BlackRock Dumps 14 Funds, Many Being Sustainable Products

BlackRock is clipping more than a dozen mutual funds and ETFs from its lines, about half of which focus on sustainable investing.

In most cases, the funds appear to have struggled to attract assets: The majority each represent less than $50 million. In all, they account for $549 million, with nearly half of that in the $254 million BlackRock Impact Mortgage Fund, which has been in operation since 1992. The asset management giant filed notices Friday for many of the closures, largely for the sustainable funds. The firm did not offer specific explanations for eliminating any individual funds but stated in an announcement that “as we evolve our platform and launch new strategies, we also constantly assess how our funds are meeting investors’ investment objectives and the evolving needs of our clients.”

BlackRock in the Hot Seat

More than any other asset manager, BlackRock has faced the brunt of campaigns against sustainable investing and ESG, or environmental, social, and governance criteria. Over the past several years, BlackRock has been blacklisted by some states for allegedly boycotting the fossil fuels industry, despite being one of the biggest investors in it. Some of the ire stems from public comments by CEO Larry Fink, who had characterized social and environmental responsibility as necessary causes for asset managers. Recently, though, BlackRock has ended its membership in international climate groups, and it subsequently had investment restrictions lifted in Texas. Currently, the company, as well as Vanguard and State Street, face an antitrust lawsuit brought by a coalition of Republican states, including Texas, over climate-related initiatives.

The sentiment against ESG may have adversely affected demand for the sustainable products, but it’s unclear how much that factored into the low asset levels and decisions to end the funds. It’s notable that all but one of the funds being shuttered are actively managed, and most are at least four years old, said Hortense Bioy, head of sustainable investing research at Morningstar. “That also reflects the trend that passive is gaining more traction and active strategies are losing ground,” she said.

Investors have been pulling money from the company’s US sustainable funds, data from Morningstar Direct show:

• BlackRock’s sustainable mutual funds saw a total of $1.5 billion in net redemptions in 2024, while the iShares sustainable ETFs had $5.2 billion in net outflows.
• The mutual funds have shed $142 million so far this year through May, compared with $4 million exiting the ETFs.

Still Pretty Big: BlackRock has about $2.8 billion in assets in its sustainable US mutual funds and $55.9 billion in the iShares ETFs, the Morningstar data show. The company is also the dominant player in sustainable investing globally, with much of its assets in institutional strategies, Bioy said. “They’re still providing investment opportunities for investors who want to get exposure to the [energy] transition, but that’s in forms other than mutual funds and ETFs.”