BlackRock entered 2026 with a defined investment strategy designed around three core pillars: artificial intelligence, income, and diversification.
BlackRock’s Head of Equity Exchange-Traded Funds, Jay Jacobs, presented how ETFs can be integrated into the changing market bets of the largest asset manager in the world that manages over $13 trillion of investor bets. He advises investors to stick to growth but to be more precise rather than widely exposed.
Jacobs said on CNBC’s “ETF Edge” on Monday that “The first is really what are the biggest growth opportunities in the market today. Where you have to get laser-focused to try and find some of these targeted exposures, like artificial intelligence, that could do very well in this environment.”
The other investing themes Jacobs discussed on the show, “ETF Edge,” align with the 2026 annual outlook at BlackRock, called, AI, income & diversifiers, which was published earlier this week.
BlackRock still considers AI to be a capital-intensive long-term investment cycle. Infrastructure investments are high, and the AI-based investments support productivity gains and earnings growth. The theme does not look like it is approaching depletion by the firm.
One of the ETF firms with AI-oriented funds is BlackRock, including its iShares A.I. Innovation and Tech Active ETF (BAI), which accumulated more than $8 billion in assets.
Many other AI ETF options have grown to over $1 billion in assets in recent years:
- Roundhill Generative AI & Technology ETF (CHAT).
- ARK Autonomous Technology and Robotics ETF (ARKQ).
- Global X Robotics and Artificial Intelligence ETF (BOTZ).
- Global X Artificial Intelligence and Technology ETF (AIQ).
- iShares Future AI and Technologies ETF (ARTY).
- Dan Ives Wedbush AI Revolution ETF (IVES).
Among the reasons to calibrate equities exposure, Jacobs cited the excessive concentration within the U.S. equity market, where a small number of mega-cap tech stocks now represent an exorbitant share of returns.
The “Magnificent Seven” stocks surged over 40 percent of the S&P 500 Index. Jacobs stated that ″[That concentration] is either a feature or a bug. It’s reaching historical levels.”
Jacobs indicated that investors are reacting by becoming more careful about the extent of the concentration they desire. Others are opting to diversify their exposure by equal-weighting the U.S. stock market to deal with the risk.
Jacobs mentioned the interest-rate environment and the expectation that the Federal Reserve might cut rates further as an excuse to make income a key point in the coming year, as the falling rates squeeze cash yields on yielding investments.
Investors who had been depending on money markets to generate income will be required to reposition.
Jacobs added that “We are in a falling interest rate environment. We expect some cuts this year. We need to find new sources of income to diversify your portfolio and generate income from it.”
However, the third pillar of BlackRock is diversification in a 2026 approach to the market. Volatility spikes are increasingly common, and the market leadership is becoming less abundant. The long-standing portfolio construction around cabinet-making stocks based on bonds to tame the risks, which is often referred to as the 60-40 portfolio, is no longer as dependable in times of stress.
This has led Jacobs to assert that investors are seeking assets that perform differently. He reported that “Where can you really get diversification for your portfolio? Something that’s going to behave differently from stocks and bonds.”
The hidden meaning of Jacobs was that investors have been quite lucky in the last decade, having a U.S. stock market that has been bringing in good returns, but it might be unsafe to assume that they will do the same thing going forward.
He indicated, “The last 10 years, the S&P 500 has an annualized return of 13.5%, and many expect it to be lower.”
