What to Expect for BlackRock in 3Q17

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Part 3
What to Expect for BlackRock in 3Q17 PART 3 OF 10

BlackRock’s iShares to Boost Asset Classes in 3Q17

BlackRock’s iShares to rake in assets

BlackRock’s (BLK) iShares are expected to add more assets in 3Q17, deployed towards equity as well as debt offerings. Equity offerings from the United States, Europe, and Asia have attracted new assets due to strong growth in the overall economy. Among ETFs, iShares continue to outperform others due to technology, reach, variety, and liquidity.

In 2Q17, iShares attracted a record $74 billion, bringing the company’s total AUM (assets under management) to $1.5 trillion on June 30, 2017. The $74 billion forms 27% of the total assets managed by the company. Global equities, blended offerings, global debt, emerging market debt, and index funds have seen a consistent inflow due to cost-effective solutions.

BlackRock&#8217;s iShares to Boost Asset Classes in 3Q17

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BlackRock’s iShares have mostly attracted funds towards equities over the past few quarters. In 2Q17, equities added $51.8 billion to US and international products. The trend will continue to tilt towards equities in 3Q17 due to large-scale deployment from retail and institutional clients. Debt offerings attracted $21 billion towards investment-grade debt, emerging market debt, and Treasury bond funds.

Traditional asset managers (VFH) State Street (STT), Charles Schwab (SCHW), Vanguard, and JPMorgan Chase (JPM) have also attracted a flow towards ETFs and index funds.

Markets rise

BlackRock’s iShares don’t generate performance fees. However, they could command more fees as markets and asset valuation rise. The division generated total base fees of $998 million in 2Q17 (37% of the company’s total fees), up $70 million on a sequential basis. In 3Q17, base fees could rise further on the appreciation of assets and inflow towards equity and debt offerings, and be partially offset by higher competition. In 2Q17, iShares’s managed assets rose $115 billion from the previous quarter due to a long-term inflow and a $43 billion rise in its holdings’ valuation.


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