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BlackRock now manages over $10 trillion in assets

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BlackRock now manages over $10 trillion in assets

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Black rock Inc.

NOIR -2.19%

posted higher quarterly profit as market gains and new client funds lifted the investment firm’s assets under management above $10 trillion for the first time.

The portfolio manager reported net income of $1.64 billion, or $10.63 per share, in the fourth quarter, up 6% from $1.55 billion, or $10.02, at the same time a year earlier. Analysts polled by S&P Global Market Intelligence were expecting earnings per share of $10.22.

Revenue rose 14% to $5.11 billion, slightly below analysts’ average estimate of $5.15 billion.

Shares of the company fell 2.7% on Friday in afternoon trading. Analysts said some investors feared interest rate hikes and rising spending could weigh on 2022 results.

BlackRock ended the year with $10.01 trillion in assets, the first time a fund manager exceeded the milestone. The company is the top seller of exchange-traded funds, and demand for ETFs and other low-cost investments that track stock indices has fueled BlackRock’s transformation from a bond investment specialist into the biggest fund manager in the world.

In the fourth quarter, however, BlackRock benefited from strong inflows into its actively managed investments. Active funds brought in nearly half of the $211.7 billion in net new client funds the company added during the period.

The resumption of active activity, which includes stock and bond selection funds and alternative investments like infrastructure, real estate and private debt, has helped BlackRock counter downward pressure on fees faced by all fund managers as many investors turned to index funds. While active funds make up about a quarter of BlackRock’s assets, they contributed nearly half of management fees during the fourth quarter.

In a conference call with analysts, BlackRock Chairman and CEO Larry Fink said the company’s active businesses are now benefiting from the developments it has made to both its investment teams and its business organization. Large pension funds, endowments and other institutional clients are turning to a handful of asset managers to oversee more of their assets, Fink said. It also helps BlackRock, as one of the few companies with both large active and passive platforms.

“We’re probably the best-positioned organization in the world to seize these types of opportunities,” he said. “If anything, I think that momentum will pick up in the future.”

Some investors are concerned that BlackRock’s active investing business will run out of steam in the new year, said UBS Group analyst Brennan Hawken. AG

. Much of the company’s inflows in the fourth quarter went into bond funds.

“As you’ve seen in the rates market since the start of the year, rates are falling quite sharply,” Hawken said. “The idea that this strength in fixed income would continue may not be a home run.”

BlackRock’s annualized commission rate fell slightly in the fourth quarter from the third, signaling that the fund manager’s revenue growth may slow, he said.

During Friday’s call, BlackRock’s chief financial officer, Gary Shedlin, said the official plans to increase its workforce by up to 10% this year as it expands its business. Continued technology investments will help increase core general and administrative expenses by 15 to 20 percent, he said.

For the year, BlackRock earned $5.9 billion, or $38.22 per share, on revenue of $19.37 billion.

Shares of BlackRock fell $23.44 to $844.14 on Friday afternoon. The stock is up 14% over the past year.

Write to Justin Baer at justin.baer@wsj.com

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BlackRock now manages over $10 trillion in assets

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