Growth in low-fee products helps boost BlackRock profits
BlackRock Inc , the world's largest asset manager, reported a better-than-expected quarterly profit on Tuesday, showing resilience in what has been a punishing market for many asset managers' earnings.
Despite what CEO Larry Fink conceded was a difficult market for investors, who moved to generally lower-fee bond investments and index funds, BlackRock's "long-term" products absorbed $55.1 billion in cash, up from $35 billion a year earlier. The company's assets under management grew to over $5 trillion.
That helped net income rise 3.8 percent to $875 million, or $5.26 per share, in the third quarter ended Sept. 30 from $843 million, or $5.00 per share, a year earlier.
The New York-based company has managed to stand above the fray because it owns iShares, the leading firm in exchange-traded funds. Many such products charge relatively low fees and aim simply to track the market, not beat it.
"The whole industry is facing what I would call turmoil," said Fink, who said investors are struggling in part because central banks have pushed interest rates so low. "It's really tough for our clients."
When adjusted to strip out some compensation and distribution costs, BlackRock said it earned $5.14 per share, beating the average analyst estimate of $5.00, according to Thomson Reuters I/B/E/S.
BlackRock's iShares ETF business took in $51.3 billion in new money, up from $23.3 billion a year earlier. About half of that cash went into stock funds.
Across all of its products, BlackRock attracted a net $37 billion into long-term fixed income investments and $13.4 billion in equity investments, while $1.8 billion went into alternative investments.
As of Monday's close of $354.60, BlackRock's shares had risen about 4.1 percent since the beginning of the year.
A grouping of the company's peers measured by the Dow Jones U.S. Asset Managers Index fell 4.4 percent.
(Reporting By Trevor Hunnicutt in New York; Additional reporting by Sudarshan Varadhan in Bengaluru; Editing by Anil D'Silva and Chizu Nomiyama)