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January 17, 2013 2:10 pm
“We are seeing a broad-based movement into equities worldwide”, said Larry Fink, chief executive. “No question, the move back into equities is one of the mega trends we witnessed in the fourth quarter, and that has continued into the first 15, 16 days of the year”.
However he said the flows – predominantly into passive exchange traded funds rather than actively managed equity products – reflected the perils of owning bonds offering very low yields and was not yet a re-embrace of risk taking.
“Clients are analysing the risks in longer term bonds and saying ‘I could do better in equities’. It’s a relative value trade, not a re-risking”, he said.
Assets under management rose 8 per cent from the year before, with revenues up 14 per cent to $2.54bn. Net income was $690m, a quarter more than the year before as margins were boosted by rising performance fees.
Net inflows of $35.7bn to the iShares exchange traded funds business during the quarter came after BlackRock cut fees on some ETF products in October, and follows the merger of the iShares and retail sales teams this year as the company reshaped its marketing strategy.
However, the group still experienced small outflows in actively managed products, with net stock outflows of $4.5bn, and outflows from fixed income of $4.7bn.
William Katz of Citigroup said in a note to clients that BlackRock “had set a high bar for the rest of the sector”, and that diverse sources of inflows “should further debunk the notion that BlackRock is too big to generate competitive (if not superior) organic growth”.
The results come after a year during which Mr Fink shuffled management responsibilities, reorganised sales and investment teams and launched a new branding campaign centred on the question: “So what do I do with my money?”.
The chief executive said that improved investment performance in its scientific equity arm reflected a two to three year process of replacing investment teams that was now largely complete. “Its all starting to pay off”, he said.
BlackRock increased its quarterly dividend by 12 per cent to $1.68 a share and expanded its authority to buy back up to 10m shares. Last year the group repurchased almost 9.1m shares, about 5 per cent of those outstanding.
Its shares ended the day up 4.4 per cent to $232, approaching for the first time in three years the $243 peak hit in January 2010.
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