Assets jump at SSgA, BlackRock, BNY Mellon, Invesco

SSgA reported $1.74 trillion in assets under management as of Sept. 30, while BlackRock assets reached a new high at $1.435 trillion, Bank of New York Mellon reported $966 billion and Invesco reported $416.9 billion.

SSgA's assets were up 11.5% from three months earlier and 3% higher than the previous year.

Investment management fees were $219 million, down 16% from a year earlier, attributable largely to a decrease in month-end equity valuations and a change in the composition of assets under management to passive from active strategies.

Parent State Street Corp. also reported earnings per common share of $1.04 on revenue of $2.24 billion, compared with $1.09 per share on revenue of $2.77 billion a year earlier. Operating-basis earnings per common share were $1.05, down 15.3% from a year earlier. And operating-basis revenue was $2.267 billion, down 10.6% from a year ago.

“Although the economic environment appears to be gradually recovering, the pace of the rebound is slow,” Ronald E. Logue, State Street's chairman and CEO, said in a news release. “Equity markets have improved, providing some support to our servicing and management fee revenue and as liquidity returns to the credit markets, spreads have tightened, thus allowing further continued declines in the unrealized loss in our investment portfolio. In this environment we remain cautious and continue to build our capital ratios, which today are among the strongest in our industry.”

BlackRock's record $1.435 trillion was an increase of 4% from the prior quarter and up 14% from the year before.

For the quarter, net cash management outflows of $26.4 billion more than offset net inflows of $14.5 billion for BlackRock's long-dated equity and bond strategies, according to the company's third-quarter earnings report released today.

BlackRock reported net inflows of $11.9 billion into equity and balanced strategies and $3.5 billion into fixed-income strategies. Alternative products saw net outflows of $845 million, while BlackRock's “advisory AUM” — the distressed assets the firm is overseeing, most on behalf of the government — saw net distributions of $4.6 billion.

On balance, BlackRock's net outflows of $16.5 billion were more than offset by market appreciation of $71.6 billion and foreign exchange-related gains of $6.5 billion.

For the quarter, BlackRock reported net income of $317 million, up 45% from the prior quarter and up 46% from the year before. Revenue, meanwhile, came to $1.14 billion, up 11% from the prior quarter but down 13% from the year before, mostly reflecting a decline in average AUM from the year before.

In a conference call this morning, Laurence D. Fink, BlackRock's chairman and CEO, cited growing signs of investors' renewed appetite for risk, as they redeploy the big chunks of their portfolios they parked in cash a year before. One of the biggest changes BlackRock saw in the latter part of the latest quarter was a pickup in demand for its alternative strategies, with $1.5 billion of net inflows to the firm's hedge fund-of-funds offerings in the last month or so, Mr. Fink said. The firm also saw strong demand for its equity strategies, especially its international strategies, he said.

BlackRock's fixed-income strategies, which struggled in 2008, are almost all outperforming their benchmarks this year, “digging us out” of the hole underperformance left them in last year, Mr. Fink said. He noted that $33 billion of the $42 billion of yet-to-be-funded mandates BlackRock has in the pipeline are in fixed income.

BlackRock said the deal it announced in August to purchase BGI is expected to close by Dec. 1. In a news release about the earnings report, Mr. Fink said “When we complete the combination with BGI, we will be uniquely positioned to blend index and active management in constructing new products and asset liability management strategies.”

Bank of New York Mellon's $966 billion under management in its asset management and wealth management units was a rise of 4.3% from the prior quarter but down 9% from the year before.

Of that total, BNY Mellon Asset Management, the asset management division of the parent company, had $892 billion in client money, up 3.7% from the prior quarter but down 14% from the year earlier. Bank of New York Mellon reported net outflows of $16 billion for the latest three-month period, with money market outflows accounting for $14 billion of that, according to a news release on the parent company's third-quarter earnings.

Asset and wealth management fees, excluding performance fees, came to $649 million, up 6% from the prior quarter but down 18% from the year before.

Invesco's $416.9 billion was an increase of 7.3% from the prior quarter and 1.8% from the year before.

Markets gains of $27.4 billion accounted for most of Invesco's 7.3% increase since June 30, as net inflows of $2.6 billion for Invesco's long-term equity and bond strategies were offset by a similar amount of outflows from money market funds, according to the company's third-quarter earnings report released today.

On a conference call today, CEO Martin Flanagan said his company's already solid prospects will gain further momentum from an agreement, announced late Monday, that calls for Invesco to buy Morgan Stanley's retail money management business in a $1.5 billion cash-and-stock deal. While the deal is expected to close in mid-2010, on a pro-forma basis, it would leave Invesco now with $535.6 billion in client assets, a broader set of investment capabilities and far stronger distribution capabilities, Mr. Flanagan said.

For the latest quarter, Invesco's current retail operations proved a magnet for investors, with net inflows of $4.4 billion offsetting $1.9 billion in institutional outflows.

By broad asset class, both equity and fixed-income strategies pulled in $2 billion apiece, while balanced strategies enjoyed a $200 million net inflow. However, Invesco's alternative strategies saw net outflows of $1.3 billion.

Invesco reported net income attributable to common shareholders of $105.2 million for the latest quarter, up 39% from the prior quarter but down 20% from the year before. Total operating revenue, meanwhile, came to $705.8 million, up 12.9% from the prior quarter but down 14.7% from the year before.