BlackRock's AUM inches up 0.5% in quarter, net inflows remain strong

BlackRock had $6.317 trillion in assets under management as of March 31, up 0.5% from the previous quarter but 17% higher than a year earlier, the firm said Thursday in its earnings statement.

Net inflows to the firm's long-term strategies were $54.6 billion, compared to $80.6 billion in the fourth quarter and $80.34 billion in the first quarter 2017.

Of the first-quarter net inflows, $26.7 billion went into fixed income, $26.5 billion to equities and $3.4 billion to alternatives. Multiasset strategies saw net outflows of $2 billion.

"Investors experienced a spike in market volatility during the quarter, driven by concerns over global trade policies, a heightened focus on rates and inflation, and headlines in the technology sector," Laurence D. Fink, BlackRock chairman and CEO, said in the earnings release. "Institutional investors, in particular, reacted to these factors by derisking and rebalancing."

BlackRock's institutional business experienced long-term net inflows of $3.3 billion in the latest quarter, compared to $14.4 billion for the fourth quarter and $11.2 billion for the first quarter 2017. Institutional active strategies saw long-term net outflows of $7.1 billion in the quarter, while long-term passive strategies saw net inflows of $10.4 billion. Net institutional inflows into alternatives for the quarter totaled $1.4 billion.

Assets in BlackRock's institutional business were $3.454 trillion as of March 31, unchanged from three months earlier and up 13% from March 31, 2017.

The decline in institutional inflows in the latest quarter vs. the fourth quarter was related to the loss of one large unnamed client that closed its $4.1 billion multiasset portfolio, as well as an additional $4.1 billion from fixed-income strategies. Mr. Fink said in the earnings statement that the fixed-income outflows were the result of profit-taking and cash-repatriation planning by institutional clients.

BlackRock's iShares exchange-traded fund business saw long-term net inflows of $34.65 billion, vs. $54.8 billion in the fourth quarter and $64.5 billion in the first quarter 2017. IShares assets totaled $1.768 trillion as of March 31, up 1% from three months earlier and 25% higher than the end of the first quarter 2017.

BlackRock's global retail business saw long-term net inflows of $16.7 billion in the first quarter, compared to $11.4 billion in the fourth quarter and $4.6 billion in the first quarter of last year.

The firm's revenue was $3.58 billion, down 5% from the first quarter but up 16% from a year earlier. Net income was $1.09 billion, down 53% from $2.3 billion in the previous quarter but up 27% from $859 million in the same period a year ago.

Daniel Fannon, equity analysts at Jefferies & Co., said in a note to clients that the revenues were slightly better than expected, although investment performance fees were weaker than expected. Also, the quarter was the weakest for net long-term inflows since the start of 2017.