BlackRock CEO Fink on $12 trillion ETF growth projection

BlackRock CEO Larry Fink.REUTERS/Ruben Sprich

• Exchange-traded funds’ assets could jump from $4.7 trillion this year to $12 trillion in 2023, according to BlackRock CEO Larry Fink.
• BlackRock’s booming iShares exchange-traded fund business helped boost the firm’s earnings during the third quarter. 

BlackRock is betting on the explosive growth of exchange-traded funds, an asset class that has already propelled the firm to become the world’s largest asset manager. 

The ETF market, which includes $4.7 trillion worldwide in assets, could jump to $12 trillion in the next five years, CEO Larry Fink said on the firm’s earnings call on Tuesday.

Fink echoed these remarks from a report published by the firm earlier this year. 

BlackRock’s booming iShares exchange-traded fund business helped boost the firm’s earnings during the quarter, as institutional investors, meanwhile, pulled money out of the markets.

iShares, a business that comprises about 30% of the firm’s assets under management, had net inflows of $33.7 billion during the quarter. iShares assets totaled $1.9 trillion, up from $1.6 trillion in the year-ago period. 

Low-cost, passively managed funds have gained popularity in recent years, as they make it easier for investors to move in and out of the market. 

In the last quarter, iShares benefitted from Fidelity’s decision to triple the number of commission-free iShares available. That change resulted in the most iShares inflows in August in the five years of Fidelity and BlackRock’s partnership, chief financial officer Gary Shedlin said on Tuesday’s earnings call.

“I believe this is a really important trend for all the ETF industry, and I also believe it’s a very important trend for the advancement of pools of money for retirement,” Shedlin said. 

In a May paper, the firm said it expects ETF growth to be concentrated in the US and Europe, driven by investors’ cost sensitivity, search for non-correlated returns, changes in fee structure and lack of bond market liquidity.

Overall, BlackRock managed $6.4 trillion in assets at the end of the third quarter, up 8% from the year-ago period.

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