BlackRock plans to create an exchange-traded fund that will invest in companies based in Texas, a state where some lawmakers have criticized the asset management giant for its adherence to ESG investing.
According to a Securities and Exchange Commission filing March 28, the iShares Texas Equity ETF will track the investment results of the Russell Texas Equity index, which is designed to measure the performance of equity securities of U.S. companies headquartered in Texas.
To be eligible for this index, a company must be included in the Russell 3000 index and have a market capitalization of $500 million or more. As of Dec. 31, a significant portion of the index was companies in the energy, technology and consumer discretionary industries, the filing said.
The SEC filing did not include information on fees, ticker symbol or expected launch date.
“Our clients have expressed interest in accessing the Texas economy,” a BlackRock spokesperson said. “BlackRock currently offers over 60 single-country, regional and state-specific ETFs with over $100 billion in AUM. At this time, we are not able to provide further comment on the ETF due to regulatory filing restrictions.”
Zachary Evens, manager research analyst for Morningstar Research Services, a wholly owned subsidiary of Morningstar, said this ETF “will test the thesis that stocks of companies headquartered in Texas, perceived to be a business-friendly state, perform better than those headquartered around the U.S. It will also test investor appetite for a single-state stock ETF, of which there are very few.”
Evens added: “We haven’t seen the portfolio yet, but it will almost certainly be more concentrated than a broad market index ETF and is likely to tilt towards certain sectors or stocks, overexposing investors to their out- or underperformance. We also have not seen the fees yet, but thematic ETFs tend to be more expensive than broad-market ETFs, like Blackrock’s own S&P 500 ETF IVV, which charges 0.03%.”
However, some Texas lawmakers and other entities have criticized BlackRock for what they perceive as the asset manager’s embrace of what they call "woke" investment policies, i.e., the use of environmental, social and governance factors in their investment decisions.
For example, in March 2024, the $57.3 billion Texas Permanent School Fund, Austin, terminated BlackRock from managing about $8.5 billion of its assets. The endowment reportedly canceled its relationship with BlackRock to comply with the Texas Government Code Section 809, known popularly as the anti-ESG law.
In August 2022, Texas Comptroller Glenn Hegar included BlackRock on a list of 10 financial companies he had determined “boycott energy companies.” Hagar was implementing a 2021 state law that restricts the state’s pension funds and other state entities from investing in companies that divest from fossil fuels.
In January 2025, Texas Attorney General Ken Paxton included BlackRock among Wall Street firms he charged with breaching their fiduciary duties by appearing “to unlawfully advance discriminatory” diversity, equity and inclusion efforts.
BlackRock is also one of the backers of a proposed new stock exchange, the Texas Stock Exchange, that is expected to launch in early 2026.
TXSE Group, the parent company of the Texas Stock Exchange, said it has raised initial capital of $161 million from BlackRock, Citadel Securities, Charles Schwab and other investors.
A number of Texas-focused ETFs already exist: Texas Capital Texas Equity Index ETF, which trades under the ticker TXS and has $28 million in assets under management; and Texas Capital Texas Small Cap Equity Index ETF, which trades under TXSS and has $12 million in AUM.
Another Texas ETF, the Texas Oil Index ETF, ticker OILT, has $13 million in AUM. All three ETFs were launched by Texas Capital Bank.
