BlackRock’s AUM tops $5.4tn for first time amid record ETF flows

BlackRock’s assets under management topped $5.4tn at the end of the first quarter, thanks to surging sales of its iShares exchange traded funds.

The world’s largest asset manager handily beat Wall Street expectations for its latest quarterly earnings, released on Wednesday. At $5.23 per share, earnings were up by one-third compared to the first three months of 2016 and a consensus estimate of $4.89 – although the beat was partly the result of a tax change.

There was a miss on the top line however. At $2.82bn, revenues were up 8 per cent, but analysts had been forecasting $2.87bn according to Thomson Reuters. Quarterly net income overall was $862m, up from $657m a year ago.

The company said its low-cost iShares products accounted for $64bn of the total $80bn in net inflows. Larry Fink, BlackRock chief executive, said it is no longer just passive investors who are using ETFs these days:

Both retail and institutional investors continued to utilise BlackRock’s iShares ETFs as the building blocks for their portfolios and in combinations to drive active returns.

BlackRock has assembled what is effectively an investment supermarket, selling products to retail and institutional investors across the globe and across most investment styles, from low-cost tracker funds to hedge fund-like products in equities, fixed income and alternatives.

One dark spot in the first quarter results was in its active equity business, which the company restructured last month. Institutional funds in this division bled $4.7bn of assets.

The company boasted a 100 basis point increase in margins, and a drop in its effective tax rate to 24 per cent from 29 per cent.

BlackRock shares, up 7 per cent over the past year, was largely unchanged in pre-market trading.