At the Goldman Sachs Financial Services Conference, the CFO of the world’s largest asset manager called the market “exciting and dynamic.”
At the annual Goldman Sachs U.S. Financial Services this week, Martin Small, the CFO at BlackRock, sat down with his hosts for a wide-ranging discussion on trends in the industry.
Among the subjects that Small addressed was BlackRock’s iShares Bitcoin Trust (NASDAQ:IBIT) ETF and its remarkable growth.
Since the spot Bitcoin ETF launched in January of 2024 among the first batch of 11 spot Bitcoin ETFs, the iShares offering has been the runaway leader.
It has already amassed $53 billion in assets under management, making it by far the fastest ETF to hit $50 billion in AUM. The iShares Bitcoin Trust hit that milestone in 228 days, some five times quicker than the previous leader, the iShares Core MSCI EAFE ETF (CBOE:IEFA), which did it in 1,329 days.
“This is something I wasn’t sure we’d ever see,” Small said at the conference in a conversation with Goldman Sachs investment analyst Alex Blostein. “I wasn’t sure we’d ever see it, but I’ve never seen anything like it in my career for something to go from 0 to $50 billion in basically six months.”
The iShares Bitcoin Trust has accumulated about $32 billion in net inflows this year as of the end of November, putting it behind only the Vanguard S&P 500 ETF at $115 billion in net new inflows YTD and the iShares Core S&P ETF at $63 billion. Notably, IBIT has had higher inflows this year than the Invesco QQQ at $28 billion, according to ETFGI.
ETFs are “lubricating agents” for portfolio builders
Small also discussed the growth of ETFs in general, which recently crossed the $15 trillion mark in AUM, up 30% this year alone. ETFs have had $1.67 trillion in net inflows so far in 2024, a record, and have posted 66 straight months of net inflows, according to ETFGI. Since the end of 2019, ETF assets have more than doubled from $6.3 trillion to $15.1 trillion.
iShares is the leader in overall ETF assets, with $4.2 trillion at the end of the third quarter. That represents about 36% of BlackRock’s total of $11.5 trillion in AUM at the end of Q3.
At the Goldman Sachs conference, Small called ETFs one of the most “dynamic parts of the asset management industry,” bringing together a variety of investors, like institutional investors, wealth managers, model portfolio builders, liquidity providers, and generally people who build portfolios.
“That never happens unless it pertains to ETFs,” he said. “So, the ETF industry is growing because it’s a lubricating agent for business model transformation, and I think that’s going to continue.”
Fixed income and European ETFs in focus
Aside from the Bitcoin and crypto ETFs, Small outlined some areas where he sees growth in ETFs. The first is in Europe.
“We’re closing in on $1 trillion of AUM in Europe and European iShares with 40% to 50% flow market share very, very consistently in a system … I think, where we have some unique competitive advantages that persist,” said Small.
The other growth area is fixed income ETFs, where Small said assets industrywide are expected to triple from $2 trillion to $6 trillion by 2030. Fixed income and cash have been a safe haven for investors due to political and economic uncertainty around the world.
But he does expect to see assets moving back from money markets and fixed income into equities.
“That can only persist so long, and I think that will fuel a healthy amount of re-risking into equities and into the private market,” Small said. “That fear of missing out, of trailing your benchmark, I think is contributing meaningfully to re-risking … I think even modest rate cuts are going to fuel a very healthy amount of investor re-risking. And that gives us a lot of confidence going into 2025.”
Overall, Small called it “one of the most, I think, exciting and dynamic markets I’ve ever seen.”
