* Analysts expect $2.75 adjusted EPS up from $2.40 yr ago
* Popular ETF business took in almost $5 bln in US alone
* Merger-related outflows expected to taper off
By Aaron Pressman
BOSTON, April 21 BlackRock has made a
series of acquisitions over the last decade, but its 2009
purchase of Barclays Plc's exchange-traded funds (ETFs)
business may look the smartest this quarter.
Though they carry among the lowest fees of any products for
investors, BlackRock's iShares line of ETFs produce high-margin
profits for the New York-based firm, which posts earnings later
BlackRock's iShares ETF business took in an estimated $4.7
billion in net inflows in the first quarter just in the United
States, according to industry estimates. Among the firm's most
popular funds during the quarter were the iShares MSCI Japan
Index Fund and the iShares iBoxx$ High Yield Corporate Bond
Analysts expect those inflows to help BlackRock report
adjusted earnings per share of $2.75 for the first quarter, up
from $2.40 a year ago, according to Thomson Reuters I/B/E/S.
The figures, which do not conform to generally accepted
accounting principles, exclude costs from acquisitions and
certain compensation plans.
BlackRock, which oversees more than $3.5 trillion in total,
is expected to have benefited from rising assets under
management, thanks both to market gains and investors pouring
money into its funds.
Revenue is expected to come in at $2.2 billion, up from $2.0
billion in the first quarter of 2010.
The results were likely bolstered by rising markets. The
Standard & Poor's 500 index was up almost 16 percent for the 12
months ended March 31 and the Barclays Capital Aggregate Bond
Index gained more than 5 percent.
Among ETF managers, only mutual fund giant Vanguard Group
took in more money in the United States, with estimated net
inflow of $10.4 billion in the first quarter. Vanguard has been
gaining on iShares for the past two years as it introduced a
slew of copycat funds with lower fees and, in some cases, better
performance tracking indexes.
BlackRock chief executive Laurence Fink has so far resisted
matching Vanguard's lower fees and insisted that customers
appreciate iShares' greater trading volume and index breadth.
"They are the market leader so everyone is gunning for
them," said Mark Morgan, an analyst at money manager Thrivent
Financial for Lutherans in Minneapolis, Minnesota. "But they're
still strong in market segments that are growing fastest."
Investors expect that customer outflows related to
BlackRock's acquisition of Barclays Plc's money management unit
at the end of 2009 will continue to slow this year.
"The acquisition has definitely already succeeded on the
cost saving," said Dan Popowics, a fund manager at Fifth Third
Asset Management in Cincinnati, Ohio. "Some of the asset growth
has been masked by the kinds of outflows that normally occur in
a deal like this."
Fink is also adding resources to BlackRock's other lines of
business. The firm aims to double its traditional U.S. mutual
fund and other retail businesses from $300 billion to $600
billion by 2014, managing director Frank Porcelli told Reuters
on April 6. [ID:nN06220156]
Shares of BlackRock closed up $1.69, or 0.9 percent, at
$193.72 on the New York Stock Exchange on Wednesday. The shares
have declined 4.7 percent over the past year.
(Editing by Gary Hill and Muralikumar Anantharaman)