BlackRock, the world’s largest asset manager, has posted a small rise in second-quarter profit as the company saw net outflows for the first time in nearly three years.
Net outflows totalled $36.6 billion, with investors pulling out $7.3 billion from BlackRock’s long-term funds. It is the first time that the New York- based firm has posted outflows since the third quarter of 2012.
The bulk were from large international institutional investors pulling funds from low-fee index-based products. Chief executive Larry Fink said those investors put the money into cash or reallocated into active BlackRock strategies.
Ten of BlackRock’s largest institutional clients have pulled $40 billion from BlackRock over the past two quarters, he said. However, many of these same investors reallocated into BlackRock’s more profitable active strategies, according to the firm. BlackRock saw $2.5 billion in net inflows into its institutional active strategies.
Overall, investors poured $10.85 billion into BlackRock’s exchange-traded funds, with the lion’s share going into equity funds. Retail flows totalled $10.8 billion, the bulk into fixed income funds.
The inflows into active strategies and ETFs are key to BlackRock because they garner higher fees than institutional index strategies. For every $10,000, an investor in a BlackRock retail fund pays about $64 a year, compared with $34 for an exchange-traded fund and $10 for institutional clients.
BlackRock still has a way to go in gaining market share among registered investment advisers (RIAs), Mr Fink said on an analyst call yesterday. “We are still way behind other firms with regard to the RIAs.”
BlackRock reported that third-quarter profit rose to $819 million, or $4.84 a share, for the quarter ended June 30th, up from $808 million, or $4.72 a share, a year earlier.
On an adjusted basis, BlackRock earned $4.96 a share, handily beating an average estimate of $4.80. – (Reuters)
