BlackRock, the 4th largest manager of money market funds with $715.9 billion, reported its Q4 2025 Earnings last week, and discussed a number of cash and fund issues on its Q4 Earnings Call. CFO Martin Small tells us, "BlackRock Cash Management saw $74 billion of net inflows in the fourth quarter and $131 billion in 2025, driven by U.S. Government, International, Prime and Circle Reserve Funds. BlackRock's platform is anchored by growth engines tied to the long-term expansion of global capital markets and fast-growing client product channels. The opportunity ahead is inspiring to reshape portfolios for more complex markets, to deepen partnerships with clients and to deliver durable, profitable growth for our shareholders."
CEO Laurence Fink comments, "In 2025, we generated over $45 billion of net inflows across our high-performing active fixed income franchise, led by Rick Rieder. We believe 2026 is shaping up to be another year where returns may be driven primarily by income rather than price appreciation. We're well positioned to capture flows with strong performance and differentiated strategies across municipals, high yield, total return and unconstrained fixed income strategies. And we're leveraging active ETFs to provide access to our portfolio managers inside along with the benefits of the ETF wrapper. Our active ETFs drove more than $50 billion in net inflows in 2025, nearly tripling their assets in the last year. Rick's flexible active income ETF, BINC, ... led our active ETF flows for the year."
He continues, "In 2000, with just 40 ETFs, BlackRock's iShares set out to revolutionize investing. And over those 25 years, iShares has led the way in democratization of access to the growth of capital markets. BlackRock shaped the industry and we continue to expand the choice and access for investors around the world. We brought U.S. investors access to international markets and we introduced ETFs to Europe. We launched the world's first bond ETF. We provide over 1,700 ETFs today, more than 6x the next largest issuer. And we're focused on providing investors value for their money while driving growth and margin expansion for our shareholders. iShares AUM was about $300 billion when we announced our acquisition in 2009. Today, it's $5.5 trillion and iShares revenues have more than quadrupled to over $8 billion."
During the Question-and-Answer Session, Craig Siegenthaler of BofA Securities asks, "A sort of follow-up would be your money market business, which is not a new modern business, has done really, really well over the last 5 years. Higher rates has been a factor there. But with the Fed cutting, do you see flows reversing in this business? And if it does, where do you think that liquidity goes?"
Small responds, "I think 2026, to your point on money funds, it's shaping up to be the year of a steeper yield curve. And we think that era of easy 2a-7 fund income looks to be fading. We think that bond returns are going to be driven more by income rather than rate moves or spread compression.... And I think even though cash is always going to be an allocation in a well-balanced portfolio, we'd expect that rate cuts are going to cause money market yields to fall and that some of the best opportunities for investors to be locking in bond yields are going to be in intermediate-term bonds."
He says, "I think if the bond team was here, they'd say there's a generational opportunity to earn high-quality, steady income in the front and middle of the yield curve using that full toolkit in fixed income, credit, securitized, government bonds, munis, active and index. And we're seeing that energy on our platform. We saw more than $80 billion of fixed income flows in Q4.... We manage over $3 trillion in fixed income. So we think we can meet clients with fixed income offerings across sectors and durations wherever they need it and to do it in a vehicle that works best for them."
Fink states, "Let me just add one more point. As global capital markets grow, cash is going to grow alongside of it. So the base holdings of cash will be elevated as long as the global capital markets continues to grow. And if you overlay -- if tokenization becomes more real and the opportunity to have a tokenized money market fund alongside tokenizing other assets -- I actually believe you're going to see probably above-trend holdings in cash. That being said, I agree with everything what Martin said, ... you're going to see more and more investors going up the curve, especially if the yield curve becomes steeper and steeper, which probably is going to be the outcome."
He adds, "But I think we have to look at the overall scale of the capital markets and its growth globally and that is one of the foundational reasons why cash holdings will -- they look larger than ever, which they certainly are. But I think as the capital markets grows, so does holdings in capital markets cash. And I think that is important -- there's an important connection between that.... Cash is just not an outcome of people are nervous and holding ... it. As the capital markets grow and as more people's wallets are in the capital markets, the role of the money market fund just grows. And I think that is one of the foundational reasons why we continue to believe that money market holdings will continue to be quite large."
Morgan Stanley CFO Sharon Yeshaya comments on their Q4 2025 Earnings Call, "Sequentially, total period deposits grew $10 billion to $408 billion, and net interest income increased to $2.1 billion. The growth in NII was driven by the increase in sweep deposits and loan balances. Looking ahead to the first quarter, we expect NII to remain roughly flat quarter-over-quarter as higher average sweeps and lending balances should help to offset the full impact of the two rate cuts in the fourth quarter. As we look ahead to the remainder of 2026, assuming the current forward curve incremental loan growth, and our projections for the deposit mix, we expect NII to continue to trend higher."
Finally, State Street also released Q$'25 earnings, and CEO Ron O'Hanley says on their Q4'25 Earnings Call, "We finalized and recently launched our Digital Asset Platform which will enable tokenization of assets, funds and cash for institutional investors, unlocking new efficiencies, improving liquidity and creating opportunities for growth. As a result, we are strategically positioning State Street to be the bridge between traditional and digital finance and the connection point among Digital Asset Platforms. State Street Investment Management ended 2025 with record quarterly and full year management fee revenue.... This consistent organic growth helped drive period-end AUM to an all-time high of $5.7 trillion, just 2 quarters after surpassing the $5 trillion mark for the first time."
CFO John Woods states, "The fourth quarter represented the culmination of a record year for Investment Management revenue, delivering a strong finish to 2025 and reinforcing the strength of our platform. Management fees increased 15% year-over-year to a new quarterly record of $662 million, driven by higher average market levels and quarterly net inflows of $85 billion, supported by strong performance across our ETFs, cash and institutional segments."
During the Q&A, Betsy Graseck of Morgan Stanley, asks about the "digital transformation," "What are clients actually looking to do with you in digital assets? Could you help us understand, is this just crypto? Or is it beyond that?" O'Hanley replies, "Actually, relatively little of it is in crypto, is -- if you mean by crypto, kind of bitcoin and other cryptocurrencies, right. It really is about the digitalization of transactions. `So a fair amount of it is around how do you digitize and transform things like cash, money market bonds into tokens, number one."
He continues, "Number two, working with a lot of the digital rail providers to help them, one, in some cases, they need a partner like this, whether it's for reserve cash or things like that. But more importantly, to be able to make the bridge between traditional finance and digital finance. And I may have used this analogy before here, so forgive me if I have, but where we are in this space is like kind of mid 1800s railroads. There's a lot of rails being laid, not all of them are the same gauge. Everybody wants to charge everybody else to cross over from one set of rails to the other. And it's the role of somebody like us to actually enable that movement between and amongst these different rails."
O'Hanley tells us, "But if you think about our business, in the asset management business, we've got a big money market business. So you'll be seeing from us tokenized money market funds, which have lots of benefits that we can talk about, if you'd like. But in the services business, we, as you know, are the largest servicer of asset managers, and they all want to do similar things plus in terms of digitalizing collateral, tokenizing money market funds, et cetera. So it's to be able to enable those institutions to make this transition from traditional finance into digital finance and to do it in a cost-effective way."
Graseck then asks, "What's the benefit of tokenized money market funds?" O'Hanley responds, "We can collateralize them.... I mean, they now can function as collateral.... [T]here's lots of others. There's the speed of settlement, things like that. But I mean the most important would be that.... The other part of it is, I think -- we all have a view as to how this is going to turn out, but nobody can predict it with accuracy. So for example, to the extent to which stablecoins become some kind of regular way of settling securities transactions, you need these kinds of capabilities to enable that kind of cash, if you will, that digital cash to be able to settle a traditional securities transaction."
