will be adjusted as market leadership changes.
The launch comes at a time when thematic ETFs are evolving beyond single-theme products such as artificial intelligence, clean energy, robotics or defence. While these funds can offer targeted exposure to structural growth areas, they can also leave investors exposed if sentiment turns against a particular theme.
By contrast, a thematic rotation strategy gives the manager greater flexibility to move between themes as market conditions change. However, it also means investors are relying more heavily on the manager’s process, timing and allocation decisions.
Our view
David Batchelor, senior analyst at QuotedData, said: “BlackRock’s launch points to a more flexible phase in thematic ETF development. Rather than asking investors to pick a single long-term theme, an active rotation approach gives the manager scope to shift exposure as market leadership changes. That may appeal after a period in which some narrow thematic ETFs struggled when sentiment moved against their chosen area. Many investors will presumably be happy to outsource decisions about the rotations made to the fund managers (and that is what they are paying 60bps for). However, for those who like to keep on top of exactly what their portfolio is exposed to on a more granular level, there will be a need to understand not just the theme, but also the process used to decide which themes to hold, when to add exposure and when to move on”.
