BlackRock, the world’s largest asset manager, announced a significant increase in its assets under management (AUM) to approximately $10.5 trillion in the first quarter, marking a record high.
This rise was accompanied by a substantial 36% growth in profits, largely driven by the recovery in global equity markets which enhanced the company’s investment advisory and administration fees.
The rebound in equity markets was triggered by growing anticipation that major central banks around the globe would halt further monetary tightening and possibly reduce rates, which positively impacted AUM.
Specifically, BlackRock’s AUM saw a 15% increase from the previous year, while its primary revenue sources—investment advisory and administration fees—grew by nearly 8.8% to $3.63 billion.
Despite these positive trends, the company’s total net inflows decreased to $57 billion from $110 billion in the prior year, as clients remained cautious, awaiting potential interest rate cuts before re-engaging with riskier investments.
This cautious stance among investors is reflected in the current soft inflows, though analysts predict a revival in asset management industry flows once rate cuts commence.
This would likely motivate investors to move their cash reserves into higher-risk assets.
The firm also reported an 11% increase in total revenue, amounting to $4.73 billion for the quarter.
This growth was fueled by higher performance fees and technology revenue, along with the effects of stronger markets on average AUM.
BlackRock’s technology services, especially its Aladdin investment management platform, also saw a revenue boost, up about 10.9% to $377 million, indicating sustained market demand.
Net income for BlackRock rose significantly in the first quarter, reaching $1.57 billion, or $10.48 per share, up from $1.16 billion, or $7.64 per share, in the same period last year.
Despite these strong quarterly results, BlackRock’s shares have fallen about 3.2% this year, which contrasts with the broader market, as the S&P 500 index has climbed 9%.
The asset manager’s shares were up 2.6% in premarket trading following the earnings report.
BlackRock continues to serve a diverse global client base, including sovereign wealth funds, insurance companies, and large corporations, providing comprehensive investment management and technology services.