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Profit at the world's largest asset manager rose in the last quarter

Billy Bambrough
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BlackRock chief executive Larry Fink says the firm's business model was built to thrive in all market environments
BlackRock chief executive Larry Fink says the firm's business model was built to thrive in all market environments (Source: Getty)

BlackRock, the world's largest asset manager, has posted a rise in quarterly profit, beating analyst expectations.

The New York-based firm's performance will be seen as a strong sign of resilience in a weak market for many traditional asset managers.

The numbers

Third quarter earnings came in at $5.14 a share on $2.84bn in revenue, beating Thomson Reuters consensus expectations of about $5 a share but falling short of predictions of $2.88bn in revenue.

Net income rose 3.8 per cent to $875m.

Read more: Morgan Stanley and Blackrock presidents warn Brexit will shrink London's financial crown

BlackRock attracted a net $13.35bn in long-term equity investments. Net investment in fixed income was $36.98bn, while $1.82bn went into alternative investments.

BlackRock ended the latest quarter with $5.12 trillion in assets under management, up from $4.89 trillion in the second quarter.

BlackRock said it had $70bn (£56bn) of total net inflows, including $55bn in long-term net inflows over its third quarter.

Base fees year-over-year rose by four per cent, driven by organic growth and market performance, offset by investor demands for fixed income and cash.

The company's operating system for investment managers Aladdin brought in 13 per cent more revenue year-over-year.

Why it's interesting

Traditional asset managers have been struggling recently though BlackRock has largely avoided many wider sector problems.

BlackRock's shares are up some four per cent since the beginning of the year, while the Dow Jones US Asset Managers Index has lost 4.4 per cent.

Read more: FCA charges former Blackrock portfolio manager with insider dealing

Earlier this month, BlackRock said it is cutting fees for 15 of its exchange-traded funds, helping it better compete with offerings by rivals like Vanguard and State Street.

The asset manager is the biggest provider of ETFs in the world through its ownership of the iShares franchise and this is expected to form a large proportion of its strategy in coming years.

What BlackRock said

BlackRock's chief executive Larry Fink was keen to stress the diversity of the business would be its strength.

In a statement he said:

In the third quarter, even as investor preferences continued to migrate from equity to fixed income and cash, and away from active strategies, the diversity of our platform drove nearly $70 billion of total net inflows. Our $55 billion of long-term net inflows were positive across both active and index strategies, and positive across every asset class and region.

Retail and institutional investors continued turning to iShares as an effective way to express market views and generate alpha. Our European fixed income ETFs reached $100bn of assets under management and fixed income remains an important growth area for iShares.

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