How BlackRock, world’s largest fund manager, is shifting market bets

BlackRock came into 2026 with a clear investment plan built around three pillars: artificial intelligence, income, and diversification.

Jay Jacobs, BlackRock’s head of equity exchange-traded funds, laid out ways in which ETFs fit into the shifting market bets from the world’s largest asset manager, which oversees more than $13 trillion from investors. Investors should remain focused on growth, he says, but precision will matter more than broad exposure.

“The first is really what are the biggest growth opportunities in the market today,” Jacobs said on CNBC’s “ETF Edge” on Monday. “Where you have to get laser focused to try and find some of these targeted exposures, like artificial intelligence, that could do very well in this environment.”

That and the other investing themes Jacobs shared on “ETF Edge” are consistent with BlackRock’s 2026 annual outlook, “AI, income & diversifiers,” which was released earlier this week.

BlackRock continues to view AI as a long-term, capital intensive investment cycle. Infrastructure spending remains elevated, while productivity gains and earnings growth are backed by AI-related investments. The firm does not see the theme as nearing exhaustion.

BlackRock is among the ETF companies offering AI-focused funds, such as its iShares A.I. Innovation and Tech Active ETF (BAI), which has amassed over $8 billion in assets.

There are many other AI ETF options that have grown to over $1 billion in assets in recent years:

• Roundhill Generative AI & Technology ETF (CHAT)
• Ark Autonomous Technology and Robotics ETF (ARKQ)
• Global X Robotics and Artificial Intelligence ETF (BOTZ)
• Global X Artificial Intelligence and Technology ETF (AIQ)
• iShares Future AI & Tech ETF (ARTY)
• Dan Ives Wedbush AI Revolution ETF (IVES)

Jacobs cited the U.S. equity market’s high level of concentration, with a handful of mega-cap tech stocks now accounting for an outsized share of returns, as among the reasons to fine-tune equities exposure. The “Magnificent Seven” stocks make up over 40% of the S&P 500 Index.

“[That concentration] is either a feature or a bug,” Jacobs said. “It’s reaching historical levels.”

Jacobs said investors are responding by becoming more deliberate about how much concentration they want. Some are choosing to broaden their exposure by equal-weighting the U.S. stock market as a way to manage the risk.

Jacobs cited the interest-rate environment, and expectations the Federal Reserve will lower rates again, as a reason to make income a major focus this year as the declining rates pressure yields on cash investments. Investors who relied on money markets for income may need to reposition. “We are in a falling interest rate environment. We expect some cuts this year. We need to find new sources of income to diversify your portfolio and generate income from it,” Jacobs said.

Diversification is the third pillar of BlackRock’s 2026 approach to the market. Bouts of volatility are becoming more frequent while market leadership is narrow, and traditional portfolio design that rely on bonds to smooth out the risks from stocks — typically the so-called 60-40 portfolio — are proving less reliable during periods of stress. As a result, Jacobs said investors are looking for assets that behave differently. “Where can you really get diversification for your portfolio?” he said. “Something that’s going to behave differently from stocks and bonds.”

The underlying message from Jacobs was that investors have been very fortunate over the past decade with a U.S. stock market that has produced significant returns, but it would be risky to expect that run to continue at a similar pace. “The last 10 years, the S&P 500 has an annualized return of 13.5%, and many expect it to be lower,” he said.