BlackRock released its Q2'25 earnings and hosted its earnings call Monday, and made several comments on cash, fixed-income and its relationship with stablecoin provider Circle. Chairman & CEO Larry Fink says, "From category innovation and iShares to new ventures across the world, the investments we made across our platform are paying off. Many of the categories that are leading our growth barely existed 2 years ago, categories like active ETFs, digital assets and our scaled private markets franchise. Just as importantly, BlackRock's core businesses like ETFs, Aladdin and cash management continue to be a growth engine for the firm and are cornerstones of many client relationships."
He comments, "A lot of firms got out of the cash business after the financial crisis when fee waivers were in place during a sustained period of low rates. But we recognize a simple thing. Every client needs to hold cash. Cash management has been the first entry point for many of our clients, who have gone on to build large mandates with BlackRock. Our cash AUM is nearly $1 trillion, and I think it's remarkable considering we're not a direct retail business or a DTC bank."
Fink explains, "At BlackRock, we think of cash as another avenue for innovation. We see a great untapped opportunity for cash and liquidity, where people want to use the technologies of digital assets to access traditional instruments, like Treasuries. Our tokenized liquidity fund [BUIDL] now has $3 billion in AUM, and what started as a small corporate investment and asset management relationship with Circle in 2022 has grown meaningfully. We delivered a significant gain to shareholders this quarter in connection with the IPO and subsequent trading activity, and we now manage more than $50 billion for Circle stablecoin cash reserves."
He adds, "We're entering our seasonally strongest back half of the year with considerable momentum and a robust pipeline." During the Q&A, Patrick Davitt from Autonomous Research says, "You touched on this briefly, but stablecoin is obviously top of mind for many investors on the back of Circle's IPO, and you're managing that money has been a strong boost to those flows for you. So through that lens, could you speak to how you see what looks like a fairly significant emerging opportunity for asset managers to manage these reserves? Is there a pipeline of other potential mandates, like the Circle one?"
Fink responds, "Yes, in my world tour, working with central banks and regulators, conversation about stablecoin is vibrant right now. And so what we are going to see is more competitive type of stablecoins. They may have some role in diversifying away from dollar as we digitize more and more currency. But the opportunity for BlackRock in our world in both stablecoin or all the entire role of tokenization of financial assets, tokenization of real assets like real estate is going to be the future. And we believe more than ever before that we are as well positioned as any organization in the world to be part of the conversations as stable coins are going to be growing and developing."
He tells the earnings call, "Related to buying money market funds or buying -- having a role, playing a role as a manager, those conversations are broad. But if you're going to show that a stablecoin truly is a substitute for a currency, it must be invested in those currencies' bonds. So I would hope that that will remain as a consistent feature of each and every stablecoin. And I believe that is going to be one of the big issues. There are questions remaining with some other stablecoins as to what is the collateral backing some of that. And if we're going to put our name associated with it, we believe each and every stable coin should be invested in short-term government bonds that backs that stablecoin."
Fink adds, "We want to make sure it's legitimatized, but it's also safe and it's a great digital substitution for each and every country's cash as a cash substitute. And I think that is going to be moving very rapidly. But it is surprising, even to me, the dialogues that we're having with central banks and how they are looking to now use their own digitized currency or using stablecoins to digitize their currency. So we believe this is just the beginning, and we will be playing a significant role as stablecoins are developed in each and every country. They believe it will fit the needs of their own monetary policy, and there are policies related to their capital markets."
In other news, ICI released its latest monthly "Money Market Fund Holdings" summary recently, which reviews the aggregate daily and weekly liquid assets, regional exposure, and maturities (WAM and WAL) for Prime and Government money market funds. It tells us, "The Investment Company Institute (ICI) reports that, as of the final Friday in June, prime money market funds held 45.8 percent of their portfolios in daily liquid assets and 61.2 percent in weekly liquid assets, while government money market funds held 75.2 percent of their portfolios in daily liquid assets and 86.5 percent in weekly liquid assets." Prime DLA was up from 43.7% in May, and Prime WLA was up from 60.3%. Govt MMFs' DLA rose from 74.8% and Govt WLA was down from 85.9% for the previous month.
ICI explains, "At the end of June, prime funds had a weighted average maturity (WAM) of 28 days and a weighted average life (WAL) of 51 days. Average WAMs and WALs are asset-weighted. Government money market funds had a WAM of 41 days and a WAL of 95 days." Prime WAMs and WALs were 3 days shorter from the previous month. Govt WAMs and WALs were both 2 days shorter.
Regarding Holdings by Region of Issuer, the release tells us, "Prime money market funds' holdings attributable to the Americas rose from $614.34 billion in May to $674.00 billion in June. Government money market funds' holdings attributable to the Americas rose from $5,152.47 billion in May to $5,308.11 billion in June."
The Prime Money Market Funds by Region of Issuer table shows Americas-related holdings at $674.0 billion, or 58.8%; Asia and Pacific at $176.1 billion, or 15.4%; Europe at $271.0 billion, or 23.6%; and, Other (including Supranational) at $26.0 billion, or 2.3%. The Government Money Market Funds by Region of Issuer table shows Americas at $5.308 trillion, or 91.6%; Asia and Pacific at $126.4 or 2.2%; Europe at $333.5 billion, 5.8%, and Other (Including Supranational) at $27.3 billion, or 0.5%.
