BlackRock will roughly triple the size of an iShares fund when it acquires assets from an ETF issuer in the coming weeks.
It’s a quirky step for the world’s largest asset manager, which doesn’t normally pursue one-off deals with small ETF providers. It’s also small potatoes, at least on BlackRock’s scale: The $106 million iShares Large Cap Value Active ETF (BLCV) will get a roughly $200 million injection when it receives the assets from the CornerCap Fundametrics Large-Cap ETF (FUNL). The actively managed iShares ETF focuses on US stocks within the Russell 1000 Value Index.
“It’s unusual,” said Dan Sotiroff, associate director of US passive strategies at Morningstar. “I don’t know what the motivation is.”
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CornerCap Investment Counsel, the advisor to the ETF being acquired, did not respond to a request for comment, though it explained in a regulatory filing that it “has determined to exit the fund advisory business.” That firm was bought about a year ago by EP Wealth Advisors, although the ETF was not part of that deal, according to a representative from the acquiring RIA. In a filing with the Securities and Exchange Commission in late December, CornerCap’s ETF indicated the transfer to iShares would be subject to a shareholder vote, and if the measure failed, the fund would be liquidated. To accommodate the transfer, BlackRock is moving assets from BLCV into an otherwise identical ETF that will also absorb the FUNL assets, transactions that are slated for Feb. 27.
BlackRock declined to comment on the fund reorganization.
There are a couple of aspects that make the fund transfer stand out:
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First, deals to acquire or absorb ETF assets don’t happen very often. Recently, though, there have been a few high-profile arrangements, such as Goldman Sachs’ agreement to buy Innovator Capital Management and Yorkville America Equities’ deal to pick up the God Bless America ETF (YALL), which would be rebranded under Trump Media’s Truth Social Funds line.
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Second, BlackRock certainly doesn’t need to absorb other issuers’ ETF assets, given its size and reach. At just over $100 million, BLCV is far from being one of the larger iShares funds, but it will benefit from seeing its asset levels triple. Even so, “BlackRock’s in a unique position where they can keep things around for a while even if there is no interest,” Sotiroff said, meaning that the company can easily afford to subsidize small ETFs if it chooses to.
