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A BlackRock office stands in New York on July 16, 2018.

Lucas Jackson/Reuters

BlackRock Inc.’s quarterly results topped analysts’ expectations on Thursday, buoyed by a rising stock market that boosted the firm’s assets under management to a record high US$8.68-trillion, further widening its lead against peers.

The firm drew US$127-billion of total net inflows in the fourth quarter as investors poured money into its various business, including its exchange-traded funds, as well as active funds that aim to beat the market.

“We begin 2021 well-positioned and intend to keep investing in our business to drive long-term growth and to lead the evolution of the asset management industry,” BlackRock chief executive Larry Fink said in a statement.

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Financial markets rallied in the fourth quarter, building on sharp gains of the prior two quarters, as accommodative global central bank policy and improving growth prospects helped lift investors’ risk appetite.

While rallying stock markets provided a powerful boost to BlackRock’s results, the profit report showed outsized growth in inflows at a time when the rest of the industry is expected to struggle with redemptions.

“Yes, markets were great for everyone this quarter, but most asset managers are still bleeding out assets ... whereas BlackRock’s flow growth rate is continuing to accelerate,” said Kyle Sanders, an analyst with St. Louis-based financial services firm Edward Jones.

“That shows that they are taking market share ... widening the competitive gap with all their peers,” Mr. Sanders said.

BlackRock’s adjusted net income of US$10.18 per share in the fourth quarter topped Wall Street estimates of US$9.14, according to Refinitiv IBES data.

The asset manager raked in higher investment and advisory fees, a major source of revenue, through the quarter.

BlackRock’s growing size and wide reach in financial markets across the globe have seen the asset manager become one of the most important firms in capital markets today.

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When markets turned turbulent in early 2020, the U.S. Federal Reserve roped in BlackRock to run various vehicles the Fed created to buy corporate debt from the primary and secondary markets, thereby helping restore calm to markets.

BlackRock’s success, not untied to its size, is likely to spur consolidation among peers looking to play catch-up with the investment behemoth, analysts said.

“We anticipate elevated mergers and acquisitions within the industry as peers attempt to replicate BlackRock’s scale, technology capabilities and comprehensive product lineup,” Mr. Sanders said.

In February, 2020, asset manager Franklin Resources Inc. bought rival Legg Mason Inc. in a US$4.5-billion deal, and in December, Bloomberg reported U.S. custodian bank State Street Corp. was exploring options for its asset management business.

On Thursday, Mr. Fink said he is open to dealmaking as long as it is additive and not just to take out costs.

In November, BlackRock said it would buy investment management services provider Aperio Group LLC for US$1.05-billion in cash.

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BlackRock’s shares, which hit a record high on Wednesday, have risen 8.1 per cent this year, compared with a 5.2-per-cent gain for a Thomson Reuters index that includes more than a dozen of BlackRock’s industry rivals in the United States. BlackRock’s shares were down 3.3 per cent in early trading on Thursday.

BlackRock’s shares were trading at record highs as investors bet on the company benefiting from improving market conditions.

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