Jennifer Grancio of iShares: More advisers staying
Long a leader in the exchange-traded-fund market, iShares of late has started to lose market share to some of its competitors. While still No. 1 in global ETFs — with $574 billion in assets under management — the firm has started to see its domestic market share slip. As of Aug. 31, iShares controlled 46.9% of the U.S. ETF market, down from 59.3% four years earlier, according to a report by The Goldman Sachs Group Inc.
Long a leader in the exchange-traded-fund market, iShares of late has started to lose market share to some of its competitors. While still No. 1 in global ETFs — with $574 billion in assets under management — the firm has started to see its domestic market share slip. As of Aug. 31, iShares controlled 46.9% of the U.S. ETF market, down from 59.3% four years earlier, according to a report by The Goldman Sachs Group Inc.
In September, The Vanguard Group Inc. supplanted iShares as the most trusted ETF provider by advisers, according to Cogent Research LLC.
But iShares believes that its long tenure in the ETF market and its focus on services and research will help it differentiate itself from the competition. As part of its integration with BlackRock Inc., iShares last summer reorganized its business according to client segment. Jennifer Grancio, head of U.S. distribution, discusses what the company is doing to continue to win over advisers.
Q. Vanguard recently replaced iShares as the most trusted ETF provider rated by advisers. What are you doing about that?
A. Advisers care about the quality and total performance of portfolios, but they are also influenced by brand. There is an interesting trend in that Vanguard has brought in a lot of assets through self-directed-brokerage accounts. So while they have some ability to influence advisers, we are also seeing they are bringing a lot of self-directed investors into ETFs. We see Vanguard in the marketplace, but we don’t feel that we are losing share of our core advisers to them.
Q. Still, Vanguard is gaining ETF market share. What are you doing to protect your turf?
A. In the adviser space, a lot of it is about service. We have a whole set of value-added services for clients and that’s where we are doing something very different from Vanguard. They may try to copy us, but we have a huge lead on them in terms of helping advisers with issues like portfolio construction, diagnostics and capital markets issues.
Q. Vanguard is also focused on building up its services and research for advisers — so what will you do to stay ahead in 2011?
A. On top of the services we offer, we are working on products such as more-specific emerging-market bets and more specific-country bets for clients. We are also looking at additional offerings, particularly around income solutions and international offerings. We are doing more to share our investment ideas and recommendations with advisers on a periodic basis. We may or may not do model portfolios, but these are regular recommendations. We also continue to grow our capital markets team.
Q. Some analysts have said that BlackRock will have to cut fees on some of its more popular ETFs, such as your MSCI Emerging Markets ETF, to remain competitive. Do you have any plans to cut expenses?
A. We look at fees every quarter as part of how we run the business. We do charge a premium, which is how we fund the in-depth services we provide. At this point, we have no plans to make wholesale changes and re-price the business.
Q. What about reducing the costs of the iShares MSCI Emerging Markets Index Fund (EEM)?
A.We have no plans to do a price reduction on EEM.
Q. How much do you think advisers are influenced by this ETF pricing war?
A. There is a price war, but our view is that we don’t need to jump into a place where we can’t offer services.
E-mail Jessica Toonkel at [email protected].
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