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Growth in low-fee products helps boost BlackRock profits
[NEW YORK] BlackRock Inc, the world's largest asset manager, reported a better-than-expected quarterly profit on Tuesday, showing resilience in what has been a punishing market for many asset managers' earnings.
Despite what CEO Larry Fink conceded was a difficult market for investors, who moved to generally lower-fee bond investments and index funds, BlackRock's "long-term" products absorbed US$55.1 billion in cash, up from US$35 billion a year earlier. The company's assets under management grew to over US$5 trillion.
That helped net income rise 3.8 per cent to US$875 million, or US$5.26 per share, in the third quarter ended Sept 30 from US$843 million, or US$5.00 per share, a year earlier.
The New York-based company has managed to stand above the fray because it owns iShares, the leading firm in exchange-traded funds. Many such products charge relatively low fees and aim simply to track the market, not beat it.
"The whole industry is facing what I would call turmoil," said Mr Fink, who said investors are struggling in part because central banks have pushed interest rates so low. "It's really tough for our clients."
When adjusted to strip out some compensation and distribution costs, BlackRock said it earned US$5.14 per share, beating the average analyst estimate of US$5.00, according to Thomson Reuters I/B/E/S.
BlackRock's iShares ETF business took in US$51.3 billion in new money, up from US$23.3 billion a year earlier. About half of that cash went into stock funds.
Across all of its products, BlackRock attracted a net US$37 billion into long-term fixed income investments and US$13.4 billion in equity investments, while US$1.8 billion went into alternative investments.
As of Monday's close of US$354.60, BlackRock's shares had risen about 4.1 per cent since the beginning of the year.
A grouping of the company's peers measured by the Dow Jones US Asset Managers Index fell 4.4 per cent.