BlackRock Earnings Cushioned by ETF Products as Assets Under Management Fall 16% To 2020 Levels

BlackRock the world’s largest investment management company reported third quarter earnings on Thursday that fell less than expected. BLK’s assets under management declined 16% in the third quarter, with the stock market falling out of bed. The bearishness in the markets lowered the firm’s assets under management from $10 trillion at the end of December 2021 to $7.96 trillion as of Sept. 30, the lowest since 2020.

Blackrock

Blackrock Earnings

Q3 2022 earnings released at 6:15 a.m. ET; conference call at 8:30 a.m ET

  • Adjusted EPS $9.55, fell 17% from a year earlier, Projected EPS: $7.03
  • Revenue $4.31 BLN, Projected revenue: $4.3 billion
  • Net Inflows $16.91 BLN, Estimate $91.38 BLN
  • Institutional Net Inflows $47.73 BLN
  • Projected EPS: $7.64
  • Projected revenue: $4.3 billion
  • $BLK Pre-market533.50+2.40 (0.45%)

The big positive was BlackRock being the largest issuer of exchange-traded funds, with $2.6 trillion in ETF assets attracted investors look to manage risk and trade the downside. Clients added $22.4 billion to its ETFs in the quarter, compared with $58 billion in the third quarter of 2021.

“The power of our diversified platform is most evident in times of uncertainty, and clients are turning to us more than ever for our comprehensive and integrated solutions,” Chief Executive Officer Larry Fink said in the statement.

Assets Under Management

BlackRock had AUM $7.96 trillion as of Sept. 30, the lowest since 2020, according to a statement Thursday, still the world’s biggest asset manager.

Investors pulled money from several BlackRock products, including equities and cash management. Core long-term funds attracted $65 billion of net inflows, well under the $104 billion average estimate of analysts surveyed. In last year’s third quarter, clients added net $98 billion into those investments, which include exchange-traded funds and mutual funds.

  • Investors pulled almost $40 billion from BlackRock’s cash-management products in the third quarter, compared with net withdrawals of $12.4 billion a year earlier.
  • Institutional investors sold off index products, withdrawing $23.4 billion.
  • BlackRock equity funds saw $29.3 billion of net withdrawals.
  • Fixed income had inflows of $90.6 billion, partly attributable to a single institutional investor.

BlackRock is a top provider of exchange-traded funds and other low-cost alternatives that track market indexes. The firm’s actively managed funds are its higher-fee products, made up nearly half of the manager’s fees last quarter, despite making up about one-quarter of BlackRock’s total assets under management.

Circle Internet Financial

Last quarter Blackrock said it was participating in a $400 million funding round for Circle Internet Financial, a cryptocurrency firm that issues digital assets pegged to the U.S. dollar.

Fidelity Investments, Marshall Wace Asset Management and Fin Capital also participated in the funding round. Prior to the investment, BlackRock already managed some of the cash, and cash equivalent reserves for its USD coin. In his annual letter to shareholders in March, BlackRock Chairman and Chief Executive Larry Fink predicted that the Ukraine war could boost usage of digital currencies.

On a conference call with analysts Larry Fink, BlackRock’s CEO,

“As you know, I always said—I don’t believe in divestiture,” Mr. Fink said, referring to his firm’s stance on energy transition for the fossil companies it invests in. “BlackRock has over $180 billion in investments in [energy], so we are working with all the companies about how to move forward.”

“Let me be clear, BlackRock is the largest investor for pension funds and retirement than anyone. We have a long-term responsibility of making sure that our beneficiaries achieve their long-term aspirations and goals. There is no question that this energy transition is real, but it’s not going to be a straight line.”

BlackRock in Q421 announced that it was pulling $2 trillion of assets that had been managed by State Street (NYSE: STT). BlackRock says it will reduce its reliance on a single outside investment manager and help to lower its costs for back-office workers. BlackRock said it plans to move the administrative and accounting tasks that State Street had performed to other lenders, such as Citigroup and Bank of New York Mellon Corp. (NYSE: BK).

Source: JPM, WFC, C, BLK,

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