Removal of ESG Screens Raises Questions as BlackRock Reshapes Tech ETF

Strategic Shift in Focus

BlackRock has announced significant changes to its iShares Future Tech Innovators ETF (ASX – ITEK), effective from 15 October 2025. The fund will be rebranded as the iShares Nasdaq Top 30 ETF, reflecting a streamlined investment approach targeting the 30 largest companies by market capitalization within the Nasdaq 100 Index. This pivot aims to sharpen the fund's exposure to leading global technology stocks, moving away from a broader basket of disruptive tech-themed ETFs.

Fee Reduction and Distribution Changes

Investors will benefit from a nearly 45% reduction in management fees, dropping from 0.55% to 0.30% per annum. This fee cut is designed to enhance net returns by lowering ongoing costs. Additionally, the fund will shift its distribution frequency from annual to quarterly, potentially providing investors with more regular income streams.

ESG Screening Removed

One of the more notable changes is the removal of exclusionary ESG (Environmental, Social, and Governance) screens. Previously, the fund invested in underlying ETFs that applied business involvement and controversy filters. The new Nasdaq-100 Top 30 benchmark does not incorporate these screens, meaning the fund will no longer be classified as an ESG-screened product. This could alter the fund’s appeal to investors prioritizing responsible investing criteria.

Performance and Tax Considerations

Historical data provided by BlackRock indicates that the new Nasdaq-100 Top 30 Index has outperformed both the current ETF and the broader MSCI World Index across multiple timeframes, including one month, three months, year-to-date, and one-year annualized returns. While past performance is not a guarantee of future results, this suggests the fund’s new focus could enhance investment outcomes.

Investors should also be aware of potential tax implications stemming from the transition. The fund may realize capital gains from the disposal of securities during the restructuring, which will be included in the fund’s attributable income for the financial year ending 30 June 2026. BlackRock advises investors to consider this when assessing their tax position.

Investor Impact and Next Steps

BlackRock emphasizes that no action is required from current investors as a result of these changes. A new Product Disclosure Statement (PDS) detailing the fund’s updated features will be released shortly. The streamlined structure, leveraging a single US-listed ETF, aims to capitalize on BlackRock’s global scale and operational efficiencies.

Overall, this revamp signals BlackRock’s intent to sharpen the fund’s technology exposure while making it more cost-effective and accessible. However, the removal of ESG filters may prompt mixed reactions among investors with sustainability mandates.