The large redemption by the Fed Thrift board also affected institutional flows resulting in net outflows of $36.8 billion in the quarter compared with $27.6 billion of net inflows in the previous quarter and net outflows of $5 billion in the year-earlier quarter.
Passive assets managed for institutional clients experienced net outflows of $80.3 billion in the second quarter, compared with net inflows of $11.1 billion in the first quarter and net outflows of $7.5 billion in the second quarter of 2020.
Active institutional strategies experienced net inflows of $43.5 billion in the quarter ended June 30 vs. net inflows of $16.5 billion in the quarter ended March 31 and net inflows of $2.5 billion in the quarter ended June 30, 2020.
Among other investment categories, BlackRock’s ETF strategies had net inflows of $75.1 billion in the quarter, compared with $68.5 billion in the prior quarter and $51 billion in the year-earlier 2020.
Laurence D. "Larry" Fink, BlackRock's chairman and CEO, told analysts on the earnings call that BlackRock's iShares business exceed $3 trillion for the first time in June, attributing the milestone to strong net inflows in the quarter.
He reminded analysts of the growth timeline of the iShares business: "It took 15 years for iShares to get to $1 trillion in assets. It took iShares only another five years to get to $2 trillion in assets and most recently, it took iShares only two years to get to $3 trillion."
In contrast, retail inflows in the second quarter were $21.4 billion, down from a recent high of $36.5 billion in the first quarter. Retail net inflows in the second quarter ended of 2020, totaled $16.2 billion.
Cash management net inflows also were down, falling to $23.3 billion in the quarter compared with $39.2 billion of net inflows in the previous quarter and $24.2 billion in the year-earlier quarter.
Mr. Shedlin told analysts that other areas of strong investment growth in the second quarter included active institutional strategies, which had net inflows of $43.5 billion, compared with $16.5 billion of net inflows in the first quarter.
A large part of the net inflows into active institutional strategies came from BlackRock being hired in June customized outsourced CIO mandate from British Airways, Harmondsworth, England, for two pension funds with total assets of £21.5 billion ($29.9 billion).
BlackRock is managing the OCIO portfolios of the £19.4 billion New Airways Pension Scheme and the £7.4 billion Airways Pension Scheme. Both asset figures are as of March 31, 2020, the latest data available. About £5.3 billion of the APS fund’s liabilities were insured through buy-ins prior to the OCIO deal with BlackRock. Management of the remaining £2 billion of non-insurance assets in the APS was transferred to BlackRock as part of the agreement.
Mr. Fink said during the call that the British Airways hire is indicative of the kind of conversations that BlackRock currently is having with investors around the world that focus on investment outcomes, a focus of the firm.
"This partnership represents the largest of its kind in the British pension fund industry, and we believe it will be a catalyst for more transformational change in the industry," he said.
In response to an analyst's question about BlackRock's pipeline of potential investors, Mr. Fink said he couldn't provide specifics but stressed the firm is talking about investment possibilities with many potential investors given "elevated opportunity."
In recognition of the "commitment to our clients and each other in incredible ways throughout" the COVID-19 pandemic, Mr. Fink said BlackRock is giving its nearly 17,000 employees through the director level a permanent 8% raise in their base salary, effective Sept. 1.
He added that BlackRock strives to create an environment that makes employees feel supported and where they can "thrive and grow and build a career and a life."
In terms of profitability, BlackRock's net revenue was up 9.6% to $4.8 billion in the quarter ended June 30 and up 32.1% compared with the quarter ended June 30, 2020.
BlackRock's technology services revenue was $316 million, up 3.3% in the first quarter and up 13.7% compared with the second quarter of 2020. Technology services revenue includes fees from the firm's Aladdin risk management system.
Net income also was up for BlackRock, to $1.4 billion in the second quarter, up 14.9% from the first quarter, and up 13.5% from the second quarter of 2020.
