BlackRock profits soar 31 per cent as investors pile into passives

Larry Fink Interview Pic

BlackRock’s profits jumped 31 per cent in the first quarter, with investors piling their money into passive funds.

The figures

The world’s largest fund manager reported a turnover of $2.82bn (£2.2bn), up eight per cent year-on-year but below $2.87bn expected by analysts, according to a Thomson Reuters consensus poll.

However, diluted earnings per share (EPS) were expected at $4.89 and came in at $5.25, BlackRock today reported.

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The fund manager’s net income for the period was $862m, up 31 per cent from $657m in the first quarter of 2016.

BlackRock ended the quarter with $5.4 trillion in assets under management, up from $4.7 trillion a year before.

Why it’s interesting

The US firm, which is paying former UK chancellor George Osborne £650,000 a year for a four-day-per-month advisory role, was boosted by its passive offerings.

BlackRock reported total long-term net inflows for the period of $80.3bn.

But $1.8bn of net outflows were reported from active funds. And $82.2bn was invested into its iShares exchange-traded fund (ETF) unit and its indexed funds.

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What the company said

Chief executive Larry Fink:

Alpha generation, risk management and technology have always been the cornerstone of BlackRock. As the world becomes increasingly complex and interconnected, technology is becoming even more essential to clients, transforming the way both institutions and wealth managers construct portfolios, manage asset allocation, understand risk and engage and connect with clients. The recent repositioning of our active equity platform is yet another example of our commitment to anticipate and embrace change to deliver sustainable alpha for clients…

Both retail and institutional investors continued to utilize BlackRock’s iShares ETFs as the building blocks for their portfolios and in combinations to drive active returns. iShares saw record quarterly inflows of $64bn, again capturing the number one share of industry flows globally, in the United States and in Europe, and in equity and fixed income.

Full story: BlackRock profits soar 31 per cent as investors pile into passives: City A.M.

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