BLK BlackRock Inc

By Sarah Krouse and Austen Hufford 

Assets at the world's largest money manager topped $5 trillion for the first time by the end of the third quarter as investors continued to pour billions into lower-cost index-tracking funds.

BlackRock Inc. said Tuesday that it had $5.12 trillion in assets under management, up 13.6% from a year ago. Profit for the New York firm rose, but revenue fell as performance fees decreased.

BlackRock's flows during the quarter highlight an ongoing shift in investor taste for lower-cost passive funds that track the performance of indexes. Roughly 93% of BlackRock's $55 billion in long-term net inflows during the third quarter came from its iShares exchange-traded fund unit.

The iShares business, which comprises about a quarter of BlackRock's assets under management, pulled in net new money across all asset classes. Meanwhile investors pulled a net $7.8 billion from BlackRock's actively-managed equity strategies. The firm's active bond strategies attracted a net $10.2 billion during the quarter

BlackRock's path to $5 trillion began in 1988, when the firm started as a fixed-income specialist as part of The Blackstone Group in a single Park Avenue office. By 1999, when the money manager went public, it had gathered $165 billion in assets.

A series of canny deals in the mid- to late-2000s added to its heft and its mix of businesses. The firm bought Merrill Lynch Investment Managers in 2006, a transaction that helped it expand globally and bolster its stock picking and multiasset businesses. The deal boosted BlackRock's assets under management to about $1 trillion for the first time.

Then, in 2009 with $1.3 trillion in assets, it acquired Barclays Global Investors, gaining a large exchange-traded fund business that helped it turn iShares into the world's largest ETF business. Assets under management more than doubled to more than $2.7 trillion as a result of the deal. ETFs trade on an exchange and typically track an index or other basket of assets.

Since then, the firm has worked to grow that passive-investing unit, gather assets globally, bolster its alternatives platform and gain more retail assets. It passed the $4 trillion mark in late 2013.

In all, BlackRock reported a profit of $875 million in the third quarter, up from $843 million a year prior. Per-share earnings grew to $5.26 from $5.00. Excluding certain items, BlackRock earned $5.14 a share, up from $5.00 a year earlier.

Revenue fell 2.5% to $2.84 billion.

Analysts had projected $5.00 a share in adjusted earnings on $2.88 billion in revenue, according to Thomson Reuters.

BlackRock shares, down 0.9% in the last three months, rose 0.7% in light premarket trading.

Write to Sarah Krouse at sarah.krouse@wsj.com and Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

October 18, 2016 08:42 ET (12:42 GMT)

BlackRock (NYSE:BLK)
Historical Stock Chart
From Mar 2024 to Apr 2024

BlackRock (NYSE:BLK)
Historical Stock Chart
From Apr 2023 to Apr 2024