BlackRock, the world’s largest money manager, suffered a 9% drop in assets under management during the quarter ended Sept. 30.
Third-quarter net outflows totaled $10.2 billion, including the loss of one $9.1 billion institutional fixed-income mandate. The client wasn’t identified.
This contrasts with second quarter net inflows of $5.6 billion and net inflows of $10.2 billion in the year-earlier quarter.
BlackRock is poised to lose a much bigger portfolio. According to the earnings release, the company will be losing, over time, a $36 billion fixed-income mandate from an unidentified client planning to manage the money internally.
Fixed income was the source of the biggest net outflows — $14 billion. Equities saw net inflows of $1.8 billion in the latest quarter.
The outflows affected BlackRock’s bottom line. For the latest quarter, BlackRock reported net income of $595 million, down 4% from the second quarter but up 8% from the year-earlier period.
Revenue, meanwhile, came to $2.2 billion in the third quarter, a decrease of 5% from the previous quarter but up 6% from the third quarter in 2010.
One bright spot for the quarter: the amount of money BlackRock received in performance fees increased 82%. Still, that was down 20.2% from a year earlier.
Mr. Fink said during the earnings call that clients’ fears stemming from the European financial crisis are behind much of the outflows. “So worldwide, clients are derisking,” he said. “But I need to remind clients and I need to tell everyone this is not 2008 or 2009. This is a confidence crisis, not a liquidity crisis.”
Mr. Fink said investors are now asking questions about how they should be reviewing their liabilities in light of the large declines. “And we expect renewed activity very shortly,” he said. “But we’re not going to have what I would call normalized flows until …our clients have (a) better understanding of their liabilities, and that will then determine how they manage their assets and their duration.”
Mr. Fink said clients also are struggling with the low-interest rate environment and that the low rates are going to result in some structural changes in fixed income in the next few years, including clients moving away from core fixed-income to credit strategies.
