BlackRock reported healthy first quarter gains in flows, profits and revenues, lifting the New York-based money management giant’s assets under management to a record $10.47 trillion as of March 31.
The firm's latest AUM was up 4.6% for the quarter and 15% higher from the year before.
Laurence D. Fink, BlackRock’s chairman and CEO, in an earnings call, exuded confidence, saying the firm's momentum "has never been stronger. The opportunity we have in front of us has never been stronger.”
BlackRock reported $76 billion in net long-term inflows for the quarter, approaching 40% of flows for calendar 2023, as well as double-digit gains for revenues, operating profits and earnings per share.
After $19 billion in net cash management outflows, BlackRock’s overall net inflows for the first quarter came to $57 billion.
Exchange traded funds remained the firm’s biggest magnet for investor allocations, with $67 billion in net inflows for the quarter — $14 billion of that total going to the bitcoin strategy BlackRock launched in January.
BlackRock’s institutional business reported net inflows of $2 billion — a modest gain which masked a continued pickup in flows for actively managed strategies. In line with recent trends, $15 billion of inflows for active mandates offset $13 billion in outflows for passive exposures.
Fink noted that BlackRock’s operating margins rose year on year by 180 basis points to 35.8%.
Martin Small, BlackRock’s chief financial officer, on the same earnings call, pointed to that $15 billion in active institutional inflows for the quarter as part of what he termed “some of the best” trends in organic fee growth that BlackRock has seen since the end of 2021.
Net flows of $57.2 billion, meanwhile, were down from $96 billion in the prior quarter and $110 billion for the year-earlier quarter.
Robert S. Kapito, BlackRock’s president, on the earnings call noted that with the U.S. yield curve still inverted, and short-term treasury paper yielding more than 10-year treasuries, “investors are currently getting paid to wait,” with BlackRock likely to benefit when a more normalized yield curve brings investors off of the sidelines.
Longer term, Fink and his fellow executives said they’re confident BlackRock will be able to continue logging healthy growth from its lofty asset base of $10 trillion.
Fink pointed to BlackRock's LifePath Paycheck offering, providing individual investors in the firm’s $470 billion LifePath target-date fund business with an annuity option, as a centerpiece of that bullish outlook.
With retirement set to “become a bigger and bigger issue,” the ability of an offering such as LifePath Paycheck to alleviate the uncertainties prospective retirees face in anticipating the recurrent income streams they’ll be relying on in retirement should drive considerable demand for the product, Fink said.
“We look at this as a major component of our future growth rates over the next three to five years,” Fink said.
Executives pointed to the coming acquisition of infrastructure heavyweight Global Infrastructure Partners, with more than $100 billion of AUM in infrastructure equity and credit strategies, as another springboard for continued growth.
And executives, in response to queries about whether additional acquisitions of private markets capabilities could be in the offing, left the door open for more.
Closing the GIP deal is by far BlackRock's top priority in the private markets space, but “if it makes sense one day we will continue to be open minded to pursue more private market opportunities,” Fink said.
