Industry Updates

BlackRock’s Fink bets big on European retail amid strong ETF inflows

Flows into BlackRock’s European ETF business have already surpassed 2022

Theo Andrew

BlackRock iShares office sign

BlackRock is betting big on the rise of retail investing in Europe after net inflows into its ETF business surpassed 2022 levels in the first nine months of this year.

BlackRock’s European ETF division recorded inflows of €47.3bn in the nine months to the end of September, above the €43bn recorded for the entirety of last year.

Speaking on its Q3 earnings call, Fink said the rise in capital markets and the uptake of ETFs among retail investors in Europe are behind the growth it has seen on the continent.

“In Europe, ETF flows are up 70% while in the US ETF flows are a little lower. As we continue to build out our platform globally, we become a very large beneficiary [of this growth],” Fink said.

“What is happening in Europe, with the rise of its capital markets and the utilisation of ETFs, we are winning big market share in that business.”

Fink’s comments follow several investments and partnerships in recent months including digital bank Monzo and German fintech Upvest.

He highlighted the two deals as examples of new growth opportunities on the continent.

“Our partnership with Upvest makes it cheaper and simpler for Europeans to start investing. What we have seen market after market is that we can make investing easier and more affordable and we can quickly attract new clients,” he said.

“With growing use cases, diversification and customisation, ETFs and indices are often and increasingly important components of active management.”

The inflows take its total ETF AUM in Europe to €668bn at the end of Q3 and a 44% share of the market. 

Across its global ETF business, BlackRock generated net inflows of $29bn in Q3 taking its total net inflows to $98bn this year.

Despite this, the world’s largest asset manager recorded quarterly outflows in the three months to the end of September.

This was attributed to “one non-US client” pulling $19bn from an index fund and $13bn of market-related precision ETF net outflows.

However, the asset manager was bullish heading into the fourth quarter, historically its strongest for ETF flows.

“The fourth quarter has historically been the strongest quarter of ETF flows for BlackRock where we see on average 35% of annual net inflows,” Martin Small, chief financial officer at BlackRock said.

“BlackRock has been a large beneficiary of ETF seasonality related to year-end rebalancing and tax planning. In line with these historical results, we would expect to see an acceleration of iShares ETF flows towards the end of 2023.”

The firm reiterated its bet on “the great reallocation” to fixed income, noting the $7trn currently invested in money market funds which is set to shift on peaking interest rates.

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