Published by Wealth Briefing Asia – 18th July 2017
One of the biggest beasts in global financial services reported that AuM grew further and net income increased in the second quarter of this year.
BlackRock, the world’s largest listed fund management business, today reported total assets under management stood at $5.689 trillion at the end of June, 2017, up 16 per cent from a year ago, with net flows of $103.616 in the second quarter, and $168.215 billion in the six months to 30 June.
Net income rose 9 per cent year-on-year in Q2 to $857 million; revenues were $2.965 billion, up 6 per cent, the firm reported yesterday. (These figures are on a GAAP basis; on an adjusted basis, net income was $860 million, up 8 per cent.)
“While significant cash remains on the sidelines, investors have begun to put more of their assets to work. The strength and breadth of BlackRock’s platform generated a record $94 billion of long-term net inflows in the quarter, positive across all client and product types, and investment styles. The organic growth that BlackRock is experiencing is a direct result of the investments we’ve made over time to build our platform,” Laurence Fink, chief executive and chairman of BlackRock, said in a statement.
BlackRock is among a number of major fund management houses that have been affected by, and sought to profit from, the vogue for so-called “passive” investment products that have become popular because of their low cost and due to disenchantment with more expensive actively managed portfolios. BlackRock is parent of iShares®, the world’s largest brand of exchanged traded funds. AuM in the iShares suite went above $1.5 trillion in Q2, drawing in a record $74 billion of net inflows.
On the other hand, BlackRock’s active strategies generated $8 billion of net inflows, led by multi-asset, fixed income and alternative offerings; these flows contributed to “strong organic base fee growth this quarter”, Fink said.
Robo-strategy
As reported earlier this year, BlackRock has sought to thwart the perceived competitive threat from robo-advisory/investment models. It purchased a €30 million stake in Anglo-German digital investment house Scalable Capital. In June, meanwhile, the firm entered into a definitive agreement to acquire Cachematrix, a fintech firm that says it simplifies the cash management process for banks and their corporate clients.
“We continued to expand our digital distribution offerings this quarter with the announced acquisition of Cachematrix and minority investment in Scalable Capital,” Fink continued.
Fink said there has been “strong fundraising momentum” in illiquid alternatives [non-publicly traded assets], with $9 billion of inflows and commitments in this area so far this year, he added.
