BlackRock's assets blow past $7T in milestone for investment giant
Breakthrough comes amid growing public suspicion of big platforms and big business
BlackRock Inc.'s assets scaled $7 trillion for the first time, putting the spotlight on the world's largest money manager's growing reach.
The investment giant took in $128.8 billion in net new money in the fourth quarter of 2019, where exchange-traded funds drew big inflows. That is up from the $49.8 billion in net flows in the year-ago period.
BlackRock's quarterly net profits rose 40 percent to $1.3 billion. The company's fourth-quarter earnings of $8.29 a share exceeded Wall Street forecasts. Analysts surveyed by Factset were expecting net profits of $1.2 billion, or $7.75 a share.
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BlackRock ended 2019 with $7.43 trillion in assets under management, an increase from $5.98 trillion exactly a year ago.
The passing of the $7 trillion mark follows a dramatic decade of growth fueled by the rise of funds that trade on exchanges and mirror markets. BlackRock today reaches millions of people with funds that are part of retirement savings, financial software that Wall Street banks and wealth managers rely on to monitor risks, and shareholder votes it casts on behalf of fund investors.
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The firm's success comes with new challenges. BlackRock and its chief executive, Laurence Fink, face public scrutiny over how the company is exercising its responsibility as a shareholder on behalf of its fund investors. The firm's growth as a provider of all kinds of financial products and technology comes at a time of growing public suspicion of big platforms and big business.
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In past quarters, an influx of new money hasn't always translated to higher profits or an increase in revenue, especially when the firm's mix of assets shifted into cheaper products. Intense competition in the asset-management industry has pushed fees of the most commonly-offered funds near zero.
In the latest quarter, BlackRock's revenue rose 16 percent to $3.98 billion, above analysts' forecasts.
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BlackRock's revenue from investment advisory, administration fees and securities lending in the quarter -- the biggest component of its revenue -- increased by 11 percent. Performance fees -- the money BlackRock gets for beating markets in actively managed strategies -- rose 139 percent.
The firm sells software, including a suite of tools called Aladdin used to evaluate financial risks, to banks and other institutions. The software sales helped increase technology services revenue by 34.9 percent.