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BlackRock is poised for a record year in net inflows across its product suite, buoyed by its line-up of active ETFs and the demand for the products in model portfolios, chief financial officer Martin Small said.
The asset manager notched more than $360bn in net flows during the year’s first three quarters, most of that from investments in its ETFs, according to quarterly earnings figures.
Most of the net inflows, at $220bn, occurred in the third quarter, leading to a record $11.5tn in total assets under management.
“[That] active ETF toolkit [has] transformed what model portfolio builders are doing,” Small said at the Goldman Sachs 2024 US Financial Services Conference earlier this month, adding that model portfolio builders have been searching for flexibility when building those sleeves.
This article was previously published by Ignites, a title owned by the FT Group.
The company’s ETF suite, which includes BlackRock and iShares strategies, recorded total net inflows of more than $170bn during the first three quarters this year, according to data from Morningstar Direct.
In October, investors poured another $34bn into its ETFs, the data shows.
BlackRock has some of the industry’s largest active ETFs, which Small said has partly helped the firm notch up the record inflows, and those strategies had been particularly successful with model portfolio providers.
They include the manager’s $13.7bn iShares US Equity Factor Rotation Active ETF and $6.7bn iShares Flexible Income Active ETF.
The two ETFs recorded net inflows of $11bn and $5.5bn, respectively, between January and October, Morningstar Direct data shows.
Small also pointed to the firm’s iShares Bitcoin Trust, which captured more than $50.8bn in assets since it launched on January 5 through the end of October, Morningstar Direct data shows.
“I’ve never seen anything like it in my career for something to go from 0 to $50bn in basically six months,” he said.
“Many model portfolios are open to the idea of adding more active ETFs and getting more active exposure, while at the same time controlling for costs and having the portability you get with an ETF,” and BlackRock has benefited, said Morningstar analyst Jason Kephart.
Trading flexibility has been one of the major reasons for their recent adoption in models, he said.
One of the reasons behind BlackRock’s success across its ETF suite is that it runs its own model portfolio business, which is one of the largest third-party platforms in the industry, Kephart said.
The firm has been adding its own ETFs to its model portfolios platform, which has boosted flows, he said.
Model portfolios themselves have become a more popular investment tool, according to a recent report from State Street Global Advisors.
The company’s research found that advisers reported 39 per cent of assets under management were in models, up from 32 per cent just three years ago.
Some 54 per cent of advisers also use custom models, while another 45 per cent use them on broker-dealer platforms and 53 per cent from third-party providers, the report shows.
*Ignites is a news service published by FT Specialist for professionals working in the asset management industry. Trials and subscriptions are available at ignites.com.
