BlackRock CEO Larry Fink. Picture: REUTERS
BlackRock CEO Larry Fink. Picture: REUTERS

New York  —  BlackRock, the world's largest asset manager, reported first-quarter profit that exceeded expectations and raked in $65bn of new investor cash as global financial markets rebounded from a volatile fourth quarter.

Total assets under management grew 3% to $6.52-trillion in the quarter through March 31 from a year earlier, amid a broad-based rebound in global equity markets. Assets had dipped below $6-trillion amid market turmoil late in 2018.

Total quarterly net inflows across all product types jumped 13.6%  to $64.67bn from a year earlier.

Overall, the company sold $59bn in stock, bond and other "long-term" investment funds, up from the $43.6bn in the quarter ended December 31.

BlackRock shares were up 2.2% at $461.56 in early trading.

The US economy is speeding up again after a slowdown and the market is getting ready for "huge" inflows into stocks, BlackRock's CEO Larry Fink said  in an interview on Tuesday.

"I believe people are still under-risked, despite the big rebound," Fink said.

The benchmark S&P 500 stock index, which sank 14%  in the final three months of 2018, rebounded  13% in the first quarter, its best performance since the third quarter of 2009.

BlackRock lost more than $26bn in its equity portfolio during the first quarter, but this was more than offset by a jump in fixed income of nearly $80bn. Long-term investments rose by $59bn.

Investment flows ‘look stronger’

"Investment flows look stronger than we anticipated," said Kyle Sanders, an analyst with St Louis-based financial services firm Edward Jones.

"BlackRock has a really strong reputation in fixed income management and it looks like that asset class came back into favor with interest rates kind of dipping lower. I think that drove better-than-expected asset flows," said Sanders.

Institutional fund net inflows grew nearly nine-fold to $29.12bn from a year ago.

Net income attributable to BlackRock fell to $1.05bn, or $6.61 per share, in the first quarter, from $1.09bn, or $6.68 per share, a year earlier. That well exceeded analysts' expectations for a profit of $6.13 per share, according to IBES data from Refinitiv.

BlackRock said its iShares-branded ETFs took in $30.69bn of new money, compared with $81.40bn in the fourth quarter.

Revenue from technology services, a key area of focus for BlackRock, grew 11% to $204m.

Still, the company continued to feel the pinch from fee pressures amid an ongoing industry-wide shift from high-fee actively managed mutual funds to low-fee passive-investment products.

Base fees dropped 5% year on year, mainly due to the negative markets in the fourth quarter and a stronger US dollar that eroded the fees they collect, BlackRock said.

"I think it was pretty well known that fees would be down, not just for BlackRock but for any asset manager just because those are based on an average of market values throughout the quarter and we started the quarter at such a low point," said Edward Jones' Sanders.

Reuters