BlackRock profit rises 10% as demand for ETFs boosts assets

BlackRock Inc., the world’s biggest money manager, said first-quarter earnings rose 10% as its exchange-traded stock funds drew client cash and assets increased.

Net income climbed to $632 million, or $3.62 a share, from $572 million, or $3.14, a year earlier, the New York-based company said today in a statement. Excluding certain items, BlackRock’s adjusted earnings of $3.65 a share beat the $3.57 average estimate of 20 analysts surveyed by Bloomberg.

Chief Executive Officer Laurence D. Fink, 60, has reorganized BlackRock’s senior leadership and last month announced 300 job cuts. Last year, BlackRock created a series of lower-fee ETFs to reverse a decline in its U.S. market share and in March announced a partnership with Fidelity Investments as it seeks to sell more ETFs directly to U.S. retail investors. BlackRock gathered $40.5 billion in the first quarter, boosting assets 3.8% to $3.9 trillion.

Net long-term deposits “were solid led by strength in equity ETFs and multi-asset products,” said Daniel Fannon, a San Francisco-based analyst at Jefferies & Co., who had expected clients to put $25 billion into BlackRock funds during the quarter.

BlackRock rose 0.7% to $255.64 at 9:37 a.m. in New York. The shares gained 28% this year through yesterday, compared with the 26% increase in the 20-member Standard & Poor’s index of asset managers and custody banks.

Equity Rally

Investors have put money into equities this year amid signs of a strengthening economic recovery and a stock-market rally. BlackRock drew $26.3 billion into its stock ETFs, as clients pulled $1 billion from those that track bond markets. Multi- asset products gathered $9 billion. Investors pulled money from BlackRock’s active products, where managers aim to beat benchmarks by security selection, removing $6.9 billion from active stock funds and $2.4 billion from their fixed-income counterparts.

“We have not seen any large major change in attitude in bonds,” Fink said today in a telephone interview. “I do believe we’re just not seeing the same investor appetite for long-dated bonds and I think that’s going to persist for some time.”

Fink, who co-founded BlackRock in 1988, said today during a conference call with investors that he doesn’t see evidence of a large-scale shift into stocks from bonds, or ‘great rotation,’ as global and high-yield bonds continue to attract investors seeking to boost returns. While investors are moving money from low-yielding cash accounts into equities, they are still cautious about the stock market, Fink said.

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