BlackRock is dialing back its bullish equity stance on its $220 billion model-portfolio platform as US markets continue to set record highs after a strong corporate earnings season.

The asset manager reduced its equity overweight from 3% to 1%, according to a Bloomberg-viewed outlook, triggering substantial ETF reallocation flows across its product lineup.

According to Michael Gates, who oversees BlackRock’s Target Allocation ETF models, US companies delivered a “generational earnings season,” with strong profitability, rising productivity, and resilient economic conditions driving equity markets to new highs. The rally persisted despite geopolitical risks and uncertainty around Federal Reserve policy.

However, Gates warned that equity upside may be increasingly constrained, arguing that markets have already priced in much of the positive macro and earnings momentum, reducing the buffer against potential shocks.

BlackRock remains constructive on equities overall but continues to emphasize themes such as AI-driven growth, corporate earnings expansion, and fiscal support.

The model-portfolio segment, now a $3 trillion industry according to Bloomberg Intelligence, has become a major driver of ETF flows, with BlackRock managing more than $220 billion across its model strategies.

The portfolio adjustment led to over $12 billion flowing into the iShares Core S&P 500 ETF (IVV), while roughly $10 billion exited factor and thematic ETFs including QUAL, IVE, THRO, and MTUM.

Outside equities, BlackRock is also rotating away from long-duration US bonds toward global fixed income and liquid alternatives, reflecting a shift in portfolio construction thinking.