BlackRock (NYSE:BLK) has launched a new actively managed exchange-traded fund (ETF), the BlackRock Advantage Large Cap Income ETF (OTCQB:BALI), as announced on Thursday. The fund offers investors exposure to a dynamic array of U.S. dividend-paying stocks and option premiums from selling call options on the S&P 500.
The BALI fund is designed to provide two income streams from a single fund, according to Jay Jacobs, U.S. head of thematic and active equity ETFs at BlackRock. The "option premium" will be given to shareholders regardless of market movement. This strategy may appeal to recent retirees seeking income as well as potential growth to keep pace with inflation.
The new ETF is part of BlackRock's growing suite of options-based ETFs, which includes fixed income BuyWrite strategies and buffer strategies. Rachel Aguirre, U.S. head of iShares Product at BlackRock, stated that the launch comes amid turbulent market conditions and increasing client demand for active ETF strategies.
The launch follows a challenging month for the U.S. stock market, with the S&P 500 experiencing a 5.2% drop in September through Wednesday, which has reduced the index's gains so far in 2023 to 11.3%, according to FactSet data.
BlackRock, the world's largest asset manager, has a history of creating ETFs that incorporate options-based investment strategies. In June, the firm launched its first "buffer" ETFs, designed to provide investors with some downside protection in the U.S. stock market while also offering potential capped gains.
In 2022, BlackRock introduced bond ETFs that aim to provide investors with an additional stream of cash flow tied to the options market.
The BlackRock Advantage Large Cap Income ETF will be managed by a team led by Raffaele Savi, global head of BlackRock systematic and co-chief investment officer and co-head of systematic active equity. Jacobs noted that the systematic investment team utilizes "big data" to drive their insights, leveraging a large volume of data from across markets and beyond to inform their strategy.
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