BlackRock Profit Rises 8% on ETF Gains

Wednesday, 17 Oct 2012 07:36 AM

 

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BlackRock Inc., the world's largest money manager, said third-quarter profit rose 8 percent as investors poured cash into its iShares line of exchange-traded funds.

The New York-based company fired on all cylinders during the quarter, showing strength in bond mutual funds, its Lifepath funds for 401(k)-type retirement accounts, hedge fund performance fees and risk management services.

Chief Executive Laurence Fink cited "robust new business generation across each of our channels." He pointed to record quarterly flows into iShares since BlackRock acquired the business in 2009 and the highest flow into retail bond funds in over 10 years.

Net income totaled $642 million, or $3.65 per share, compared with $595 million, or $3.23 per share, a year earlier, BlackRock said in a statement on Wednesday. Excluding certain items, BlackRock earned $3.47 per share. On that basis, analysts, on average, expected $3.31, according to Thomson Reuters I/B/E/S.

Overall, investors withdrew $43 billion from BlackRock's long-term funds and accounts. Excluding the impact of an institution withdrawing $74 billion from an indexed bond account, BlackRock said it took in $31 billion from investors.

That included a record $25 billion going into iShares funds, with more than three-quarters flowing into stock ETFs, $6 billion into retail bond funds and $10 billion into funds aimed at 401(k)-type defined contribution retirement accounts.

Total assets under management at BlackRock hit $3.67 trillion, up 3 percent during the quarter and up 10 percent from a year ago.

The strong quarter for iShares came despite competition from lower-cost competitors like Vanguard Group and Charles Schwab Corp. On Monday, BlackRock unveiled a plan to cut fees on six iShares funds and introduce four new low-cost funds.

Revenue rose 4 percent from a year earlier to $2.3 billion. Performance fees jumped 12 percent to $103 million on strong gains at BlackRock's hedge funds and other accounts that garner a portion of their profits based on their investing track records.

Revenue from risk management advice and other services at its BlackRock Solution unit rose 9 percent to $128 million.

Shares of BlackRock closed at $189.97 on the New York Stock Exchange on Tuesday. The shares have gained 7 percent so far this year, trailing the 16 percent gain in the Standard & Poor's 500 Index.

© 2014 Thomson/Reuters. All rights reserved.

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