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BlackRock Manages Strong Growth in 1Q17 on New Flows, ETFs

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Part 4
BlackRock Manages Strong Growth in 1Q17 on New Flows, ETFs PART 4 OF 8

BlackRock’s Institutional Funds Add $12 Billion in Assets in 1Q17

Institutional funds

BlackRock’s (BLK) institutional AUM (assets under management) totaled ~$3.1 trillion on March 31, 2017. Institutional AUM made up 56% of the company’s total AUM.

The company is now managing ~$1.0 trillion in active funds and ~$2.0 trillion in index funds for its institutional clients.

BlackRock&#8217;s Institutional Funds Add $12 Billion in Assets in 1Q17

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Institutional active long-term outflows for 1Q17 stood at $1.0 billion. These outflows were led by equity of $4.7 billion and $1.3 billion from fixed income offerings, and they were partially offset by inflows from multiassets and alternatives. Multiassets attracted $3.8 billion, driven by the LifePath Target Date series. Alternatives’ net inflows were $1.2 billion, driven by infrastructure offerings.

BlackRock’s institutional index’s long-term net inflows of $12.2 billion were mainly the result of fixed income flows of $9.5 billion and equity flows of $2.4 billion.

BlackRock posted an operating margin of 41% in 2016. Its peers posted the following margins:

  • State Street (STT): 23.9%
  • JPMorgan Chase (JPM): 31.6%
  • Bank of New York Mellon (BK): 22.7%

Together, these companies account for 8.7% of the Vanguard Financials ETF (VFH).

Positive market changes, foreign exchange

The total AUM for institutional active and index funds rose $139 billion compared to the previous quarter, mainly due to positive market changes of $108 billion led by equities, long-term inflows of $11 billion, and a positive foreign exchange impact of $20.4 billion.

BlackRock’s institutional offerings’ total base fees fell to $694 million in 1Q17, compared to $697 million in the previous quarter. Institutional base fees made up 27% of the company’s total fees in 1Q17, in line with the previous quarter.

BlackRock is seeing more demand for its index offerings. Active management has failed to generate alpha or superior returns.

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