Recently, we’ve been providing some background on exchange traded funds.  We’ve talked about Proshares, gold ETFs and oil ETFs.  Now, were going to discuss iShares, which is the market leader in the field.  Here’s a little background about iShares’ history and why it stands out in the ETF world.

Banking and finance conglomerate Barclay’s used to own iShares.  Under its auspices, iShares grew to be the biggest player in the ETF world, offering over 400 different funds ranging from wide-ranging market index offerings to narrow niche-specific options.

In 2009, Barclay’s decided to raise cash in the face of the banking crisis by selling off the highly successful iShares unit.  At the time, experts thought that Vanguard, Charles Schwab or Northern Trust might buy iShares.  In something of a surprise, they instead announced plans to sell to CVC Capital Partners for over $4 billion.  However, during a 45-day period in which Barclays’ was allowed to shop iShares before the deal was finalized, BlackRock –a New York based financial management company–came up with a $13.5 billion offer for iShares and its parent unit.  In June of 2009, iShares officially became part of BlackRock.

The change in ownership hasn’t seemed to hurt iShares.  Even though the ETF field is growing increasingly competitive, iShares managed a significant increase in the total of assets under its management.  According to the Financial Times:

According to figures from BlackRock, assets under management for global ETFs reached $1,032bn (£639bn, €734bn) at the end of December, some 5 per cent above the previous all time high of $982bn registered just a month earlier. European ETFs also fared well, registering a record high of $223bn last year.

That boost put slightly over 50% of all EFT assets in the US under iShares management, an increase of around 4% for the year.

Why is iShares continuing to gain so much ground even in a market that’s exploding with new funds?  According to a recent Wall Street Journal analysis, much of it is the natural advantage of being an established player.  Most ETFs are index funds.  Their returns are easy to understand and they can be remarkably similar.  That makes it harder for new ETFs to distinguish themselves from the rest of the pack.  Additionally, ETFs are traded just like stocks, which means investors are attracted to funds that are established and that have high trading volume, which makes selling a quicker proposition. established funds with heavy trading volume—thus they know they will always be able to sell quickly and cheaply. That puts new players at a disadvantage.

The advantages of being the “king of the hill” are undeniable, but iShares also continues to attract investors because if offers such a wide range of funds.

over 400 funds globally across equities, fixed income and commodities, which trade on 16 exchanges worldwide.  A CNN/Money report noted that iShares runs over 400 different funds–across commodity, fixed income and equity types–that are traded on 16 different markets around the world.

Honesty.  Transparency.  Purity.  Tax and Cost-Efficiency:  Those are what iShares lists as the underlying principles governing their approach to business.  I’m sure they’d credit a commitment to those ideals a key component to their success, as well.

Regardless if the causes, the results are clear.  BlackRock’s iShares is continuing to gain popularity within the exchange traded fund world.  They’re well known, respected, experienced and offer a huge number of fund options for investors.  Anyone who is considering getting actively involved with ETFs should carefully consider iShares funds.  There’s no such thing as a sure thing in the world of investing, obviously.  However, it seems sensible to believe that a company who currently hols more than half of the US market is doing something right.