Wall Street investment giant BlackRock (NYSE: BLK), with over $12 trillion in assets under management (AUM), is now generating more in annual fee revenue from its spot Bitcoin exchange-traded fund (ETF) than its flagship fund tracking the S&P 500 Index, according to a recent Bloomberg report.
The asset manager’s iShares Bitcoin Trust ETF (NYSE: IBIT) was launched in the United States in January 2024 and has around $75 billion in AUM, while its iShares Core S&P 500 ETF (NYSE: IVV), which debuted in the year 2000, is almost nine times larger with $624 billion in assets under management.
BlackRock’s Bitcoin ETF Outpaces S&P 500 ETF by $100K in Under a Year
Based on Bloomberg’s July 1 calculations, IBIT earned an estimated $187.2 million in annual fees at an expense ratio of 0.25% per share. This is about $100,000 more than the $187.1 million made by IVV, which charges just 0.03%.
The iShares Bitcoin ETF was launched alongside a dozen similar products tracking the BTC spot market, and is by far the most popular of the lot. The fund hit an all-time high in AUM this year. The second-most popular Bitcoin ETF is the Fidelity Wise Origin Bitcoin Fund (Cboe: FBTC) by Fidelity Investments (NYSE: FNF), which has nearly $32 billion in total assets under management.
Speaking to Bloomberg, Nate Geraci, president of NovaDius Wealth Management, said that IBIT overtaking IVV in annual fee revenue reflects the growing investor sentiment for the apex crypto asset and the significant fee compression in core equity exposure. He added that although there is increased competition among publicly listed Bitcoin ETFs, in terms of price, IBIT is proof that investors are willing to pay more for exposures they believe are “truly additive to their portfolios.”
BlackRock’s IBIT has drawn significant cash inflows from both institutional and retail investors, managing to attract $52 billion of the combined $54 billion in net inflows into the 12 US spot Bitcoin ETFs since they began trading on Wall Street 18 months ago. During that time, it has only seen outflows in one month and now commands over 55% of the total assets held by all Bitcoin ETFs.
Most recent data suggests that the company holds approximately 572,226.5 BTC under its iShares Bitcoin Trust ETF. It is important to note that BlackRock’s exposure to the alpha cryptocurrency primarily exists through its exchange-traded product (ETP) structure, where the firm acts as a custodian for investors rather than a direct owner of the $70 billion in assets.
Paul Jickey, co-founder of Bespoke Investment Group, said that the fund’s dominance is an indication of much “pent-up” demand from investors to gain exposure to the world’s largest cryptocurrency by market cap as part of their overall portfolio without having to open a separate account elsewhere.
“It also illustrated the leadership of Bitcoin in the crypto space where its perceived utility as a store of value has left the others in the dust,” he added.
IBIT holds 55% of the Total BTC Managed by Bitcoin ETFs and is among the top-20 ETFs
Ever since the Securities and Exchange Commission (SEC) reluctantly opened the door to mainstream adoption of Bitcoin through ETFs last year, there has been an influx of capital into the investment vehicle category from large-scale financial institutions, like hedge funds, sovereign wealth funds, pension funds, and banks. This has caused the price of BTC to surge to multiple all-time highs over the previous 12 months.
IBIT is so popular among investors that it is already positioned among the top-20 ETFs by trading volume. The company’s 25-year-old IVV remains a traditional ETP seeking to track the investment results of an index composed of equities of the 500 largest U.S. companies by market cap.
Bitcoin’s supremacy over the rest of the market has only continued to widen. Despite BlackRock and other Wall Street giants launching spot Ethereum ETFs, they have failed to garner as much investor attention. The iShares Ethereum Trust ETF (ETHA), launched in July 2024, is the largest fund tracking the price of Ether (ETH), but holds just a fraction of the AUM of its BTC counterpart at $4.344 billion.
U.S. President Donald Trump’s pro-crypto stance has the financial markets craving more digital asset investment products. Wall Street’s BTC buying spree has been led by Strategy, which has used its cash reserves to accumulate the largest number of Bitcoins by a private entity. Meanwhile, hedge funds are piling into convertible debt issued by the Michael Saylor-founded company to capitalize on arbitrage trade and the growing Bitcoin market.
At the time of writing, Bitcoin (BTC) is trading at $109,372, up 2.55% in the last 24 hours. IBIT closed Wednesday’s trading session at $62.41, up 4.31% for the day, while IVV ended the day at $623.42, up 0.44%.
