BlackRock announced a smaller-than-expected decline in quarterly earnings on Thursday, triggered by strong demand for exchange-traded funds (ETFs) and other low-risk products. This helped offset the impact to fee income from a global market crash.
Bonds and stocks have been hit hard this year by the Ukraine crisis, swiftly rising interest rates, and the danger of a recession. Also,this kept investors on edge and hurt companies like BlackRock.
In the third quarter, the company’s assets under management fell 16% year over year to $7.96 trillion as pressure from a stronger dollar also increased. Furthermore, the value of investments in important European and Asian markets decreased.
The largest asset manager in the world, which derives the majority of its income from fees charged for investment advice and administration services, saw its adjusted earnings decline by 16% to $9.55 per share.
According to IBES statistics from Refinitiv, that nonetheless exceeded analysts’ predictions of $7.07 per share, as BlackRock was able to partially offset the market drop with the help of its diverse business strategy led by iShares ETFs.
After the report, the company’s shares, which are down 42% so far this year, increased 0.4% in premarket trade.
Long-term net inflows of $65 billion countered the negative impact of BlackRock’s retail clients withdrawing around $5 billion to produce overall net inflows of $65 billion in the quarter.
With the help of $37 billion in flows into bond ETFs, net inflows into ETFs increased to roughly $22 billion during the quarter.
Profits dropped for 15% or $4.31 billion.
The company stated in a statement that the decline was “mainly driven by the impact of much lower markets and dollar appreciation on average AUM and lower performance fees.”
The benchmark S&P 500 Index has lost about 25% of its value so far this year. Analysts predict further losses in light of the U.S. Federal Reserve’s aggressive approach.
For the three months ended September 30, BlackRock’s net income decreased from $1.68 billion, or $10.89 per share, to $1.4 billion, or $9.25 per share.
