Jay Jacobs, U.S. head of equity ETFs at BlackRock, joins Remy Blaire to discuss how investors are navigating AI-driven growth, geopolitical fragmentation, and rising market dispersion through systematic active management.
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Remy: A macro landscape is currently defined by accelerating AI demand, as well as geopolitical fragmentation and growing infrastructure bottlenecks. And as market concentration and volatility remain elevated, investors are increasingly looking for new tools to manage risk and also capture growth outside of traditional correlations. While joining me to highlight how systematic active management is being utilized to navigate macro shifts is Jay Jacobs, U.S. head of equity ETFs at BlackRock. Jay, great to have you back. Thank you so much for joining me.
Jay: Thanks for having me.
Remy: Well it's been quite the start to 2026. So first and foremost what are the primary themes that are driving your investment outlook for this year?
Jay: There's a couple areas that we're looking at specifically. One is really what the next stage of artificial intelligence looks like. We've started to see a bit of a broadening this year into different types of semiconductor manufacturers and the memory space, which is indicated, really, that the Mag 7 focus for AI is starting to shift a little bit across the value chain of artificial intelligence, things like digital infrastructure, things like power. Things like more semiconductors. Even companies that are adopting artificial intelligence are all starting to experience some of the excitement that we've seen focused on the Mag 7 over the last couple of years. The other theme that we focus on is just the changing geopolitical landscape. We've seen a major focus on defense stocks. We've seen a major focus on infrastructure stocks. We're really trying to distill kind of what that means for the markets and how people can be best positioned for that.
Remy: And you bring up an important point there, because when we take a step back and look at an equity index like the S&P 500, the performance, the leaders and the laggards so far in 2026 differ from the end of last year in terms of performance. So first and foremost, for our viewers out there, give us an idea of what you're seeing in overall funds so far.
Jay: Well, we're seeing a lot of flows going into more specific areas of the market. So this isn't necessarily just people looking at the broad large cap indexes. We're seeing flows into things like thematic ETFs, like our AI funds R&D and VAI. We're seeing a lot of flows into single country funds. People looking to play that semiconductor trade with exposure to places like South Korea or Taiwan. And we're seeing a lot of flows and a lot of volatility, frankly, around the metals space. As we look at silver with SLV, copper with ICOP, a lot of investors trying to position around this kind of changing metals and inflation landscape as well.
Remy: Yeah. And you just highlighted what we're seeing across asset classes. Because as much as we need to look at what's happening within a specific, index when we're talking about even asset classes like precious metals or crypto, we're seeing so much volatility, not just on a monthly basis, but even on a daily basis as well. So what does active risk management look like?
Jay: Well, we're seeing more dispersion across asset classes and a lot of dispersion within sectors across stocks. And this creates opportunities for active management in a fund like BAI where our portfolio manager Tony Kim is trying to select the next winners in the AI trade. He has a lot of freedom to be able to identify those companies and really shift the exposure, but we also see it in areas like IALT, Which is our multi-asset alternative ETF. Our Multi Strategy Alternative ETF, which is really looking at a variety of different alternative strategies to capture exposures and risk premia in the market that are not going to be as correlated to stocks and bonds. So really a story around diversification for investors.
Remy: Yeah. And when we're talking about diversification it's not just asset classes but also geography as you highlighted given the geopolitical shifts that we're seeing. So what does that mean for investors out there? Can you break this down.
Jay: Well, it's a reminder that there's a multitude of opportunities out there. You know, when we see things like an emerging market trade, emerge, which we've seen over the last few weeks, that's a reminder that you can look beyond the stocks in the S&P 500. When we look at certain themes, like artificial intelligence, as a reminder that the US is the leader in this theme, but not necessarily the only player in the theme, there's companies around the world that are participating in the AI trade as well. So I think it's just a good reminder for investors. There's a global opportunity set for their portfolios. We've seen a tremendous amount of returns in the U.S. over the last ten years. There are pockets of opportunity beyond just us large-caps though.
Remy: Yeah. So I want to hear about liquid ETF formats. So for viewers who might not be as familiar, tell us what it is and why we're actually seeing this shift from institutional alternative capabilities into this format. Jay:Yeah. So liquid alternative strategies are really a way that investors can get exposure to things that are not going to behave exactly like stocks and bonds. Very simply, many people build a portfolio called a 60/40 portfolio, 60% stocks, 40% bonds. For many years that work tremendously well because stocks and bonds have relatively low correlations to each other. it was considered a very diversified portfolio.
But we saw in 2022, however, is that correlation started to spike and it's remained elevated, meaning just having stocks and bonds might not be the most modern way to build a portfolio anymore. Increasingly, people are looking at adding a third asset class to that exposure, which is liquid alternatives that could take the form of gold or silver, that could take the form of Bitcoin, that could take the form of alternative strategies, things that are doing long, short across different asset classes or across different stocks, or looking for different risk premia that are rewarded in the within the markets.
These different liquid alternative strategies can provide diversification for our portfolio and just a differentiated source of returns from stocks and bonds.
Remy: And finally, before I let you go, we have about 60s here. So for your typical retail investor who's wondering what should a modern portfolio actually look like, what would you say to them?
Jay: Well, I think it starts with the core. It starts with funds like IVV or AGG to build out your really diversified exposure. But I think in 2026 and beyond, you have to look at one. What are some of the granular exposures in the thematic space that could drive tremendous growth over the next few years? Things like AI with BAI, things like geopolitics. If we look at our infra ETF, for example, U.S. infrastructure product, and you have to look at ways to diversify gold, silver, bitcoin alternatives like our IALT ETF, or a way to really expand the exposure of your portfolio.
Remy: Well Jay was great having you here as we head into 2026. Always appreciate your time and your insights.
Jay: Thanks for having me back.
Remy: Thank you so much.