World’s Biggest Money Managers Report Bigger Q1 Net Income, But Net Inflows Miss Forecasts

A strong stock market and the popularity of a new bitcoin exchange-traded spot fund propelled BlackRock to record assets under management of $10.5 trillion and net profit that increased by more than a third.

The world’s largest money manager reported a 36 percent annual jump in net income to $1.57 billion in its fiscal first quarter, on an 11 percent increase in revenue to $4.7 billion. These numbers, as well as the adjusted net profit of US$1.47 billion, exceeded the expectations of analysts consulted by Bloomberg.

However, net inflows of $57 billion disappointed as investors remain wary of leaving money to return to equity and debt markets while the US Federal Reserve keeps interest rates at record highs. last 23 years.

“There is still a record amount of money on the sidelines and money market fund balances are now approaching $9 billion. I think it stems from fear and uncertainty,” BlackRock Chief Executive Larry Fink told analysts on Friday.

Fink said large pension funds that have large allocations in private equity have been particularly reluctant to invest because those funds have been slow to return money to investors amid a slowdown in acquisitions and initial public offerings.

“More and more customers are maintaining a larger cash balance [para] fulfill its obligations,” he said. “If there was an unlock in private capital, I believe we would see a faster allocation into fixed income and other income-generating products.”

BlackRock was one of a dozen providers to launch a bitcoin exchange-traded spot fund in the first quarter, but its product has been a huge success story: It reached $10 billion in assets in record time and is now worth $18 .7 billion. This helped boost total flows into ETFs for the quarter to $67 billion.

Fink highlighted BlackRock’s enthusiasm for private markets and infrastructure, where the company aims to capitalize on global investment in decarbonization and digitalization. BlackRock said its $12.5 billion purchase of Global Infrastructure Partners, announced in January, is on track to close in the third quarter, subject to regulatory approvals and financed by $3 billion in newly issued debt.

Fink also said BlackRock was seeing “accelerated momentum” because it was winning new business from “branded” clients for its technology, retirement and portfolio management services. “All of this will lead to much greater opportunities,” he said.

Tech revenues rose $37 million year over year to $377 million, and Fink told analysts that its Aladdin platform had won several “big mandates” with more to come.

“We see Aladdin as a differentiated source of growth. . . providing a reliable recurring source of revenue during market downturns,” Edward Jones analyst Kyle Saunders wrote in a client note.

Most of the nearly $500 billion increase in assets under management in the first quarter was due to rising equity markets. In the US, the S&P 500 had its best first quarter since 2019. Fixed income funds recorded inflows of $42 billion and equity funds received $18 billion, for total long-term flows of $76 billion.

BlackRock’s operating margin improved to 35.8%, slightly better than analysts expected. Chief Financial Officer Martin Small said on a conference call with analysts that he expected headcount to be “broadly stable” in 2024, as has been the case over the past two years. Fink added that he believes artificial intelligence would allow the company to do more with fewer people.

BlackRock shares fell 2% in afternoon trading Friday. The company’s share price fell more than 5% in 2024 after a strong fourth quarter during which it rose more than 25%.

Financial Times report


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