BlackRock net income rises 24% as ETF deposits boost assets

BlackRock Inc., the world’s biggest money manager, said fourth-quarter earnings increased 24% as its exchange-traded funds drew client deposits and assets rose.

Shares rose the most in more than a year. Net income climbed to $690 million, or $3.93 a share, from $555 million, or $3.05, a year earlier, the New York-based company said today in a statement. Profit beat the $3.71 a share average estimate of six analysts surveyed by Bloomberg. BlackRock increased its quarterly dividend 12% to $1.68 a share and expanded its share buyback program.

Chief Executive Officer Laurence D. Fink, 60, in August reorganized BlackRock’s senior leadership and product distribution to revive investor deposits, and in October created a series of lower-fee ETFs in a bid to reverse a decline in its U.S. market share. The moves, and a decision by Vanguard Group Inc. to change the index provider for its funds, helped increase ETF deposits. Index-linked products drove the $47 billion in deposits during the quarter, contributing to a 3.2% increase in assets to a record $3.79 trillion.

“It was a very strong quarter for ETFs,” Luke Montgomery, a research analyst who covers asset managers at Sanford C. Bernstein & Co. in New York, said in an interview. BlackRock has “the advantage of being a very diverse platform, so they can still generate earnings growth without growth in active equities.”

ETF Deposits

BlackRock’s shares rose 4.4% , the most since December 2011, to close at $232 in New York. The stock gained 24% in the past 12 months, compared with the 27 percent increase in the 20-member Standard & Poor’s index of asset managers and custody banks.

Investors continued to pull money from actively managed stock and bond funds. BlackRock’s active equity funds had $5.4 billion in withdrawals and investors pulled $374 million from active bond funds during the quarter. Stock ETFs drew $30.1 billion in new money during the quarter, gathering more than six times the money gathered by their bond counterparts.

“We’ll still see flows into high yield, flows into higher income types of fixed income,” Fink said in a telephone interview today. “I’m not trying to suggest people are running away from fixed income, but we are seeing a more fulsome look at investable products.”

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