BlackRock’s (BLK) iShares grew stronger in 3Q17 on new flows, performance, and rising broader markets. The division raised $52 billion, compared with $74 billion in 3Q16, and the division’s total AUM (assets under management) rose to $1.64 trillion, forming 27% of BLK’s total AUM.
Notably, iShares ETFs and index fund offerings across the equity, debt, emerging markets, and blended products have seen strong flows over the past few years due to their lower costs.
BlackRock raised $33.1 billion in its equity ETFs, helped by inflows in the US and international offerings. It raised another $17.5 billion in debt ETFs, led by corporate, treasury, and broader fixed income funds. Asset managing peers (XLF) including Vanguard, State Street (STT), JPMorgan Chase (JPM), and Schwab (SCHW) have also seen increased flows into ETFs across the equity and debt offerings.
Base fees rising
BlackRock’s iShares garnered total base fees of $1.1 billion in 3Q17, which was $69 million higher on a sequential basis and comprised 38% of the company’s total fees. The growth was strong in its equity ETFs due to appreciation and fund flows.
In 3Q17, managed assets for iShares rose by $112 billion over 2Q17 on inflows, positive market movements (largely in equity), and a positive foreign exchange impact. The iShares equity holdings appreciated by $51 billion, while fixed income holdings grew by $1 billion, and alternative holdings rose $0.5 billion.
The division managed a positive foreign exchange impact of $7.4 billion, reflecting a weaker dollar over the past few quarters.
Notably, the Trump administration’s proposed tax reforms in the financial sector, if passed by US Congress, could result in more buying of index-based ETFs in the short to medium term. Theme-based offers have already attracted more flows in the retail and institutional categories.