The world's largest money manager and exchange-traded fund provider is distancing itself from the products blamed for much of this week's tumultuous market activity.
BlackRock said it neither endorses nor provides the leveraged exchange-traded notes that tumbled as market volatility soared.
Primarily, the firm sought to draw a line between the exchange-traded funds it provides under the iShares umbrella and the various ETNs that use leverage and derivatives to provide inverse returns for gains and losses in various indexes.
"Inverse and leveraged Exchange-Traded Products are not ETFs, and they don't perform like ETFs under stress. That's why iShares does not offer them," BlackRock said in a statement Monday night, hours after the Dow industrials lost 1,175 points, the worst single-day point decline in market history.
Two ETNs have attracted much attention: the ProShares Short VIX Short-Term Futures and the VelocityShares Daily Inverse VIX Short-Term ETN. Both trade using leverage and provide inverse returns to the market's "fear gauge" known as the Cboe volatility index — the VIX. When the VIX falls, the two products rise. When the VIX soared Monday, both securities suffered severe losses.
BlackRock's statement did not mention any specific products. However, it encouraged regulators to step in and provide market clarity in leveraged products.