NEW YORK: BlackRock, the world's largest asset manager, reported first-quarter profit that exceeded expectations and raked in US$65 billion of new investor cash as global financial markets rebounded from a volatile fourth quarter.
Total assets under management grew 3 per cent to US$6.52 trillion in the quarter through Mar 31 from a year earlier, amid a broad-based rebound in global equity markets. Assets had dipped below US$6 trillion amid market turmoil late last year.
Total quarterly net inflows across all product types jumped 13.6 per cent to US$64.67 billion from a year earlier.
Overall, the company sold US$59 billion in stock, bond and other "long-term" investment funds, up from the US$43.6 billion in the quarter ended Dec 31.
BlackRock shares were up 2.2 per cent at US$461.56 in early trading.
The US economy is speeding up again after a slowdown and the market is getting ready for "huge" inflows into stocks, BlackRock's Chief Executive Larry Fink told Reuters in an interview on Tuesday.
"I believe people are still under-risked, despite the big rebound," Fink said.
The benchmark S&P 500 stock index, which sank 14 per cent in the final three months of 2018, rebounded by 13 per cent in the first quarter, its best performance since the third quarter of 2009.
BlackRock lost more than US$26 billion in its equity portfolio during the first quarter, but this was more than offset by a jump in fixed income of nearly US$80 billion. Long-term investments rose by US$59 billion.
"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.
Institutional fund net inflows grew nearly nine-fold to US$29.12 billion from a year ago.
Net income attributable to BlackRock fell to US$1.05 billion, or US$6.61 per share, in the first quarter, from US$1.09 billion, or US$6.68 per share, a year earlier. That well exceeded analysts' expectations for a profit of US$6.13 per share, according to IBES data from Refinitiv.
BlackRock said its iShares-branded ETFs took in US$30.69 billion of new money, compared with US$81.40 billion in the fourth quarter.
Revenue from technology services, a key area of focus for BlackRock, grew 11 per cent to US$204 million.
Still, the company 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.
Base fees dropped 5 per cent year-over-year, mainly due to the negative markets in the fourth quarter and a stronger US dollar that eroded the fees they collect, BlackRock said.
"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.