BlackRock shuts social impact fund after Tricolor collapse

BlackRock, the world’s largest asset manager, is winding down a key social impact fund following the bankruptcy of subprime auto lender Tricolor, according to a report by the Financial Times.

The fund, known as the BlackRock Impact Opportunities Fund, was created to invest in businesses that promote economic inclusion among underrepresented communities. However, its exposure to Tricolor — a Dallas-based lender offering car loans to borrowers with limited credit histories — turned into a major liability after the company filed for bankruptcy in September.

Tricolor’s collapse came amid a wave of financial strain across the subprime auto lending sector, where rising interest rates and higher default levels have put pressure on smaller lenders. The company had gained attention for targeting Latino and low-income borrowers in the U.S., but its loan portfolio struggled as repayment risks grew.

Sources familiar with the matter told the Financial Times that BlackRock has informed its employees it will close the fund to new investments while reviewing its strategy for future impact-driven initiatives. The decision highlights how volatile markets and credit risks can challenge even well-intentioned social impact ventures.

While BlackRock continues to expand its sustainable investing efforts globally, the winding down of this fund underscores the delicate balance between purpose and profitability in impact finance — a reminder that even the world’s biggest asset manager is not immune to market realities.