BlackRock's Profit Jumps on Bond, ETF Activity
July 17 2020 - 7:13AM
Dow Jones News
By Dawn Lim
Money management giant BlackRock Inc.'s quarterly profit rose
21% as investors leaned on its bond funds to make new bets in
volatile markets roiled by the coronavirus pandemic.
The investment firm posted second-quarter profit of $1.2
billion, or $7.85 a share, up from the year-prior period of $1
billion, or $6.41 a share. Its revenue rose 4% to $3.6 billion.
The world's largest asset manager ended the quarter with $7.3
trillion it manages for clients, up from $6.5 trillion in March. It
took in $100 billion in net new money, down from $151 billion in
the year-ago quarter.
The firm beat analyst revenue and profit estimates.
Asset managers came under acute pressure at the end of the first
quarter in March as markets sold off, But after the Federal Reserve
rushed in to stabilize markets, many investment firms reaped the
benefits of the Fed's intervention across a host of markets in the
second quarter. Higher asset prices translate to bigger revenues
for managers; they take a cut of fees on money they oversee for
investors.
BlackRock's gains signal that the firm stands to cement its
power in a world shaken by Covid-19.
Its exchange-traded-funds arm did a brisk business as traders
and financial institutions used ETFs to zip in and out of markets,
make wagers, or hedge risks during unprecedented volatility. ETFs
are collections of instruments that trade like stocks on exchanges.
BlackRock's ETFs took in $51 billion in the latest quarter, up from
over $36 billion in the year-ago period.
BlackRock sells software, including a suite of tools called
Aladdin, to banks and other institutions to evaluate financial
risks. Its technology services revenue -- which includes fees from
Aladdin -- rose by 17%. Many investors have struggled to price in
the risks of their trades with the U.S. stock market rallying even
as the U.S. faces a downturn with no end in sight.
That technology gives BlackRock a vantage point into markets and
helped the firm land a coveted, but highly scrutinized, role in
helping the Fed buy ETFs and bonds to support credit markets.
Write to Dawn Lim at dawn.lim@wsj.com
(END) Dow Jones Newswires
July 17, 2020 06:58 ET (10:58 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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