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BlackRock’s New Sector ETFs Powered by Machines

BlackRock’s new ETFs are powered by machines and collectors prefer art over wine.

BlackRock has unveiled a new suite of exchange traded funds that takes into consideration the evolution of companies and sectors in the economy. The seven iShares Evolved U.S. Sector ETFs, which will take a dynamic sector classification approach, will be managed with the help of BlackRock’s Systematic Active Equity group and powered by machine learning. “The ‘traditional way’ of doing things meant using backward-looking inputs and required each company to sit within a single sector and that raises complicated questions for investors,” said Jeff Shen, co-head of investments for SAE at BlackRock. The asset manager uses Amazon as an example. While the online retailer is considered a consumer discretionary company under existing classifications, the company has expanded into technology, grocery stores and even healthcare. “An investor who wants to gain technology exposure can do so by investing in a traditional technology sector fund, but it may have zero exposure to Amazon—that seems hard to believe, which is why a new methodology may help investors better classify today’s businesses,” Shen said. The new ETFs cost 18 basis points.

HNW Collectors Like Art More Than Wine

Copyright Tristan Fewings, Getty Images

For the first time since 2010, high-net-worth collectors spent more of their fortunes on fine art than “investment-grade wine,” Quartz reports, citing The Wealth Report from Knight Frank and Douglas Elliman. The jump in art investment was due in part to the sale of Leonardo da Vinci’s Salvator Mundi, for $450 million. Chinese and African art are also popular, the report states. As far as wine goes, it still saw an 11 percent increase in investment in 2017, with much of the demand being driven by Asian buyers.

 

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