BlackRock on Wednesday reported $3.673 trillion in assets under management as of Sept. 30, an increase of 3.2% from the previous quarter and an increase of 9.8% over the third quarter of 2011.
The increases primarily came from strong investment returns and $6.2 billion in assets from the September acquisition of Swiss Re Private Equity Partners, offsetting net outflows chiefly resulting from the firm's decision not to rebid for a $74.2 billion passive fixed-income portfolio from one client, according to the firm's third-quarter earnings release. BlackRock did not name the client, citing confidentiality agreements, but said it didn't rebid because it had generated low fees for the firm.
Laurence D. Fink, BlackRock's chairman and CEO, said in a conference call on Wednesday that the $74.2 billion portfolio was “one of our lowest-fee products that we provided and in fact this assignment was passed on to other index providers at a fee that I would tell you if there was one minor trading (error), those investment managers are going to lose money,” according to a transcript of the call.
Excluding the single outflow, long-term net inflows totaled $31.3 billion; net inflows for equity, fixed income and multiasset strategies were $21.9 billion, $8.7 billion and $2.6 billion, respectively, offset in part by net outflows of alternatives, totaling $1.9 billion.
Institutional investors continued to seek passive strategies in the third quarter, according to Mr. Fink.
“In the Americas, clients looked out for index and multiasset strategy solutions. This resulted in $3 billion in index equity and about $4 billion in our multiasset class products,” Mr. Fink said, while there were some outflows in some active products, as well as some outflows in the Asia-Pacific region.
For the third quarter BlackRock reported net income of $610 million, up 9% from the previous quarter and up 17% from the year before.
Revenue totaled $2.3 billion, up 4.1% from the previous quarter and up 4.2% from the previous year.