BlackRock ETF Flows Hit New Record as 2Q Earnings Beat

BlackRock, Inc. (BLK) reported second-quarter adjusted earnings per share of $12.05 today, beating analyst expectations, as the company's ETF business delivered record first-half flows that helped drive revenue growth across the world's largest asset manager.

The company's iShares ETF franchise attracted $85 billion in net flows during the second quarter and $192 billion year to date, according to BlackRock's earnings report released Tuesday. ETF assets under management reached $4.7 trillion, representing 38% of BlackRock's total $12.5 trillion in assets.

The ETF business generated $1.9 billion in base fees during the quarter, accounting for 42% of BlackRock's total investment advisory revenue, according to the filing. This revenue stream has become increasingly important as more fund managers increase their active strategy launches.

"iShares ETFs had a record first half in flows, and technology ACV growth reached a fresh high of 16%," said Larry Fink, BlackRock's chairman and CEO, in the earnings statement. "This core strength, alongside client demand for private markets, digital assets, Aperio, and our tech and data-driven systematic strategies, propelled another consecutive quarter of above-target organic base fee growth."

The company's total revenue increased 13% year over year to $5.4 billion, according to the earnings report. BlackRock's assets under management rose 18% from the prior year to $12.5 trillion, though quarterly net flows of $68 billion were reduced by a single institutional client's $52 billion redemption.

ETF net flows were driven by strong demand across multiple asset classes, according to BlackRock. Fixed-income ETFs attracted $43 billion in flows, while equity ETFs drew $22 billion. Digital asset ETFs added $14 billion in new assets during the quarter.

BlackRock ETF Revenue Growth Outpaces Alternatives

ETF revenue growth has outpaced BlackRock's alternatives business in recent quarters, according to the company's financial statements. ETF base fees increased to $1.9 billion from $1.6 billion in the prior year, while alternatives revenue reached $656 million.

Catherine Seifert, vice president at CFRA Research, noted in a research report that BlackRock's "market-leading ETF franchise" remains one of three key growth pillars supporting the company's premium valuation. She expects continued ETF leadership amid challenging market conditions.

"We expect BLK to pursue additional bolt-on acquisitions to achieve this strategic goal and view its ability to produce above-peer organic growth enhanced by tactical acquisitions as providing a catalyst for multiple expansion," Seifert wrote, forecasting 12%-17% revenue growth for 2025.

The ETF business has proven resilient during market volatility, with BlackRock's index funds maintaining 95% of assets within applicable tolerance ranges over one-year periods, according to the company.