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BlackRock’s assets under management topped $11tn for the first time — sending its shares to a new peak — as the world’s largest money manager benefited from a rally in markets and attracted record new cash from investors.
The inflows helped push revenues up 15 per cent to $5.2bn, surpassing analysts’ expectations. Improved margins lifted the group’s net income to $1.63bn.
Assets rose 8 per cent during the quarter to $11.5tn from $10.6tn three months earlier, powered by $160bn in long-term flows and investors pouring an additional $61bn into its cash management products.
The prospect of the US Federal Reserve cutting interest rates attracted money into bond funds, while the S&P 500 climbed 5.5 per cent in the quarter.
BlackRock’s chief executive Larry Fink predicted his firm’s growth would continue. “We expect momentum to further build to year’s end and into 2025,” he told analysts on an earnings call. “Investors will have to re-risk to meet their long-term return needs.”
“Our strategy is ambitious and our strategy is working . . . I have never felt more optimistic,” he said. “Capital markets are becoming a bigger and bigger part of the global economy.”
Analysts polled by Bloomberg had expected revenue of $5bn. Adjusted operating income rose 26 per cent to $2.1bn, beating expectations of just under $2bn.
BlackRock shares hit a new intraday high on the news, rising as much as 4. per cent to $995.38 shortly after Wall Street’s opening bell on Friday to surpass their previous peak set in November 2021.
The bulk of the new investor money went into the low-cost exchange traded funds and index products that are BlackRock’s bread and butter. But New York-based BlackRock is making a concerted push into alternative assets, which command much higher fees.
“What we see is a blending of public and private markets . . . clients are going to be shifting between public and private,” Fink said. “They aren’t alternatives, they are just part of the market.”
BlackRock’s $12.5bn purchase of Global Infrastructure Partners closed after the quarter ended. That has now added a further $116bn in assets to the money manager’s $11.5tn pile and doubled BlackRock’s fees from managing private market assets, chief financial officer Martin Small said. BlackRock expects its £2.55bn purchase of Preqin, a private markets data provider, to close around the end of 2024.
The Financial Times reported this week that BlackRock was one of several groups looking into a possible purchase of HPS, a private credit manager that spun out of JPMorgan.
Small told analysts that the firm would consider doing more deals but that it would be “prudent with our capital . . . We do not need M&A to meet our growth targets” of 5 per cent annual fee growth.
Jefferies analyst Daniel Fannon called the results “strong” and Kyle Sanders at Edward Jones wrote that the numbers were “impressive . . . we believe the rotation of money from cash to fixed income and equity products . . . provides a positive near-term catalyst”.
