BlackRock bets on consumer push as it chases European savers

By Iain Withers

LONDON (Reuters) - BlackRock is betting on an expanded range of retail-focused products, including more exchange-traded funds, to attract a new generation of Europeans into investing, an executive said, as it tries to outcompete local rivals slowly gaining ground.

The U.S. fund manager, through its iShares unit, has a 43% market share in European ETFs, three times its nearest rival, according to Morningstar data.

BlackRock and other index-tracker providers have dominated Europe's investment market in recent years, squeezing local managers, but analysts say they face a tough task keeping up their past growth rates.

Stephen Cohen, its chief product officer, said BlackRock wanted to strike more agreements with local banks to distribute a wider range of funds to attract millions of first-time European investors.

BlackRock will explore launching more bond and actively managed ETFs - a small but growing area in Europe - and targeted indices that track fewer stocks to meet changing client demands, Cohen said.

"Europe starts as a culture of savings, it's not a culture of investing. That is now starting to change and change quite radically," Cohen told Reuters.

His comments come as the European Union on Wednesday announced a new 'Savings and Investment Union' strategy to get more money out of low-yielding accounts and into investments, noting that 70% of household savings in the EU – worth 10 trillion euros – are held as bank deposits.

Attracting consumers is the "missing ingredient" for the European ETF market, said Morningstar analyst Jose Garcia-Zarate, after its growth to date was mainly driven by institutions.

BlackRock - which already works with British banks Lloyds and Monzo - is exploring further distribution deals and particularly in markets where it is less established such as Eastern Europe, Cohen said, declining to give further details.

BlackRock is also preparing to launch a bitcoin exchange-traded product in Europe, Reuters reported last month, following on from the take-up of bitcoin ETFs in the U.S. BlackRock declined to comment on its crypto plans.

Cohen said BlackRock, which hit $1 trillion in assets at its European iShares business last month, is targeting 19 million customers there within three years, against the current 9 million.

BlackRock declined to comment on what that increase would mean for its assets. But its recent growth rate has slowed, according to Morningstar, with European player Amundi and U.S. rival Vanguard growing their assets quicker since 2023.

"They've been losing market share to other providers," said Morningstar's Garcia-Zarate, but added BlackRock would likely do "whatever it takes" to try to defend or grow its market position.

Cohen said a shift into European stocks instead of U.S. equities - which had fuelled iShares' expansion - was boosting inflows this year.

"You're definitely seeing people... say, actually, European equities are cheap, maybe U.S. exceptionalism isn't as exceptional," he said.

(Reporting by Iain Withers; Editing by Tommy Reggiori Wilkes and Nick Zieminski)