NEW YORK: BlackRock Inc , the world's largest asset manager, beat analysts' estimates for quarterly profit on Wednesday, helped by strong flows into its exchange-traded fund business that boosted overall assets under management to a record US$7.43 trillion.
A rally in global equity markets and strong inflows across business segments helped the company lure US$128.84 billion in new money during the fourth quarter through Dec. 31.
"I think it's quite evident from our flows in the fourth quarter that we are winning more of our clients' share of wallet," Chief Executive Larry Fink said in an interview with Reuters.
Even as the stock market enjoyed a sharp rally recently, many of BlackRock's clients were under-invested in equities and remained heavily oriented towards fixed-income securities, Fink said.
However, fears of a global slowdown have moderated through 2019 and investors have started to take on risk, he added.
BlackRock's iShares-branded ETFs took in US$75.20 billion of new money, up from US$41.50 billion in the prior quarter, taking the net inflow for the year to US$183 billion.
Those flows helped lift total assets to US$7.43 trillion.
"A lot of times, if a company is big, the law of big numbers makes it hard to grow, we are not seeing that with BlackRock," said Kyle Sanders, an analyst with St. Louis-based financial services firm Edward Jones.
"The size is actually allowing them to continue to be more aggressive and push into new products and take market share," said Sanders, who maintained a 'buy' rating on the company.
With its growing heft, BlackRock has drawn increased scrutiny of its fossil fuel investments. On Tuesday, Fink warned company boards to step up efforts to tackle climate change, a significant shift by the world's top asset manager.
In his annual letter to CEOs posted on the company's website on Tuesday, Fink forecast a "fundamental reshaping of finance" and said companies must act or face anger from investors over how unsustainable business practices might curb their future wealth.
The New York-based company's fourth-quarter net income https://ir.blackrock.com/files/doc_financials/2019/Q4/BLK-4Q19-Earnings-Release.pdf surged to US$1.30 billion, or US$8.29 per share, in the three months ended Dec. 31, from US$927 million, or US$5.78 per share, a year earlier.
Excluding items, BlackRock earned US$8.34 per share, while analysts had expected US$7.69, according to IBES data from Refinitiv.
"We had high expectations this quarter, just given the good market backdrop, and they still exceeded what the Street was looking for," said Sanders.
A thawing in U.S.-China trade tensions during the fourth quarter supported global equity markets, especially U.S. stocks. The benchmark S&P 500 index climbed 8.5per cent during the period, taking the year's surge to 29per cent.
For the fourth quarter, BlackRock's cash management business drew net inflows of US$29.80 billion, taking total assets for the business to US$545.95 billion.
BlackRock shares were up 2.1per cent in morning trading.
(Reporting by C Nivedita in Bengaluru and Saqib Ahmed in New York; Editing by Sriraj Kalluvila and Bernadette Baum)