BlackRock’s assets under management jumped 13% to $7.3tn during the second quarter © Bloomberg

BlackRock surpassed profit estimates in the second quarter as the world’s biggest fund manager attracted $100bn in new client funds during a bumper Wall Street rally.

The New York group’s assets under management jumped 13 per cent over the period to $7.3tn, reversing a large fall at the start of 2020 and coming within just a whisker of the record high at the end of last year.

The strong inflows boosted the fees BlackRock earns from servicing client portfolios by 2 per cent. Its net profits rose by a fifth compared with the previous year to $1.2bn while revenue rose 3 per cent to $3.6bn.

Chief executive Larry Fink said the roaring run in US stocks, which have returned to the levels at which they started the year, was evidence that stimulus from central banks had calmed investors. “I remain cautiously optimistic about our path to recovery,” he said on Friday.

The group delivered $7.85 in diluted earnings per share on an adjusted basis for the quarter, 13 per cent above analysts’ estimates.

US stocks posted the best rally since 1998 in the second quarter, a strong rebound from a 20 per cent drop in the first three months of 2020. Wall Street’s biggest banks also benefited from the frenetic market activity in the second quarter with JPMorgan Chase, Bank of America, Goldman Sachs and Morgan Stanley all reporting strong rises in bond trading revenues.

Inflows for the quarter were smaller than those in the same period a year earlier but were three times the amount seen in the first quarter, when the pandemic took hold.

Line chart of Rebased showing BlackRock outperforms listed peers

The company’s exchange traded funds business, iShares, brought in $51bn of the inflows, driven by a record $57bn flowing into bond ETFs.

“There used to be a lot of fixed income investors who were worried about ETFs because of concerns about liquidity,” said Kyle Sanders, an analyst with Edward Jones. “Now we’re seeing more and more institutional investors embrace the fixed income platform — that will be a nice growth driver for BlackRock over the next few years.”

BlackRock still trailed Vanguard, the world’s second-largest fund manager, in ETF inflows in the first half of the year, according to data from ETFGI.

BlackRock has taken a prominent role during the pandemic after being chosen to manage the Federal Reserve’s bond-buying programme, although this attracted criticism given that the central bank’s scheme includes purchasing ETFs, even the asset manager’s own funds. BlackRock is not charging the Fed fees related to any ETF purchases.

The group’s financial markets advisory unit, which manages the Fed programme and works with central banks around the world, generated $17m in revenue, down on the same quarter a year ago.

Technology revenue hit a record $278m, almost a fifth above the same period last year. The big rise was driven by BlackRock’s Aladdin platform, which links investors to the markets, ensures portfolios hold the right assets and measures risk across a wide range of assets.

Column chart of Quarterly technology and service revenue ($m) showing Aladdin powers BlackRock's tech revenue to record high

BlackRock’s shares were close to the year’s high point reached in February and just 5 per cent from the record reached two years ago in morning New York trading. The stock is up 13 per cent this year compared with an 8 per cent decline for fund managers in the S&P 500 index of US blue-chips.

Mr Fink added that the asset manager’s New York-based staff would return to work in “split operations” on Monday.

This article has been amended to reflect the revenue generated by the financial markets advisory unit.

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