By Saqib Iqbal Ahmed and Trevor Hunnicutt
NEW YORK (Reuters) – BlackRock Inc. (NYSE :), the world's largest asset manager, reported first-quarter earnings that exceeded expectations and earned $ 65 billion from new investor money as global financial markets rebounded from an unstable fourth quarter.
Total managed assets grew 3% to $ 6.52 trillion in the quarter to March 31 from a year earlier, amid a broad-based rebound in global equity markets. Assets have slipped below $ 6 trillion amid market turmoil late last year.
Total quarterly net inflows on all types of products jumped 13.6 percent to $ 64.67 billion from the previous year.
Overall, the company sold $ 59 billion in shares, bonds and other "long-term" investment funds, up from $ 43.6 billion in the quarter ended December 31.
BlackRock shares rose 2.2% at $ 461.56 in early trading.
The US economy is accelerating again after a slowdown and markets are gearing up for "big" inflows into stocks, BlackRock Inc chief executive Larry Fink told Reuters in an interview on Tuesday.
"I believe people are still at low risk, despite having a big rebound," Fink said.
The benchmark stock index, which sank 14 percent in the last three months of 2018, rebounded by 13 percent in the first quarter, its best performance since the third quarter of 2009.
BlackRock lost more than $ 26 billion in equity portfolios during the first quarter, but this was more than offset by a surge in fixed income of nearly $ 80 billion. Long-term investment rose $ 59 billion.
"The investment flow looks stronger than we expected," said Kyle Sanders, an analyst at financial services company Edward Jones based in St.
"BlackRock has a very strong reputation in fixed income management and it looks like the asset class is favored with a declining interest rate. I think it encourages better than expected asset flows," Sanders said.
Inflows of institutional funds grew almost nine-fold to $ 29.12 billion from a year ago.
Net income attributed to BlackRock fell to $ 1.05 billion, or $ 6.61 per share, in the first quarter, from $ 1.09 billion, or $ 6.68 per share, a year earlier. That far exceeded analysts' expectations for a profit of $ 6.13 per share, according to IBES data from Refinitiv.
BlackRock said the iShares branded ETF took $ 30.69 billion in new money, compared with $ 81.40 billion in the fourth quarter.
Revenue from technology services, the main focus area for BlackRock, grew 11 percent to $ 204 million.
However, companies continue to feel a pinch of cost pressures amidst the ongoing industry shift from high-cost, actively managed mutual funds to low-cost passive investment products.
Base costs fell 5% year-on-year, mainly due to the negative market in the fourth quarter and the stronger US dollar which eroded the costs they collected, said BlackRock.
"I think it's quite famous that costs will go down, not only for BlackRock but for every asset manager just because they are based on average market values throughout the quarter and we start the quarter at a very low point," said Edward Jones. .