Even with an influx of client cash, BlackRock reported a year-over-year decline of 14.41% in assets under management to total $8.59 trillion at the end of the fourth quarter compared with AUM of $10.01 trillion in the same period a year ago.
In a quarter-to-quarter comparison, the firm's assets under management in the quarter ended Dec. 31 were up 7.95% from the third quarter of 2022 when the firm's AUM totaled $7.96 trillion.
Despite the decline in total assets in the fourth quarter, BlackRock had $145.7 billion of long-term net inflows, including cash management. Without cash management, which was down $31.9%, net inflows totaled $113.7 billion, according to the firm's earnings release Friday.
Investors have been buffeted by the threat of a recession and the efforts of the Federal Reserve to tame inflation by ratcheting up interest rates. The S&P 500 tumbled 19% last year, while the Bloomberg US Aggregate index, which includes Treasuries, investment-grade corporate bonds as well as mortgage- and asset-backed securities, plunged a record 13%.
"We are not immune to complex and volatile market conditions," Chief Executive Officer Larry Fink, 70, said in a separate memo to staff. "The current operating environment is unlike anything we've seen in decades, and 2022 was a year of huge transition for geopolitics and markets. We saw a rewiring of global supply chains, soaring inflation, hawkish monetary policy and a deepening of political polarization."
By client type, exchange-traded funds attracted net inflows $89.7 billion in the fourth quarter. Total institutional net flows totaled $70.9 billion, with active strategies notching $76 billion in net flows while passive strategies were down $5.2 billion.
Retail assets were down $14.8 billion, the report showed.
By product type, fixed-income strategies brought in $115.5 billion of net inflow and equity funds had net inflows of $29.7 billion. Multiasset had a total of $2.1 billion in net inflows. BlackRock's combined alternative investment strategies had total net outflows of $1.7 billion in the fourth quarter with illiquid alternative strategies attracting $4.4 billion of net inflows while liquid active strategies had net outflows of $1.9 billion and currency and commodities strategies had net outflows of $4.2 billion.
Regarding net inflows, Gary Shedlin, BlackRock's chief financial officer, told analysts during the firm's earnings call that BlackRock captured one-third of all long-term industry flows in 2022.
Mr. Shedlin also noted that BlackRock is making a minority investment in 401(k) provider Human Interest and will lead a financing round to support the firm's growth.
With respect to earnings, fourth quarter 2022 revenue totaled $4.34 billion, up 0.6% from $4.31 billion in the third quarter, BlackRock's report showed.
In a year-over-year comparison, BlackRock's revenue was down 15.1% compared with the fourth quarter of 2021, when revenue totaled $5.1 billion.
BlackRock's fourth quarter net income totaled $1.3 billion, compared with $1.4 billion in the prior quarter.
Among other issues, Mr. Fink noted that BlackRock had dismissed 500 employees as part of a restructuring plan during the Friday conference call.
Despite the layoffs, Mr. Fink said BlackRock's employee base will be 6% larger than a year ago, noting "we must invest in people and technology."
Mr. Fink also referred to the amount of attention BlackRock has been subject to regarding ESG issues.
Republican officials in several states have collectively pulled more than $3 billion from BlackRock's funds after criticizing the company's views on ESG investing. The firm has become a political punching bag from forces on both ends of the spectrum, with some on the right alleging its policies harm the fossil-fuel industry and others on the left arguing it's not doing enough to respond to climate change.
"BlackRock's story over the past year was dealing with various people and the media. We are accused of being too progressive and that we are too conservative," Mr. Fink said.
Bloomberg contributed to this story.
