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BlackRock’s Stock Performance to Be Driven by iShares in 2018

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iShares ETFs

BlackRock (BLK) was managing ~$1.8 trillion through the iShares ETF platform on March 31. The company has attracted lower flows in the first quarter, compared with its average flows in 2017.

Exchange-traded funds have attracted consistent flows in the last decade, primarily mainly due to their lower costs. Other factors include the ease of investments across asset classes including equities, debt, commodities, and currencies, as well as across regions such as the Americas, Europe, Asia, and emerging markets.

State Street (STT), Vanguard, and BlackRock (BLK) are managing $1.0 trillion–$2.0 trillion in ETFs, followed by brokers (XLF) such as Charles Schwab (SCHW) and bankers such as JPMorgan Chase (JPM).

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BlackRock’s iShares raised $35.0 billion in the first quarter, down from $64.0 billion in the first quarter of 2017 and $55.0 billion in the previous quarter. Assets under the company’s iShares products formed 28.0% of its total AUM on March 31. Equities attracted $29.7 billion in the US and international markets, $3.2 billion in the fixed income category, and $1.7 billion in commodities.

Pricing impact

BlackRock’s iShares garnered ~$1.2 billion in the first quarter, helped by new flows and partially offset by a decline in valuations of holdings. The valuation of BlackRock’s equity holdings rose by $13.0 billion in the first quarter. This increase was helped by inflows of $35.0 billion and positive forex impact of $4.1 billion. This trend was partially offset by a portfolio decline of $23.0 billion across equities and debt

The iShares products are facing competition from thematic investment options as well as alternative offerings amid volatile equity and debt markets.

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