- BlackRock is an iShares business, which offers low-cost exchange-traded funds.
- Investment firm BlackRock $BLK has lost $1.7 trillion of its clients’ assets.
- BlackRock is trying to adapt to the changing landscape.
According to eVestment, the outflows come as investors pull money from actively managed funds and put it into passive vehicles like index funds. BlackRock’s iShares business, which offers low-cost exchange-traded funds (ETFs), was one of the few bright spots for the firm, with $22.4 billion in inflows.
The outflows are a sign that investors are becoming more choosy about where they put their money. They’re also a sign that the industry is undergoing a structural shift, with passive investing gaining ground at the expense of active management. BlackRock is far from the only firm to see outflows. eVestment’s report showed that actively managed US equity funds had $74 billion in outflows in the first half of 2022, while passive funds had $283 billion in inflows.
The outflows come as the stock market has been on a tear, with the S&P 500 up more than 20% so far this year. That has put pressure on actively managed funds to keep up with their benchmarks.
“The outflows from active US equity funds are a continuation of the trend we’ve seen over the past few years,” said Jon Hale, head of sustainability research at Morningstar. “Investors are becoming more aware of the costs and risks of active management, and they’re increasingly turning to lower-cost passive options.”
BlackRock is trying to adapt to the changing landscape. The firm has been investing in technology and data to make its active management more cost-effective. And, it has been expanding its lineup of ETFs. But the outflows are a sign that it’s going to be an uphill battle for BlackRock and other active managers. Investors are becoming more cost-conscious, and they’re increasingly turning to passive investing.
“The outflows from actively managed funds are a sign that the industry is undergoing a structural shift,” said Hale. ” Passive investing is gaining ground at the expense of active management.”
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