Assets managed by BlackRock hit a record $10.65 trillion in the second quarter, driven by rising client asset values and strong inflows into the company’s exchange-traded funds, the world’s largest asset manager reported on Monday.
The surge in assets was fueled by stock markets reaching record highs, spurred by optimism about a soft landing for the U.S. economy and excitement over artificial intelligence-linked stocks.
The S&P 500 index rose about 4% during the quarter, pushing BlackRock’s assets under management to $10.65 trillion, up from $9.43 trillion a year ago and $10.5 trillion in the previous quarter.
BlackRock anticipates closing two acquisitions in the second half of the year to enhance its presence in infrastructure investments and private markets, key growth areas.
“We see unbelievable growth opportunities for our clients and shareholders for 2024 and beyond,” said BlackRock’s chairman and CEO Larry Fink during a conference call.
He highlighted significant potential in energy transition investments and AI data centers. “We are wildly bullish as more and more clients are going to be using infrastructure debt,” he added.
In June, BlackRock agreed to acquire private markets data provider Preqin in a deal worth nearly $3.2 billion.
This follows BlackRock’s $12.5-billion acquisition of Global Infrastructure Partners, positioning the firm as a leader in global infrastructure investments.
“There’s growth in private markets … but more importantly you can charge much, much higher fees on private assets than you can on an iShares ETF,” noted Kyle Sanders, senior equity research analyst at Edward Jones.
“They want to move into higher-margin, higher-fee products, and alternatives would be at the top of the list.”
BlackRock reported total net inflows of $81.57 billion in the quarter, slightly above the $80.16 billion from the previous year. Exchange-traded funds accounted for $83 billion of these flows, marking their best start to a year on record.
The company is optimistic about debt inflows, anticipating that investors will shift from high-yielding cash to riskier fixed income products as the Federal Reserve lowers interest rates.
“We’re seeing clients around the world recalibrate their risks,” said Fink.
BlackRock’s shares rose slightly after early declines, having gained about 2% this year compared to the S&P 500’s 18% rise.
Cathy Seifert, vice president at CFRA Research, noted that higher revenue growth expectations may have tempered Monday’s flat share performance.
Investment advisory and administration fees increased 8.6% to $3.72 billion, while technology services revenue rose 10% to $395 million, driven by demand for its Aladdin platform.
BlackRock’s total revenue grew 8% to $4.81 billion, with net income rising to $1.50 billion, or $9.99 per share, from $1.37 billion, or $9.06 per share, a year earlier.