Rise Of The Robots: 7 New AI-Powered iShares ETFs
BlackRock Inc. (NYSE:BLK)'s iShares unit — the world's largest issuer of exchange traded funds — added to its suite of actively managed ETFs Friday with the launch of seven sector funds that are powered by artificial intelligence technologies.
The new ETFs are: the iShares Evolved U.S. Technology ETF (CBOE: IETC), iShares Evolved U.S. Consumer Staples ETF (CBOE: IECS), iShares Evolved U.S. Discretionary Spending ETF (CBOE: IEDI), iShares Evolved U.S. Financials ETF (CBOE: IEFN), iShares Evolved U.S. Healthcare Staples ETF (CBOE: IEHS), iShares Evolved U.S. Innovative Healthcare (CBOE: IEIH) and the iShares Evolved U.S. Media and Entertainment (CBOE: IEME).
“The ETFs are managed by BlackRock’s Systematic Active Equity group, which is now backed by more than 80 portfolio managers, researchers and strategists,” according to ETF Trends.
Looking Inside Some Of The New ETFs
The iShares Evolved U.S. Technology ETF holds 221 stocks, but Microsoft Corp. (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL) and Amazon.com Inc. (NASDAQ:AMZN) combine for about 30 percent of the new ETF's weight. Traditionally, Amazon is classified as a consumer discretionary stock and is not found in standard, passive technology sector ETFs.
The iShares Evolved U.S. Consumer Staples ETF holds 115 stocks with Coca-Cola Co. (NYSE:KO) and PepsiCo Inc. (NASDAQ:PEP) being the top two holdings, combining for about 18 percent of the fund's weight. Procter & Gamble Co. (NYSE:PG) is usually the largest holding in cap-weighted, passive staples ETFs, often with a double-digit allocation, but IECS allocates just over 5 percent of its weight to that Dow component.
The iShares Evolved U.S. Discretionary Spending ETF holds 215 stocks, with Amazon and Home Depot Inc. (NYSE:HD) combining for 20 percent of the fund's weight. IEDI also features some stocks typically classified as consumer staples names, such as Procter & Gamble, among its top 10 holdings.
The iShares Evolved U.S. Financials ETF holds 261 stocks, a roster that includes money center and investment banks, insurance providers, credit card issuers, health insurers, exchange operators, asset managers, index providers, regional banks and some industrial stocks.
The iShares Evolved U.S. Healthcare Staples ETF holds 165 stocks, but that lineup is dominated by Dow component UnitedHealth Group Inc. (NYSE:UNH). The health insurance stock accounts for 14.33 percent of IEHS' roster, more than double the weight assigned to the fund's second-largest holding.
iShares Evolved U.S. Innovative Healthcare ETF is framed as an innovative healthcare play, but the new ETF features exposure to blue-chip pharmaceuticals companies in addition to biotechnology firms.
The iShares Evolved U.S. Media and Entertainment carves out many of the well-known media companies from the consumer discretionary sector, including The Walt Disney Co. (NYSE:DIS) and Netflix, Inc. (NASDAQ:NFLX).
All of the new iShares ETFs charge 0.18 percent per year, or $18 on a $10,000 investment. While that is pricey compared to some passive sector ETFs, the fee compares favorably with the broader actively managed ETF and mutual landscape.
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