The fourth quarter continued a positive storyline for BlackRock Inc., with $98 billion in net inflows, while many other money managers saw net outflows or tiny net inflows.
Those developments capped a year in which net outflows for active strategies hit a record high and shares in asset managers fell before a post-election rebound. Flat profits and revenue dogged most publicly traded asset managers, but their operating margins remained high.
For 2016, BlackRock, the world's largest asset manager with $5.1 trillion in assets under management, reported a record $202 billion in net inflows, riding the growing popularity wave of passive strategies and exchange-traded funds, said Craig Siegenthaler, a managing director and equity analyst with Credit Suisse Group, New York.
Passive strategies and ETFs made up $3.2 billion of New York-based BlackRock's total assets under management, show company statistics. Inflows for the fourth quarter ended Dec. 31 included $49.3 billion into BlackRock's iShares ETF unit.
Vanguard Group, the Malvern, Pa., manager with the $3.9 trillion in assets, was another major beneficiary of net inflows, with $322.8 billion for the year. The company, known as a leader in passive investing, reported a net $77.3 billion into U.S. mutual funds and ETFs in the fourth quarter. Vanguard is not publicly traded; it is owned by investors in its funds.
“There are a few guys winning a lot of the business and there's a lot of guys losing a little bit of business,” said Mr. Siegenthaler.
He said as assets move from active strategies, it sets up a positive scenario for the small number of managers specializing in passive investing: BlackRock and Vanguard as well as State Street Global Advisors, Boston. Mr. Siegenthaler said that leaves a majority of asset managers — those that specialize in active strategies — on the losing end.
Still, State Street Corp., the parent of SSGA, reported net outflows of $42 billion in 2016, which company officials attribute to redemptions in money market funds and passive equity strategies. SSGA's ETF business, however, had positive inflows in the quarter and the year.
SSGA saw $16 billion in net inflows for the fourth quarter, but that was tempered by net outflows of $36 billion in the third quarter and $35 billion in the second quarter. In the first quarter, it reported $13 billion in net inflows.