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Blog Posts — August 18, 2022

BlackRock’s iShares launches tech-focused thematic ETF of ETFs powered by STOXX indices 

BlackRock has listed the iShares Future Tech Innovators ETF in Australia, a fund that invests in thematic ETFs tracking STOXX indices. 

The new ETF allocates capital into six technology-focused ETFs seeking exposure to companies driving change in areas from medical advancements to the digitalization of services and the automation of factories. Five of the target ETFs have a STOXX thematic index as underlying:

The iShares Future Tech Innovators ETF also invests in a sixth fund, the iShares Global Clean Energy ETF. All allocations to the selected funds are done on an equal-weight basis. 

Themes derived from three broad megatrends 

Thematic investing has garnered investors’ attention as a way to accurately target structural economic and social trends disrupting our modern societies. Qontigo’s STOXX Thematic family includes over two dozen indices categorized within the three broad megatrends of future technology, socio-demographics, and sustainability and climate. Each theme is chosen for its potential to outperform markets in the long term, and help investors diversify away from more cycle-sensitive and sector-focused traditional portfolios. 

All five STOXX thematic indices in the iShares Future Tech Innovators ETF follow a revenue-based selection criterion. From a global universe, they choose stocks that have the highest percentage of sales derived from FactSet Revere (RBICS) business sectors associated with the target theme. 

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The indices also incorporate ESG exclusionary screens that meet standard sustainability principles of investors. The filters remove companies that Sustainalytics considers to be in breach of international norms, or are involved with controversial weapons, small arms, military contracting, tobacco, thermal coal, nuclear power or other conventional and unconventional energy sources. Additionally, the indices exclude companies with a high ESG risk or controversy rating from Sustainalytics.

“Thematic indices allow investors to harness a specific theme in a precise and nuanced way,” said Yang Wang, Senior Director, Thematic R&D at Qontigo. “They enable investors to capture economic and social trends beyond the limitations of traditional sector-based allocations. The indices follow a systematic and clear methodology, and have a granular focus, all of which have made passive-based thematic approaches so popular in recent years.”

“Our thematic STOXX indices offer rules-based, transparent methods to attain exposure to technology innovators,” said Axel Lomholt, Chief Product Officer, Indices & Benchmarks at Qontigo. “We have collaborated with BlackRock in the thematic space since 2016, and we are excited to expand our footprint in Australia through this fund of funds that builds on the robust suite of thematic iShares ETFs based on STOXX indices.”

In the two years through 2021, assets under management in thematic funds worldwide nearly tripled to USD 806 billion, according to Morningstar1, following record-breaking inflows. Net inflows into thematic ETFs worldwide have continued this year to the tune of USD 39 billion through April2, even as equities have fallen amid rising interest rates. 

For a recent Qontigo white paper on investing in thematic indices in the current environment, click here

1 Morningstar, ‘Global Thematic Funds Landscape 2022,’ March 24, 2022.
2 Data from ETFGI, covering all funds worldwide.