iShares continues to be a hit
BlackRock’s (BLK) iShares saw strong rebound in 3Q16, with the division regaining its number one position for new assets in and outside of the US. It had AUM (assets under management) of ~$1.3 trillion as of September 30, 2016.
The iShares AUM accounted for 26% of the company’s total AUM in 3Q16. Its long-term inflows for the quarter stood at $51.3 billion, driven by inflows of $25.5 billion in equities, $22.7 billion in fixed income, and $2.9 billion in commodities. Investments were made in emerging market equities and bonds as well as in corporate and core bond funds.
BlackRock posted net income of $3.3 billion in 2015, as compared to the following net incomes of its peers:
- State Street (STT): $2.0 billion
- JPMorgan Chase (JPM): $21.8 billion
- Bank of New York Mellon (BK): $2.7 billion
Together, these companies make up 8.8% of the Vanguard Financials ETF (VFH).
Market value rises
The total AUM for iShares rose by $92 billion over the previous quarter, mainly due to long-term inflows, a rise in equities, and a marginal positive foreign exchange impact. Equities rose the highest (by $38.6 billion) followed by fixed income (by $1.6 billion).
BlackRock’s iShares offerings’ total base fees rose by $67 million in 3Q16 to $879 million, as compared to $812 million in 3Q15. The base fees of iShares made up 34% of the company’s total fees in 3Q16, which is lower than the proportion in 2Q16. The rise in fees was mainly due to new assets and a rise in the market value of holdings.
Base fees for equities rose by $18 million to $691 million in 3Q16, as compared to $673 million in 3Q15. Fixed income base fees rose by $49 million to $188 million for the same period.
Now let’s take a look at BlackRock’s Retail Business and discuss why there have been net outflows.