BlackRock Profit Rises as Demand for ETFs Boosts Assets

(Bloomberg) -- BlackRock Inc., the world’s biggest money manager, said first-quarter earnings rose 10 percent as its exchange-traded equities funds drew client cash and assets increased.

Net income climbed to $632 million, or $3.62 a share, from $572 million, or $3.14, a year earlier, the New York-based company said today in a statement. Excluding certain items, BlackRock’s adjusted earnings of $3.65 a share beat the $3.57 average estimate of 20 analysts surveyed by Bloomberg.

Chief Executive Officer Laurence D. Fink, 60, has reorganized BlackRock’s senior leadership and last month announced 300 job cuts. Last year, BlackRock created a series of lower-fee ETFs to reverse a decline in its U.S. market share and in March announced a partnership with Fidelity Investments as it seeks to sell more ETFs directly to U.S. retail investors. BlackRock gathered $40.5 billion in the first quarter, boosting assets 3.8 percent to $3.9 trillion.

“This quarter is more broadly supportive of asset managers in general, with strong January flows for both ETFs and mutual funds,” Luke Montgomery, a research analyst at Sanford C. Bernstein & Co. in New York, said in an interview before the earnings were announced. “For BlackRock, the question is how much did they participate in the trend toward active equities.”

BlackRock rose 2.4 percent in electronic trading, before the U.S. markets opened. The shares gained 28 percent this year through yesterday, compared with the 26 percent increase in the 20-member Standard & Poor’s index of asset managers and custody banks.


Investors have put money into equities this year amid signs of a strengthening economic recovery and a stock-market rally. BlackRock drew $26.3 billion into its stock ETFs, as clients pulled $1 billion from those that track bond markets. Investors pulled money from BlackRock’s active products, where managers aim to beat benchmarks by security selection, removing $6.9 billion from active stock funds and $2.4 billion from their fixed-income counterparts.

“We have not seen any large major change in attitude in bonds,” Fink said today in a telephone interview. “I do believe we’re just not seeing the same investor appetite for long-dated bonds and I think that’s going to persist for some time.”

Fink, who co-founded BlackRock in 1988, has urged investors to get back into equity markets and said in January clients will start to get comfortable with stocks in passive products and then potentially move to active products if returns are worth the higher expenses.

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