The world’s largest asset management, BlackRock, reported on Friday that its assets, which are open to the public, reached a record $10.5 trillion in the first quarter. The company also reported a 36% increase in earnings as surging global equities markets drove up its investment advice and administration fees.
Expectations that the world’s main central banks will stop tightening their monetary policies and switch to lowering interest rates caused global stock markets to surge in the first quarter, which helped increase BlackRock’s assets under management (AUM). Global stock performance in the first three months of the year increased by 7.7% according to the MSCI gauge, while the S&P 500 had a 10% increase in the same period.
AUM at BlackRock increased by 15% in the first quarter compared to the same period last year, while the company’s primary revenue stream, investment advising and administration fees, increased by about 8.8% to $3.63 billion.
Laptops 1000Chairman and CEO Larry Fink stated, “I see the greatest opportunities I’ve ever seen for BlackRock, for our clients, and for our shareholders,” on a conference call to discuss the results.
He talked about the need for new infrastructure, some emerging countries, and artificial intelligence as potential investment prospects.
With the goal of diversifying into alternative assets and private markets through global infrastructure investments, BlackRock announced in January that it would acquire Global Infrastructure Partners for $12.5 billion. According to Martin Small, chief financial officer of BlackRock, the deal is still scheduled for completion in the third quarter.
Fink did not imply that another purchase was in the works, but he did state that BlackRock would continue to be “open-minded” about pursuing new private market opportunities.
He also stated that BlackRock was closing in on securing sizable mandates that would propel future asset flows and new customers for its technology platform, Aladdin.
According to Kyle Sanders, senior equities research analyst at Edward Jones, “The results were better than anticipated and they seem upbeat and confident about growth accelerating.”
In early trade, the company’s shares were up 0.3%. This year, they have decreased by roughly 3.4%.
INFLOWS: From $110 billion in the previous year to $57 billion this year, net inflows decreased. According to Small, $20 billion in net inflows into the money market during the first week of April followed about $14 billion in seasonal withdrawals from institutional money market funds at the end of March.
Rob Kapito, president of BlackRock, stated on Friday that concerns about inflation and an inverted Treasury yield curve were preventing additional investments in fixed income.
Rising inflation affects fixed-income investors because it reduces the value of their future cash flows.
After interest rate reduction starts, analysts predict that the asset management industry’s flows will pick up again since it will encourage cash piles currently sitting on the sidelines to shift into riskier assets.
Nevertheless, Sanders of Edward Jones stated that the first-quarter net flows of about $42 billion into fixed-income products were better than anticipated.
“In my opinion, the question is when, not if. You’ll see money flow into those products once you’ve had one or two rate cuts,” he stated.
The bulk of inflows were absorbed by exchange-traded funds, which were further stimulated by BlackRock’s iShares Bitcoin Trust, which has received $14 billion in net inflows since its introduction in January.
The impact of higher markets on average AUM, coupled with increased performance fees and technology revenue, caused the company’s overall revenue to soar 11% to $4.73 billion in the quarter.
Laptops 1000BlackRock serves individual and institutional clients worldwide, including large organizations, insurance providers, and sovereign wealth funds, with investment management and technology solutions.
The company’s technology sales increased by around 10.9% to $377 million, indicating the ongoing demand for Aladdin, its investment risk management platform.
The company’s net income increased from $1.16 billion, or $7.64 per share, a year earlier to $1.57 billion, or $10.48 per share, in the three months that ended on March 31.
