While early into third-quarter earnings season, both BlackRock (BLK) and J.P. Morgan Asset Management (JPM) released their results this week. Both reported positive revenue and asset growth, with BlackRock's quarterly and trailing 12-month numbers handily ahead of J.P. Morgan's figures.
But what should be highlighted is that J.P. Morgan generated about $12 million more in revenue than BlackRock (BLK) with a third of the total AUM. This trend should be expected due to much of BlackRock's business model being built upon low-cost index and ETF vehicles while JPAM's business relies on active investing and wealth management services. But the trend has been shifting: J.P. Morgan's active products have been struggling to add alpha, like most active funds, and new client asset growth has been weak as a percentage of the prior quarter's AUM. As a result, much of JPAM's revenue growth has been driven by its wealth management business.