BlackRock quarterly profit beats, assets under management top $6 trillion

Earnings

BlackRock, the world’s largest asset manager, reported a better-than-expected first-quarter profit and garnered tens of billions of new investor cash as global financial markets rebounded from a volatile fourth quarter.

Net income attributable to BlackRock fell to $1.05 billion, or $6.61 per share, in the three months ended March 31, from $1.09 billion, or $6.68 per share, a year earlier. Analysts expected a profit of $6.13 per share, according to IBES data from Refinitiv.

Overall, the company sold $59 billion in stock, bond and other “long-term” investment funds, up from the $43.6 billion sold in the quarter ended Dec. 31.

“Investment flows look stronger than we anticipated,” said Kyle Sanders, an analyst with St. Louis-based financial services firm Edward Jones.

“BlackRock has a really strong reputation in fixed income management and it looks like that asset class came back into favor with interest rates kind of dipping lower. I think that drove better-than-expected asset flows,” said Sanders.

BlackRock’s total assets under management rose to $6.52 trillion, up 3% from the first quarter of 2018. Assets dipped below $6 trillion during the market slide late last year.

Total institutional fund net inflows grew nearly nine-fold to $29.12 billion in the first quarter from a year ago.

Total net inflows across all product types were $64.67 billion, up 13.6% from a year earlier.

BlackRock said its iShares-branded ETFs took in $30.69 billion of new money, compared with $81.40 billion in the fourth quarter.

Calmer markets in the first quarter, compared to a year earlier when volatility had been boosted by U.S. tax cuts, encouraged more people to return to the markets, particularly after deep losses in December 2018.

The company, however, continued to feel the pinch from fee pressures amid an ongoing industry-wide shift from high-fee actively managed mutual funds to low-fee passive-investment products.

There was a 5% drop in base fees year-over-year, mainly due to the negative markets in the fourth quarter and a stronger dollar affecting the fees they collect, BlackRock said.

The S&P 500 Index, which fell nearly 14% in the fourth quarter, staged a sharp recovery in the first quarter to rise 13%, its best quarterly performance since the third quarter of 2009.

“I think it was pretty well known that fees would be down, not just for BlackRock but for any asset manager just because those are based on an average of market values throughout the quarter and we started the quarter at such a low point,” said Edward Jones’ Sanders.

BlackRock shares, which slid 23.5% in price during 2018, its worst performance since 2008 amid market volatility, have recovered ground to trade up nearly 15% for 2019.

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