Exchange-traded funds continue to represent the strongest single growth engine for the increasingly diversified asset manager BlackRock Inc., which crested the $11.5 trillion mark during the third quarter.
BlackRock’s iShares ETFs took in more than $97 billion during the quarter, the New York-based company reported Friday morning.
Of those third-quarter net inflows, $47.8 billion went into fixed-income ETFs as investors and financial advisors started moving assets in stride with the Federal Reserve’s interest rate cutting cycle.
“The iShares’ bond ETFs have been in high demand for quite some time,” said Ryan Jackson, senior manager research analyst at Morningstar.
“Their taxable-bond products represented about 23% of assets at the start of 2024 but claimed nearly half of iShares net flows so far this year,” he added. “Treasury ETFs have thrived in particular, and a potential slowdown in Treasury ETFs could be a minor headwind for iShares flows, but it has the product lineup and resources to take it in stride.”
BlackRock’s performance reflects the strong demand for ETFs. The industry generated a quarterly record of $280 billion in inflows for the third quarter and is on track to surpass $1 trillion in yearly inflows and break its all-time, single year high.
iShares ETFs Reach $4.2 Trillion
Over the first nine months of 2024, BlackRock’s ETFs have accumulated $248 billion, growing the iShares business to $4.2 trillion, or 37% of BlackRock’s total assets under management.
Cathy Seifert, an analyst at CFRA, said that BlackRock is likely to continue expanding.
“Money flowing out of money market funds as interest rates fall, theoretically, should flow into their ETFs,” she said. “From a broader perspective, BlackRock’s strong organic growth rate is a core metric to measure the health of an asset manager’s business.”
One area of growth Seifert is watching is BlackRock’s diversification into alternative investments, including private credit, which is a category that asset managers are starting to wrap inside ETFs to expand the market.
BlackRock’s alternative investments took in $5.5 billion during the recent quarter, which is still just “a spec on the BlackRock map right now,” Seifert said.
“But private credit and alternatives are top of mind right now, and we should be looking for BlackRock to be offering more products to a broader swath of investors,” she added.
BlackRock stock, which is up more than 21% this year, gained more than 3% in mid-day trading Friday.
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