* Total AUM exceeds $4 trillion
* Money into iShares boosts long-term net inflows
* CEO Fink sees 4 to 6 percent annual growth in asset base
By Ashley Lau
Oct 16 BlackRock Inc, which crossed the
$4 trillion mark in total assets under management, was given a
boost from investors pouring money into its iShares
exchange-traded funds and retail business during the third
Roughly 80 percent of the $25.3 billion investors added into
long-term funds during the quarter went into the company's
iShares business, which had $20.3 billion of net inflows.
"You're seeing more and more ETF utilization across the
globe as a tool for portfolio composition and as a tool for
portfolio liquidity," Chief Executive Officer Laurence Fink said
in an interview on Wednesday.
The 12 percent rise in total assets under management from
last year helped boost BlackRock's profit, which rose 15 percent
from last year. Large asset managers make profits by charging
fees as a percentage of assets under management.
BlackRock's diverse business lines across a mix of asset
classes and clients has also allowed it to remain insulated to a
certain extent against swings in investor sentiment. Even as
investors pulled roughly $11 billion from BlackRock's active and
index equity products on the institutional side, total long-term
flows were overall positive across asset classes during the
"Our platform and the composition of our products has
allowed us to take advantage of those changes in sentiment,"
FLOWS INTO iSHARES
BlackRock's iShares business, which it acquired from
Barclays in 2009 and is the largest U.S. provider of
exchange-traded funds, now accounts for roughly 23 percent of
its total assets under management.
The company has benefited from increased investor interest
in lower-cost, indexed funds. In September alone, U.S.-listed
ETFs added $33 billion in net new assets, the bulk of which went
into U.S. and international equities ETFs, according to
BlackRock has been expanding its iShares business within the
United States and abroad.
Earlier this year, the company completed its acquisition of
Credit Suisse's exchange-traded funds business and expanded its
three-year relationship with Fidelity Investments, which now
promotes 65 iShares ETFs to its clients without charging a
commission. Previously, BlackRock paid Fidelity to list just 30
"IShares is an important business for BlackRock, but overall
it's part of a larger, passive franchise that is still very
formidable," Edward Jones analyst Jim Shanahan said in an
interview ahead of earnings on Friday.
The New York-based asset manager on Wednesday reported net
income of $730 million, or $4.21 per share, up from $642
million, or $3.65 per share, a year earlier.
Excluding certain items such as compensation expense,
earnings were $3.88 a share, in line with the analysts' average
forecast, according to Thomson Reuters I/B/E/S.
Investors added more money than they withdrew across asset
classes during the quarter, putting $11.3 billion into equities
funds, $7.5 billion into fixed-income funds, $4.9 billion into
multi-asset products and $1.7 billion into alternative products.
BlackRock ended the quarter with total assets under
management of $4.1 trillion, including new money and market
gains. Fink expects the company to increase its asset base
anywhere from 4 percent to 6 percent annually.
BlackRock shares were up 2.6 percent at $289.72 in afternoon
trading on Wednesday on the New York Stock Exchange.