Boom in Index Funds and ETFs Lifts BlackRock Profit

Earnings Reuters

BlackRock, the world's biggest asset manager, on Wednesday reported a 31 percent rise in quarterly profit as investors continued to plow money into its index-tracking funds.

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Investors poured $64.5 billion into BlackRock's iShares exchange-traded funds business during the quarter, up from $24.3 billion a year earlier.

That helped the company end the quarter with $5.4 trillion in assets under management, up from the preceding quarter, when managed assets totaled $5.1 trillion.

BlackRock's net income rose to $862 million, or $5.23 per share, in the first quarter, from $657 million, or $3.92 per share, a year earlier.

Excluding items, the company earned $5.25 per share. That beat the $4.89 forecast of analysts polled by Thomson Reuters.

The investment management industry is being reshaped by a move of investors toward cheaper products, especially index funds. Yet BlackRock has been rewarded by Wall Street in part because its iShares franchise offers relatively low-cost funds that are in high demand.

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Still, BlackRock's higher-fee business of actively picking individual winners in the market is under pressure. Last quarter, BlackRock's active funds posted $1.8 billion in withdrawals.

The asset manager announced a plan last month to cut jobs and fees while relying more on computers to assemble its investment portfolios, a flurry of changes meant to jumpstart its lagging stockpicking franchise.

 

 

(Reporting by Trevor Hunnicutt; Additional reporting by Diptendu Lahiri in Bengaluru and Simon Jessop in London; Editing by Shounak Dasgupta and Alden Bentley)