(Bloomberg) -- BlackRock's fourth-quarter revenue missed estimates on declining fees, even as the firm had the strongest inflows in its history last year.

Revenue rose 1% to $2.89 billion, the New York-based firm said in a statement Friday. Analysts predicted $2.93 billion. Assets under management at the world's largest money manager increased 11% to $5.15 trillion from a year earlier. For all of 2016, the company had $202 billion in net inflows.

BlackRock, led by CEO Laurence D. Fink, has benefited from a move by investors into cheaper passive products. But it has been cutting fees and seeing withdrawals from its U.S. active funds business. The money manager took in a record $140 billion of new flows into its iShares business last year, boosted by fee cuts on 15 ETFs in October.

Performance fees fell $40 million in the fourth quarter, mostly reflecting lower fees from equity products. While investment advisory, administration fees and securities lending revenue increased, that was in part offset by the impact of a shift of assets to lower fee products and foreign exchange movements.

BlackRock reported adjusted earnings of $5.14 a share, exceeding the $5.02 average estimate of 15 analysts surveyed by Bloomberg.

Investors plowed $27 billion into BlackRock's U.S. iShares Core ETFs since the October price cut on stock and bond funds targeting buy-and-hold investors, according to a company press release this month. BlackRock in December trimmed expenses on six smart beta ETFs, signaling that the price war with other other asset managers was moving beyond plain vanilla products.

The firm's stockpicking business hasn't fared as well, with performance continuing to lag behind many peers. U.S.-based active funds at BlackRock saw a record $19.3 billion of outflows last year, according to data from Morningstar. The firm's quantitative strategies have underperformed, with four of its quant hedge funds on track for their worst returns on record, according to data through November. Fink combined the quant group with the stockpicking unit early last year to boost returns and lure clients into higher fee paying products.

BlackRock is the first big U.S. money manager to report fourth-quarter earnings, providing a view of how other firms may have navigated financial markets. Shares of BlackRock have risen 12% in 2016, compared with an 8.4% increase for S&P's 19-company index of asset managers and custody banks.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.