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Pro Analysis

Buy BlackRock because ETF price cuts aren't hurting iShares business, JPMorgan says


An "iShares by Blackrock" sign on the front of the New York Stock Exchange.
Richard Levine | Corbis | Getty Images
An "iShares by Blackrock" sign on the front of the New York Stock Exchange.

Investors should buy BlackRock because its higher-end ETF business is still growing even after rising industry pricing pressure, according to JPMorgan, which reiterated its overweight rating on the financial firm.

BlackRock lowered its fees on 15 U.S. iShares Core ETFs in October 2016 including ETFs that track the performance of the S&P 500 index and U.S. Treasury bonds.

"BlackRock's expanded fee reduction strategy, which better segments its customer base to increase growth, has shown success with limited evidence of cannibalization, despite perception to the contrary," analyst Kenneth Worthington wrote in a note to clients Tuesday. "We view the fee cuts as investments in future growth, particularly with U.S. investors, who appear to have become increasingly price conscious."

BlackRock's iShares unit surpassed $1 trillion in assets earlier this year.