BlackRock’s iShares Bitcoin Trust (IBIT) surpassed the company’s S&P 500 ETF (IVV) in fee income generation per year. IBIT’s yearly fee income exceeded $187.2 million up to July 1 based on Bloomberg data, overtaking IVV at $187.1 million.
The switch is a reflection of the building institutional demand for digital assets over traditional equity strategies. The IBIT fund has amassed $52 billion in net flows since its inception in January 2024 and now commands over 55% of the total Bitcoin ETF assets.
Despite its much smaller assets under management at a whopping $75 billion versus IVV’s $624 billion, IBIT generates higher revenues because its higher 0.25% expense ratio cancels out IVV’s lower 0.03%. By Bloomberg calculations, that difference has seen fee income swing in IBIT’s favor.
BlackRock, the planet’s largest asset manager, now generates more revenue from its Bitcoin ETF than its flagship S&P 500 fund. The stunning turnaround is a reflection of growing willingness by investors to pay a premium to hold access to nascent asset classes with growth prospects.
Interestingly, IBIT has seen inflows in every one of the last 18 months except one, a reflection of persistent demand by institutional and retail buyers alike.
Bitcoin ETF growth signals investor portfolio shift
Regulatory approval has been instrumental in the development of spot Bitcoin ETFs like IBIT. U.S. policymakers’ clearance provided entry opportunities to hedge funds, banks, and pension managers. IBIT is already within the top 20 volume ETFs trading, a reflection of the activity volume among the market participants.
This is due to the changing priorities within the portfolio of investors. A thirst for inflation hedging and diversification is triggering greater interest in Bitcoin.
Larry Fink is the CEO of BlackRock, once a strong denier of Bitcoin, but now sees Bitcoin as “digital gold.” He cited its potential to reach a high valuation should the sovereign wealth funds place only minuscule percentages of their portfolio in the cryptocurrency.
As market dynamics continue to shift, asset managers are gravitating toward higher-margin digital products. IBIT success is a sign that the broader investment behavior is shifting and that the revenue leadership itself can change with the sentiment of the investors and innovation in the markets. BlackRock ETF portfolio now clearly shows the increasing influence of crypto in the broader finance space.
