BlackRock Inc. hauled in $51 billion of client cash to its long-term investment funds in the second quarter, pushing the world’s largest money manager to a record $10.6 trillion of assets.
Investors added $83 billion to ETFs and $35 billion to fixed-income overall, New York-based BlackRock said Monday in a statement.
“Organic growth was driven by private markets, retail active fixed income, and surging flows into our ETFs, which had their best start to a year on record,” Chief Executive Officer Larry Fink said in the statement.
The company also had $30 billion in net flows to cash-management and money-market funds in the period. Total net flows were $82 billion. Net flows to the long-term investment funds missed the $86 billion average estimate of analysts surveyed by Bloomberg.
BlackRock’s flows were affected by a roughly $20 billion active fixed-income redemption from a large insurance client, Chief Financial Officer Martin Small said on the firm’s call with analysts. The firm reported $35 billion of institutional outflows from its index funds.
Fink said on the call that it was recently awarded its first large-scale general account allocation for a private structured-credit mandate. The firm’s ETF inflows included growth in its higher-fee Strategic and Precision products.
BlackRock added about $2 billion to its illiquid alternatives business. Performance fees rose $46 million from a year ago, boosted in part by higher revenue from liquid alternatives.
Shares of BlackRock fell 0.6% to $823.41 at 9:45 a.m. in New York.
Money managers are beginning to rebound after a bumpy ride during the Federal Reserve’s interest-rate hikes and volatility in bond markets over the past two years. The S&P 500 index rose about 4% in the second quarter after a roughly 10% increase in the first three months of the year, and investors are wagering that the central bank will start cutting rates in September from a four-decade decade high.
That’s fueling flows of client cash into fixed-income funds, with asset managers pointing out the risks of staying too long in money-market funds that may no longer be able to offer 5% yields once rates come down.
“The robust fixed-income flows that BlackRock delivered this quarter should boost investor confidence that the long-awaited great rotation to fixed income is beginning to materialize,” Kyle Sanders, a senior analyst at Edward Jones, said in a note Monday.
BlackRock is positioning itself as a one-stop shop for a wide range of actively managed and index ETFs and mutual funds, while seeking to expand its business in fast-growing and lucrative private assets. The company’s $12.5 billion acquisition of Global Infrastructure Partners will add about $100 billion of assets to the company and vault the firm into the top ranks of infrastructure investors.
Last month, BlackRock announced a £2.55 billion acquisition of Preqin, the private-markets data firm.
Fink and senior executives said Preqin will enable BlackRock to “index the private markets” and use data and analytics to broaden access to alternative assets.
BlackRock’s adjusted net income per share rose 12% from a year ago to $10.36, beating Wall Street’s average estimate of $9.93. Revenue increased 8% to $4.8 billion from a year ago.
Shares of BlackRock have risen about 2% this year as of market close Friday, trailing the 18% advance of the S&P 500 Index.
