BlackRock, Inc. (BLK) Stock: A Better Buy Than Its ETFs?

What’s next for BlackRock?
So far, BlackRock has been able to make a fortune based on its dominance of the index-driven passive ETF market, whereby investors are content to earn returns that come close to matching those of different benchmarks chosen by each fund. By using economies of scale to appeal to institutional investors and by reaching out to retail investors through a lucrative partnership with Fidelity Investments, BlackRock, Inc. (NYSE:BLK) has held onto its leadership position in the industry despite major competition from other providers, most notably Vanguard.

Longer term, though, the big question facing BlackRock is whether traditional mutual-fund providers will enter the ETF space through actively managed ETF offerings. Thus far, active ETFs have largely been limited to the bond-investing arena, as current disclosure rules force active stock-fund managers to give up the proprietary advantages of not having to reveal their holdings as frequently as ETFs would. Some mutual fund companies, however, are looking to the SEC for relief from those requirements, and if successful, the wave of active ETF offerings could pose a major threat to BlackRock’s dominance.

The better way to invest
For now, though, BlackRock, Inc. (NYSE:BLK) is poised to keep growing, with expectations for 10% revenue growth both this year and next, and profits rising at an even faster pace. An end to the four-year bull market could put an end to the big run higher for BlackRock stock, but in the absence of a cataclysmic event that would force ETF investors to the sidelines once more, BlackRock appears poised to make good on its profit potential.

The article BlackRock Stock: A Better Buy Than Its ETFs? originally appeared on Fool.com.

Fool contributor Dan Caplinger owns shares of iShares Core S&P 500 ETF. The Motley Fool recommends BlackRock, Inc. (NYSE:BLK).

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