BlackRock Inc., the world’s largest asset manager, beat analysts’ estimates for quarterly profit on Wednesday, helped by strong flows into its exchange-traded fund business that boosted overall assets under management to a record US$7.43-trillion.
A rally in global equity markets and strong inflows across business segments helped the company lure US$128.84-billion in new money during the fourth quarter through Dec. 31.
“I think it’s quite evident from our flows in the fourth quarter that we are winning more of our clients’ share of wallet,” chief executive Larry Fink said in an interview.
Even as the stock market enjoyed a sharp rally recently, many of BlackRock’s clients were underinvested in equities and remained heavily oriented toward fixed-income securities, Mr. Fink said.
However, fears of a global slowdown have moderated through 2019 and investors have started to take on risk, he added.
BlackRock’s iShares-branded ETFs took in US$75.2-billion of new money, up from US$41.5-billion in the prior quarter, taking the net inflow for the year to US$183-billion.
Those flows helped lift total assets to US$7.43-trillion.
“A lot of times, if a company is big, the law of big numbers makes it hard to grow. We are not seeing that with BlackRock,” said Kyle Sanders, an analyst with St. Louis-based financial services firm Edward Jones.
“The size is actually allowing them to continue to be more aggressive and push into new products and take market share,” said Mr. Sanders, who maintained a “buy” rating on the company.
With its growing heft, BlackRock has drawn increased scrutiny of its fossil fuel investments. On Tuesday, Mr. Fink warned company boards to step up efforts to tackle climate change, a significant shift by the world’s top asset manager.
In his annual letter to CEOs posted on the company’s website on Tuesday, Mr. Fink forecast a “fundamental reshaping of finance” and said companies must act or face anger from investors over how unsustainable business practices may curb their future wealth.
The New York-based company’s fourth-quarter net income surged to US$1.3-billion, or US$8.29 a share, in the three months ended Dec. 31, from US$927-million, or US$5.78 per share, a year earlier.
Excluding items, BlackRock earned US$8.34 a share, while analysts had expected US$7.69, according to IBES data from Refinitiv.
“We had high expectations this quarter, just given the good market backdrop, and they still exceeded what the Street was looking for,” Mr. Sanders said.
A thawing in U.S.-China trade tensions during the fourth quarter supported global equity markets, especially U.S. stocks. The benchmark S&P 500 index climbed 8.5 per cent during the period, taking the year’s surge to 29 per cent.
For the fourth quarter, BlackRock’s cash management business drew net inflows of US$29.8-billion, taking total assets for the business to US$545.95-billion.
BlackRock shares were up 2.1 per cent in morning trading.