Stephen Cohen. Education. Tipping point. Technology. Global Head of Fixed Income Beta

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Transcription:

Education Tipping point Technology Stephen Cohen Global Head of Fixed Income Beta Trading Portfolios Go

S&P 500 ETF FTSE 100 ETF What exactly is an ETF? Reference to s pecific company names is for illustration only and s hould not be construed as inves tm ent advice or recommendation.

S&P 500 ETF FTSE 100 ETF What exactly is an ETF? Reference to s pecific company names is for illustration only and s hould not be construed as inves tm ent advice or recommendation.

Gold ETF What exactly is a Commodity ETF?

IG ETF High Yield ETF What exactly is a Bond ETF? Reference to s pecific company names is for illustration only and s hould not be construed as inves tm ent advice or recommendation.

Total AUM (US $B) 300 Primary Dealer Inventories 225 The Bond Market doesn t work the way it used to 150 75 0 2003 2005 2007 2009 2011 2013 2015 2016 Source: Inventory based on Federal Reserve Bank of New York, Barclays, as of 31/12/2016. Bid-ask information based on Barclays LCS. Data is from 12/31/2007 and 31/12/2016.

The Bond Market doesn t work the way it used to Basel III Volcker DOL MIFID QE / ZIRP Low yields Source: Inventory based on Federal Reserve Bank of New York, Barclays, as of 31/12/2016. Bid-ask information based on Barclays LCS. Data is from 12/31/2007 and 31/12/2016. (PLEA SE REA D IMPORTA NT DISCLOSURES)

Total AUM (US $B) 750 Total Bond ETF AUM 600 450 While the Bond ETF is growing fast 300 150 0 2002 2004 2006 2008 2010 2012 2014 2016 Source: BlackRock Global Business Intelligence, Bloomberg, as of 31/12/2016.

While the Bond ETF is growing fast $600+ billion in AUM 34% year over year growth over the past decade Approx $7 billion traded daily Source: BlackRock Global Business Intelligence, Bloomberg, as of 31/12/2016.

Bond Market Bond ETFs A Tipping Point - What next? For illustrative purposes only.

Bond Market Bond ETFs A Tipping Point - What next? The future of fixed income For illustrative purposes only.

Global watch dog says bond market liquidity a concern Why Are Big Banks Offering Less Liquidity To Bond Markets? Negative rates and the death of banking The headlines The bac k drop The my t hs The fac t s For illustrative purposes only

Warning over dash to bond ETFs ETFs to play main role in the next crisis Should the US bond ETF sell-off worry UK investors? The headlines The bac k drop The my t hs The fac t s For illustrative purposes only.

Bond investors turn passive aggressive as ETFs swell Staying buoyant on bond ETFs We Just Saw the Largest Daily Inflow Ever to a Corporate Bond ETF The headlines The bac k drop The my t hs The fac t s For illustrative purposes only

Buy Side Sell Side Trading As it was

Trading As it needs to be

Portfolios The traditional approach

Portfolios The modern approach

Portfolios The modern approach

Portfolios The modern approach

When I think of Fixed Income ishares I think of markets-on-demand. They are cheap, easy to implement and give diversification to the portfolios. Rick Rieder CIO BlackRock Fixed Income Asset Manager Greenwich Associates study 2015

Sectors US Treasury Bunds Linkers TIPs MBS Munis AGG High yield EMD GILTS

The industry today Billion ($) $600bn FI ETFs The industry today 0 150 300 450 600 750 Source: BlackRock Global Business Intelligence, as of 31/12/2016.

The industry today Billion ($) FI ETFs The industry today 0 150 300 450 600 750 Source: BlackRock Global Business Intelligence, as of 31/12/2016.

The industry today Billion ($) $600bn FI ETFs $2.7trn The industry today Equity ETFs 0 750 1500 2250 3000 Source: BlackRock Global Business Intelligence, as of 31/12/2016.

The industry today Billion ($) FI ETFs The industry today Equity ETFs 0 750 1500 2250 3000 Source: BlackRock Global Business Intelligence, as of 31/12/2016.

The industry today Trillion ($) FI ETFs $600bn Equity ETFs $2.7trn Equities $65trn The industry today Swap & Futures Fixed Income $49trn $96trn 0 25 50 75 100 125 Source: BlackRock Global Business Intelligence, as of 31/12/2016.

Enabler Application Multiplication Game changer Technology - it s what you do with it

Otto Rohwedder to change an industry

Otto Rohwedder to change an industry G ame ch an g er

Create Enabler/ redeem Application S&P Multiplication Bonds Game Fixed changer income industry Building the next best thing

The future of fixed income The Future Past Network Balance sheet driven driven Exchange OTC MO ne ult i dimensional ETF = Essential Outcast

Bond ETF /b(on)d(e)(t)(f)/ noun and verb a weapon of mass convenience

Bond ETF /b(on)d(e)(t)(f)/ noun and verb a weapon of mass convenience

Education Tipping point Technology Stephen Cohen Global Head of Fixed Income Beta Trading Portfolios Appendix

Back HYG holdings Name Weight (%) Numericable Sfr Sa 144a 0.5865 Frontier Communications Corp 0.4635 Numerical Group Sa 144a 0.4375 Western Digital Corporation 144a 0.4243 First Data Corporation 144a 0.4012 Sprint Corp 0.3972 Reynolds Group Issuer Llc 0.3891 Hca Inc 0.3742 Prime Security Services Borrower L 144a 0.365 Sprint Nextel Corporation 144a 0.3615 Sourc e: BlackRock, as of 06/30/16. Subject to change, Reference to s pecific company names is for illustration only and s hould not be construed as inves tm ent advice or recommendation. FOR INSTITUTIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION

Back LQD holdings Name Weight (%) Anheuser-busch Inbev Finance Inc 0.5513 Anheuser-busch Inbev Finance Inc 0.5111 Ge Capital International Funding C 144a 0.4294 Blk Csh Fnd Treasury SI Agency 0.4199 Verizon Communications Inc 0.3866 Anheuser-busch Inbev Finance Inc 0.2897 Ge Capital International Funding C 144a 0.2671 Goldman Sachs Group Inc 0.2653 At&t Inc 0.2515 Anheuser-busch Inbev Finance Inc 0.2514 Sourc e: BlackRock, as of 06/30/16. Subject to change, Reference to s pecific company names is for illustration only and s hould not be construed as inves tm ent advice or recommendation. FOR INSTITUTIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION

Back ishares ETFs For investors in Singapore: Issued by BlackRock (Singapore) Limited (Co. registration no. 200010143N) for use only by institutional investors as defined in Section 4A of the Securities and Futures Act, Chapter 289 of Singapore. Some of the funds mentioned herein have not been registered with the Monetary Authority of Singapore for offering or distribution in Singapore. Accordingly, this information may not be circulated or distributed, nor may the funds be offered or sold whether directly or indirectly, to any person in Singapore ot her than (i) to an institutional investor pursuant to Section 304 of the Securities and Futures Act ("SFA") or (ii) otherwise pursuant to and in accordance with the conditions of any other applicable provision of the SFA. This material is prepared by BlackRock for informational or educational purposes only. 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Transactions in units of the fund will result in brokerage commissions. You are reminded to refer to the relevant prospectus for specific ris k considerations which are available from BlackRock or the ishares websites. Past performance is not indicative of future performance and is no guide to future returns. BlackRock does not guarantee the performance of the shares or units of the ishares Funds. Before deciding to invest, investors should read the prospectus carefully including the investment objective and risk factors relating to the fund, including the arrangement in the event the fund is delisted. Index returns are for illustrative purposes only and do not represent actual ishares Fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Investors should note that the fund differs from a typical unit trust as units or shares of the Funds are bought and sold at market price (not NAV) and units may only be redeemed by a participating dealer in large creation/ redemption unit sizes. The listing of units of the fund on a stock exchange does not guarantee a liquid market for the units. Indexes are unmanaged and one cannot invest directly in an index. This material contains general information only and is not intended to represent general or specific investment advice. The information does not take into account your financial circumstances. An assessment should be made as to whether the information is appropriate for you having regard to your objectives, financial situation and needs. This material may contain forward-looking information that is not purely historical in nature. 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No part of this material may be reproduced stored in retrieval system or transmitted in any form or by any means, electronic, mechanical, recording or distributed without the prior written consent of BlackRock.BlackRock Fund Advisors (BRFA) serves as the investment adviser to the ishares Funds that are registered with the United States Securities and Exchange Commission under the Investment Company Act of 1940. BRFA is a subsidiary of BlackRock Institutional Trust Company, N.A., a subsidiary of BlackRock Inc. This material does not constitute an offer or solicitation to sell or a solicitation of an offer to buy any shares of any Funds (nor shall any such shares be offered or sold to any person) in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities law of that jurisdiction.ishares Funds are not sponsored, endorsed, issued, sold or promoted by their index providers. For details of the index provider including any disclaimer, please refer to the relevant ishares Fund offer document. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. Any opinions contained herein reflect our judgment as of 31 May 2017 and may change as subsequent conditions vary. No part of this material may be reproduced stored in retrieval system or transmitted in any form or by any means, electronic, mechanical, recording or distributed without the prior written consent of BlackRock.BlackRock Fund Advisors (BRFA) serves as the investment adviser to the ishares Funds that are registered with the United States Securities and Exchange Commission under the Investment Company Act of 1940. BRFA is a subsidiary of BlackRock Institutional Trust Company, N.A., a subsidiary of BlackRock Inc. This material does not constitute an offer or solicitation to sell or a solicitation of an offer to buy any shares of any Funds (nor shall any such shares be offered or sold to any person) in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities law of that jurisdiction.ishares Funds are not sponsored, endorsed, issued, sold or promoted by their index providers. For details of the index provider including any disclaimer, please refer to the relevant ishares Fund offer document. ishares and BlackRock are registered trademarks of BlackRock, Inc., or its subsidiaries in the United States and elsewhere. All other trademarks, servicemarks or registered trademarks are the property of their respective owners. 2017 BlackRock Inc. All rights reserved.

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