Catenaa, Friday, May 29, 2026- BlackRock is trimming its bet on stocks across its $220 billion model-portfolio business as US equities surge to record highs following a strong earnings season.
The world’s largest asset manager cut its overweight position in equities from 3% to 1%, according to an investment outlook viewed by Bloomberg.
The shift triggered billions of dollars of flows between BlackRock’s exchange-traded funds on Thursday, data compiled by Bloomberg showed.
The move follows a “generational earnings season” for US companies, wrote Michael Gates, lead portfolio manager for BlackRock’s Target Allocation ETF model portfolio suite.
The strong results, booming productivity, and a stable economy have pushed the S&P 500 to record highs in recent weeks, offsetting the impact of the war with Iran and growing doubts that the Federal Reserve will lower interest rates this year, he said.
But it’s becoming harder to expect overperformance from equities, he cautioned. The markets have already priced the positive indicators, and “we see a narrower path ahead to avoiding potential risks,” he said.
Gates said the firm remains confident in equities and will maintain positions that bet on growing corporate profits, artificial intelligence and government spending.
Model portfolios, which package together funds into ready-made strategies to be sold to financial advisers, have soared in popularity in recent years.
Bloomberg Intelligence estimates that $3 trillion sits in model portfolios, roughly 22% of all ETF assets. BlackRock controls more than $220 billion in these models, up from $150 billion last year.
As a result of this week’s adjustment, more than $12 billion flowed into the iShares Core S&P 500 ETF (ticker IVV) in the latest session, Bloomberg data show.
Meanwhile, a record haul flooded into the iShares International Country Rotation Active ETF (CORO) to capture regions that are the most advanced in adopting AI, according to the outlook.
Those inflows came at the expense of factor-focused and thematic funds, with a combined $10 billion exiting from the likes of the iShares MSCI USA Quality Factor ETF (QUAL), the iShares S&P 500 Value ETF (IVE), the iShares US Thematic Rotation Active ETF (THRO) and the iShares MSCI USA Momentum Factor ETF (MTUM) in the most recent trading session, Bloomberg data show.
Outside of equities, BlackRock is rotating away from longer-dated US debt in favor of global fixed-income and liquid alternatives as the asset manager rethinks conventional portfolio hedges, Gates wrote in the outlook.
Accordingly, the iShares Core Universal USD Bond ETF (IUSB) and the iShares Systematic Alternatives Active ETF (IALT) both absorbed cash, while the iShares 10-20 Year Treasury Bond ETF (TLH) posted a record outflow.
“Traditional ballasts have not been as effective in these environments, and we cannot cling to long-duration rates with a bear flattening curve,” Gates wrote. “Our approach to this is to diversify diversifiers.”
