BlackRock, State Street ETF Assets Surged in 2Q

BlackRock Inc. and State Street Corp., the Nos. 1 and 3 exchange-traded fund companies, reported second quarter earnings on Friday, showing big jumps in money flowing into their ETFs as investors chased the U.S. stock market rally and remained upbeat about ETFs as investment vehicles. 

BlackRock, whose iShares unit is the world’s biggest ETF issuer, had inflows of $48 billion, more than double the first quarter’s $21.7 billion. Still, that was a drop from last year’s second quarter flows of $52.1 billion. 

State Street, which runs the SPDR S&P 500 ETF Trust (SPY), the world’s oldest and biggest ETF, reported a total inflow of $27 billion into equity ETFs, a reversal from the $6 billion in first quarter outflows and the $8 billion in outflows in last year’s second quarter and $1 billion into fixed income ETFs. 

Flows jumped as equity markets gained, with the Nasdaq having its biggest first-half increase in 40 years. Most ETFs focus on stocks with a smaller percentage investing in fixed income like bonds. 

The gains were “driven in a large part by improving equity markets,” Greggory Warren, sector strategist at Morningstar wrote in an analyst note.  

BlackRock ETFs

At BlackRock, ETF assets under management rose to $3.2 trillion, a 14% gain from the year-earlier quarter.  

Equity ETFs at BlackRock added $13.9 billion in inflows, far less than the $19.6 billion expected by analysts surveyed by Bloomberg. That was a 40% decrease from last year’s second quarter. 

BlackRock shares dropped 1.1% in afternoon trading.  

iShares’ bond ETFs drew in $34.7 billion, a 13% gain and topping the $34.1 billion analysts expected.  

“One troubling sign in BlackRock's overall ETF operations during the first half of the year, though, is the dichotomy that has emerged between its equity and fixed-income product lines—something that we were not really seeing across the rest of the industry,” Warren wrote.  

Overall, State Street reported positive inflows of $38 billion across ETFs, cash funds, and long-term institutional funds. In the second quarter its collective funds, including ETFs, under custody increased 4% since last year to $13.2 billion. The company’s stock was down 11% in afternoon trading after its net interest income missed expectations, according to the Wall Street Journal. 

Contact Gabe Alpert at [email protected]; Lucy Brewster at [email protected] or follow her on Twitter at @lucyrbrewster