BlackRock, the world's largest asset manager, has filed to offer its first buffer exchange-traded funds, a move likely to spur price competition in an area of the ETF market pioneered by Innovator Capital Management, an analyst said.
On March 31, BlackRock filed with the Securities and Exchange Commission to offer the BlackRock Large Cap Moderate Buffer ETF and the BlackRock Large Cap Deep Buffer ETF. In August 2018, Innovator Capital listed the world's first defined outcome buffer ETFs, according to Innovator's website.
"Innovator is the leader in the space and has seen strong demand in the last couple of years," said Todd Rosenbluth, head of research at VettaFi, a data and analytics provider. "This likely leads to some price competition as Blackrock uses its scale as a positive advantage."
The BlackRock Large Cap Moderate Buffer ETF will seek to track the share price return of the iShares Core S&P 500 ETF — the underlying ETF — up to an approximate upside limit, while seeking to afford downside protection against roughly the first 5% of underlying ETF losses over each calendar quarter, the filing said.
The BlackRock Large Cap Deep Buffer ETF will seek to track the share price return of the iShares Core S&P 500 ETF up to an approximate upside limit, while aiming to provide downside protection against underlying ETF losses between about 5% and 20% over each calendar quarter, the filing said.
The filing did not reflect expense ratios for the funds.
While Innovator pioneered the defined-outcome ETF, others including First Trust and Allianz Investment Management have followed, Mr. Rosenbluth said. While BlackRock's scale will allow it to price the new funds competitively, "many advisers will remain loyal to what they have been using and stick with a more specialized firm."
The Innovator U.S. Equity Buffer ETF, April series, has a 0.79% expense ratio, according to Innovator's website.
A spokesman for Innovator declined to comment. A BlackRock spokeswoman also declined to comment.
BlackRock had $8.59 trillion assets under management as of Dec. 31.