BlackRock Profit Falls 5%, But Still Within Expectations

By Austen Hufford 

BlackRock Inc. said Thursday that profit in its latest quarter fell, as the world's largest money manager saw its clients drive assets into net-income products.

Earlier this week The Wall Street Journal reported that BlackRock hired longtime Credit Suisse Group AG executive Philip Vasan as part of its push to attract more individual clients. The idea behind the new role is to customize ways to combine actively managed mutual funds and index-tracking products such as iShares exchange-traded funds.

The New York firm reported $1.54 billion in long-term net inflows during the June quarter. Inflows from the Americas and Europe, Middle East and Africa regions offset outflows from Asia-Pacific.

Inflows and positive market performance helped boost assets under management to $4.89 trillion, up 3.6% from a year earlier and 3.2% from the March quarter.

"Political and macroeconomic uncertainty, historically low yields and elevated market volatility are leading clients to pause," Chief Executive Laurence Fink said. "This market environment is creating greater opportunities for BlackRock to engage with clients -- leading to more frequent and substantive conversations than ever before."

BlackRock reported net outflows of equity products and net inflows of fixed-income assets, leading to higher fee revenue in net income and lower fee revenue in equity offerings. Performance fees also decreased due to lower fees from alternative and equity products.

The firm reported that fixed-income offerings helped grow its iShares products, leading to $15.7 billion of long term net iShares inflows. In the iShares division, which makes up about a quarter of BlackRock's assets under management, the firm offers exchange-traded funds, or securities that trade on an exchange and typically track an index or other basket of assets.

BlackRock, like many of its peers, is also seeking ways to marry its active and passive funds and tout the benefits of both types of investing.

BlackRock reported a profit of $789 million, down from $819 million a year prior. Per-share earnings fell to $4.73 from $4.84. Excluding certain items, BlackRock earned $4.78 a share, down from $4.96 a year earlier.

Revenue fell 3.5% to $2.8 billion.

Analysts had projected $4.78 a share in adjusted earnings on $2.8 billion in revenue, according to Thomson Reuters.

BlackRock shares, up 0.7% in the last three months, were inactive in premarket trading.

Write to Austen Hufford at [e-mail]

(END) Dow Jones Newswires

July 14, 2016 07:20 ET (11:20 GMT)

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