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BlackRock beat expectations with profits that rose 13 per cent year on year despite a volatile quarter for markets that drove down assets under management and resulted in the group’s first quarterly net long-term outflows since the early days of the Covid-19 pandemic.
The world’s largest asset manager reported adjusted net income of $1.6bn, powered by faster than expected growth of its Aladdin risk management platform and other technology. Revenue was $4.5bn and adjusted earnings were $10.91 a share.
Outflows were driven by a $19bn redemption from its index funds by a large institutional client, while money continued to come into exchange traded funds, bringing net long-term outflows from the end of June to $13bn. Wary investors continued to park more money in cash, so total flows were mildly positive at $2.57bn.
“We’re delivering the benefits of scale to our clients and our shareholders, with margin expansion and 14 per cent growth in adjusted EPS year over year,” chief executive Larry Fink said. “Technology services revenue grew 20 per cent over the same time period, reflecting sustained demand for Aladdin and several large eFront renewals . . . The long-term trend of clients consolidating more of their portfolios with BlackRock is only accelerating, and underlying business momentum remains strong.”
Assets under management fell in the quarter to $9.1tn, although they were up year on year.
BlackRock shares were down 1.8 per cent in pre-market trading. They are down more than 15 per cent since late July.
Analysts polled by Bloomberg had been expecting net long-term inflows of $50bn in the quarter.
While BlackRock is doing better than most of its competitors, its quarterly long-term inflows fell to the lowest level since the very start of the Covid pandemic, according to calculations by Kyle Saunders at Edward Jones.
But he remained bullish on the stock, saying investors would return in larger numbers soon. “With so much money sitting in money market funds, it’s a matter of when not if,” said Saunders, who continues to rate the firm a “buy”.
Across the broader industry, assets in US money market funds nationwide remain near all-time highs of $5.7tn, according to this week’s data from the Investment Company Institute.
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