BlackRock is embarking on a strategic path with its AI-focused ETFs, such as the iShares A.I. Innovation and Tech Active ETF (BAI), which has garnered over $8 billion in assets. The firm views artificial intelligence as part of a long-term, capital-intensive investment cycle, seeing continued infrastructure spending and productivity gains supported by AI investments.
In a discussion on CNBC's 'ETF Edge,' Jay Jacobs, BlackRock's head of equity exchange-traded funds, outlined the company's investment themes consistent with its 2026 outlook, 'AI, income & diversifiers,' released earlier this week. Jacobs underscored the significance of identifying precise growth opportunities, particularly in AI, amidst a shifting market environment.
BlackRock, managing more than $13 trillion, encourages focused investment strategies, with an emphasis on precision over broad market exposure. Jacobs highlighted the U.S. equity market's high concentration in mega-cap tech stocks, accounting for a significant share of returns, advising investors to deliberate on their exposure levels.
The discussion also addressed a range of AI ETFs surpassing $1 billion in assets, including Roundhill Generative AI & Technology ETF (CHAT) and Global X Robotics and Artificial Intelligence ETF (BOTZ), among others. The aim is to enable investors to judiciously manage equities exposure in a highly concentrated market.
Amid an evolving interest-rate environment, with expectations of Federal Reserve rate cuts, Jacobs pointed to income as a critical focus, as lower rates impact cash investment yields. Investors may need to adjust, seeking new income avenues to enhance portfolio diversification.
Jacobs emphasized the importance of diversifying beyond traditional portfolios, noting increasing market volatility and the need for assets that differ from stocks and bonds. As traditional designs like the 60-40 portfolio show less reliability during stress, investors are advised to seek alternative diversification strategies.
Concluding, Jacobs cautioned against assuming the continuation of the past decade's robust U.S. stock market returns, noting the S&P 500's 13.5% annualized return as potentially setting unrealistic future expectations.