BlackRock is pushing deeper into AI stocks while scaling back risk across its US model portfolios, reacting to growing uncertainty around tariffs.
According to Bloomberg, the asset manager on Tuesday added $436 million to its iShares AI Innovation and Tech Active ETF, or BAI, the fund’s biggest one-day inflow since launching in October.
That massive cash injection caused the fund to balloon to four times its previous size, as BlackRock made clear where it thinks growth is headed.
The BAI fund, which is actively managed, is stacked with tech names dominating the AI sector, including Nvidia, Broadcom, and Meta. It’s already surged 29% in the past month, boosted by a bounce in risk assets that had previously slumped due to trade fears.
BlackRock reduces US stock weight, adds global value and bonds
Michael Gates, who manages the firm’s $160 billion Target Allocation ETF model portfolio suite, said in a memo that AI is currently their top conviction within the tech space.
“Tech remains one of our highest conviction and longest running portfolio overweights, and within tech, AI is the highest conviction driver,” Gates wrote.
While the AI bet grows, BlackRock is pulling back from overall stock exposure inside its US models. It lowered its overweight on equities versus bonds to just 1%, down from 3%. The company is also reducing its US growth stock allocation and adding more weight to international value stocks.
Gates said this was because of uncertainty over global trade talks, not because the company is backing off its view of the US economy. “These moves are not a reflection of diminished confidence in US exceptionalism,” he added.
Trade concerns are clearly front and center. “In our view, the more significant concern around tariffs lies in their potential to modestly weigh on global growth, as supply chains may take time to adapt and business confidence remains sensitive to evolving trade dynamics,” Gates explained.
The market responded. On the same day BlackRock poured cash into AI, investors pulled $6.28 billion out of the iShares Core S&P 500 ETF — the biggest outflow since March. Another $822 million left the iShares S&P 500 Growth ETF.
At the same time, $912 million flowed into the iShares MSCI EAFE Value ETF, marking its largest single-day inflow since September.
The iShares US Thematic Rotation Active ETF, known as THRO, also pulled in over $3 billion Tuesday, the biggest one-day inflow in its history. BlackRock also steered money into short-term bonds. Its iShares 0-5 Year TIPS Bond ETF (STIP) brought in $553 million, its highest daily inflow since 2022.
These are all happening inside model portfolios — pre-built bundles of ETFs that BlackRock offers to advisers and institutions. These portfolios are meant to make investing simpler by packaging strategy into a single product.
The model portfolio market itself is growing fast. Broadridge Financial Solutions expects assets tied to models to climb to $11 trillion by 2028, with ETFs playing a major role in that expansion.
