What BlackRock Is Seeing in ETFs Into Year End

SPEAKER_1 (0:00)

All right, let's bring Marlee back into the conversation, turn our attention to BlackRock's suite of ETFs with Jay Jacobs, US head of equity ETFs at BlackRock. Good afternoon to you, Jay, so nice of you to join us. Now, I know you can't speak about EWZ specifically because it is ripping today, it's really stealing the show, but I want to phrase it like this. How are international ETFs performing against their US counterparts, obviously, which is an area that you look at? Because I'm just wondering how we are looking at the shifting global momentum that we've been looking at this year when you take an EWI, which was all the rage earlier in 2026 as well, versus US equity counterparts.

Jay Jacobs (0:44)

Well, I think for most investors in the United States, they've really been frankly spoiled by the returns we've seen in just US equity benchmarks like the S&P 500 or the NASDAQ 100 over the last decade. It's been brilliant to overweight US stocks, but what we've seen over the last two years now is international stocks are coming back in favor, and specifically if you can be selective with your exposures, looking at areas related to artificial intelligence, looking at Taiwan, looking at Korea, or looking at areas where you might see some regulatory or policy tailwinds like we're seeing in Brazil, that could also be a positive. So being selective on single countries has certainly been a way investors have been able to generate higher returns in this market.

SPEAKER_3 (1:23)

Jay, we're seeing a lot more of that selectivity and investors being much more precise in how they're using ETFs. We released our Schwab Trading Activity Index Report today, and for the first time ever an ETF was the top net buy for the month of September. Five of the 10 top net buys were ETFs. So in terms of what you're seeing, in terms of client demand that tells you that investors want more than just this broad market exposure and they want to build more targeted portfolios through ETF, what are you seeing in terms of the trends?

Jay Jacobs (1:55)

Well, I think that's the biggest trend is getting more precise using ETFs, so we talked about single countries. I think we see it with subsectors as people look to areas like semiconductors with our SOX ETF to get exposure to that part of the market, or really looking at thematic ETFs as they do more accurately capture some of the structural trends that are driving the market today. We've seen tremendous amount of interest in ways to play the AI value game through funds like BAI. We've seen people looking at ways to play power infrastructure with POWR.

We've been seeing ways that people want to play even broader infrastructure with IFRA, which is a US infrastructure fund. But really all of these tickers that I'm mentioning are just really precision instruments to isolate the parts of the market that have the most tailwinds. Yes, people are still very much building out of core with core products like IVV, but the satellites international thematic have made a really big difference in investor returns this year.

SPEAKER_1 (2:48)

Yeah, Jay, we've seen a big rotation back into mega cap tech. I mean, obviously with the Mag 7 and another record today, we've got Nvidia to thank for that, obviously a strong showing for names like Microsoft. We had been talking about that broadening out earlier in the year, but it seems like the Mag 7 have quickly reestablished that leadership in the market. And I think the big debate, as I mentioned in the intro of the show, is whether they're gonna take us into year end alone or are they gonna take the rest of the market sort of riding on the coattails with them? Are you seeing similar rotation within ETFs?

Jay Jacobs (3:25)

Look, I think it's impossible to count out the Mag 7 These stocks have some of the most access to capital, some of the best software programmers, some of the most proprietary data in the world, all of which is an incredible recipe for success in an AI-driven market. With that being said, I think investors are still looking to go beyond the Mag 7 to find some of the more uncovered opportunities within the market. I was mentioning AI earlier.

BAI, an Actively Managed AI Fund, is looking at the Mag 7, but it's also looking at other areas, looking at memory stocks, looking at some power infrastructure stocks, looking at some applications of artificial intelligence. All of these can be lesser known names that are very much playing in one of the biggest mega-forces we've seen in history, but are going to be less covered than the Mag 7 It's not either or. I think it's at Mag 7 and some of these more compelling areas of the market.