BlackRock on Thursday reported $3.648 trillion in assets under management for the quarter ended March 31, up 2.4% from the prior quarter and up 8.4% from the year before.
BlackRock said in its first-quarter earnings report that the $87.5 billion rise in AUM from the prior quarter reflected $100 billion in market gains offset by net outflows of just more than $12 billion. Outflows of $24.4 billion from the firm's money market offerings — as investors continued to add risk to their portfolios – was the biggest factor behind those net outflows.
The firm enjoyed net inflows for its long-term equity, fixed-income, multiasset class and alternatives strategies of more than $16 billion during the latest quarter. That total reflected $34.7 billion in overall inflows, offset by $18.4 billion of what BlackRock over the past year has called “merger-related” outflows, as some clients continued to pare back their exposure to the firm following BlackRock's December 2009 acquisition of Barclays Global Investors.
However, in a conference call Thursday to discuss the firm's results, Laurence D. Fink, BlackRock's chairman and CEO, said with the latest quarter, those “concentration-related” outflows were largely complete. BlackRock will no longer break out those numbers in coming quarters, he said.
For the latest quarter, Mr. Fink said clients — institutional and retail — continued to add more risk to their portfolios, with many institutional clients pursuing a “barbell” approach with allocations to both passive strategies at one end of the risk spectrum and higher-alpha offerings on the other.
He noted that BlackRock's multiasset class AUM jumped 12%, or $22.4 billion, from the prior quarter, and 34% from the year before. The gains since Dec. 31, 2010, were led by $6.8 billion in net new inflows to fiduciary outsourcing mandates, with strong flows as well for BlackRock's defined contribution business, particularly its LifePath target-date retirement offerings, company executives said.
Alternatives AUM, meanwhile, rose to $115.3 billion, up 5% from the prior quarter and up 13% from the year before, helped by net inflows of $800 million over the past three months.
For the company's long-only equity and fixed-income products, passive strategies continued to outshine active strategies for the latest quarter.
In terms of net equity inflows, the company's iShares exchange-traded fund products pulled in $7.2 billion in net flows for the quarter, with another $1.1 billion going into institutional passive strategies. Active equity products, by contrast, saw a net $4.7 billion in outflows, as investors moved $6.9 billion out of BlackRock's “scientific” quantitative equity strategies, and another $10.7 billion in “merger-related” outflows left the passive institutional equity space.
The relatively strength of passive can be seen in the firm's AUM trends over the past 12 months, which showed long-only active equity AUM, at $343.4 billion, down 1% from the year before, while its $595.3 billion in active fixed-income AUM was up a modest 1% over the same time period.
By contrast, the firm's long-only, institutional passive and ETF totals, for both equities and fixed income, were up between 12% and 22% from the year before.
In the conference call, Mr. Fink said BlackRock's efforts to turn around the Scientific Active Equity segment - a significant chunk of legacy BGI business whose performance had begun stumbling well before BlackRock's December 2009 acquisition - have begun to pay off. In its earnings statement, BlackRock noted that 62% of the firm's scientific equity products posted above median returns for the 12 months through March 31, up from 39% and 42% for the three- and five-year periods, respectively.
Mr. Fink said some U.S. strategies continue to have negative returns, but non-U.S. strategies are performing well and attracting inflows. BlackRock is “working tirelessly to rebuild the entire platform,” said Mr. Fink, who predicted the beaten-down long-only quant segment of the money management industry could be poised to rebound.
Mr. Fink noted that the company's pipeline of mandates won but not yet funded stood at $82.4 billion, with $60.7 billion of that total in long-only strategies. Better yet, he said, 45% of those wins are for active alpha products — marking a better balance with the 55% of wins slated for beta strategies.
The company reported revenue, on a GAAP basis, of $2.3 billion for the latest quarter, down 8% from the prior quarter — as seasonal performance fees dropped to $83 million, or 66%, from $243 million in the prior quarter — but up 14% from the year before.
Net income, attributable to BlackRock, came to $568 million, down 14% from the prior quarter but up 34% from the year before.