Where BlackRock Is Adding Assets
Retail division adds assets
BlackRock’s (BLK) Retail division has added long-term flows toward active asset management over the past couple of quarters as investors seek returns higher than those of indexes. The segment was managing AUM (assets under management) of $608 billion, making up 10% of the company’s total AUM, on September 30, 2017.
Notably, BlackRock’s Retail division has attracted flows in and outside of the US, across the equities and debt offerings.
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In 3Q17, the division’s long-term retail inflows stood at $7.4 billion, including international inflows of $3.7 billion and domestic inflows of $3.7 billion. Fixed income offerings drew $4.6 billion, which went to unconstrained strategies, municipal offerings, and emerging market debt. The division also drew $1.7 billion in inflows for equity-backed mutual funds, reflecting interest in actively managed funds.
The multi-asset category saw inflows of $1.0 billion, largely into the multi-asset income fund family, partially offset by flows withdrawn from world allocation strategies. Among major managers (XLF), State Street (STT) and JPMorgan Chase (JPM) have strong offerings for retail clients, while Goldman Sachs (GS) focuses more on institutional funds.
AUM rising for three quarters
BlackRock’s AUM from its Retail division grew $22 billion in 3Q17, thanks to inflows of $7.4 billion, portfolio appreciation of $10.7 billion, and a favorable currency impact of $3.7 billion.
The division’s total base fees rose to $843 million in 3Q17, compared with $819 million in 2Q17. The fees accounted for ~30% of the company’s total in 3Q17, falling 1% from 2Q17. Retail clients have also been active participants in BlackRock’s ETF offerings. The division has seen relatively lower growth due to more flows toward exchange-traded funds and index funds.