BlackRock on Wednesday reported assets under management of $3.56 trillion as of June 30, down 3.4% from the prior quarter, mostly the result of market-related declines, and off 2.7% from the year before.
For the latest quarter, the company reported net outflows of $29.4 billion, largely reflecting $31.6 billion in planned distributions from the portfolio of distressed assets BlackRock began managing for the U.S. government with the onset of the capital markets crisis of 2008, according to BlackRock's quarterly earnings report.
The firm reported net inflows to BlackRock's long-term strategies of $3.7 billion for the latest quarter. That total reflected inflows of $5.6 billion for fixed income and $4.3 billion for multiasset class offerings, offset by outflows from alternative and equity products of $4.2 billion and $2 billion, respectively.
BlackRock reported net outflows of $10.3 billion from the firm's long-term strategies for the prior quarter and $8.5 billion of net inflows for those strategies for the year-earlier quarter.
The biggest hit to the firm's AUM, however, came from market-related declines, which amounted to $94.7 billion for the quarter ended June 30.
Speaking on an earnings conference call Wednesday, Laurence D. Fink, BlackRock's chairman and CEO, noted that institutional money continued to flow to passive from active strategies in the second quarter, as concerns about volatility have left institutional investors and corporate CEOs increasingly focused on short-term horizons rather than long-term goals.
Even BlackRock's industry-leading iShares ETF business is being affected by the “risk-off” mood dominating the market now, Mr. Fink said. BlackRock reported net inflows of $6.1 billion for its iShares products, with $11.7 billion of inflows for the firm's fixed-income ETFs offset by outflows of $5.4 billion and $200 million, respectively, from equity and alternatives ETFs.
While health care has been at the center of the U.S. political debate, Mr. Fink said he believes the inadequacy of retirement savings poses a greater danger to the country. With major institutional investors today reporting fiscal year gains of 1% while paying out 7% or more of their principal, the defensive, short-term focus of institutional investors today is aggravating that retirement shortfall — a mismatch that cannot persist for long without resulting in enormous damage to retirees, the institutional investors with fiduciary responsibility for those retirees and for the country, he said.
Against that backdrop, Mr. Fink said BlackRock executives are spending more time this year with their institutional clients, speaking with members of the boards overseeing institutional portfolios and not just with the investment-related executives.
For the latest quarter, BlackRock reported net income of $554 million, down 3.1% from the prior quarter and off 11% from the year before.
Revenue, meanwhile, came to $2.23 billion, down 0.9% from the prior quarter and off 5% from the year before.