BlackRock (BLK) drew a majority of its assets under management—55.0% of total AUM—on December 31, 2017. The company manages $3.5 trillion in active and index-based offerings.
In active fund offerings, BlackRock manages ~$1.1 trillion and provides substantial fees compared to index fund offerings that have an AUM of $2.3 trillion. In 2018, institutional investors are expected to see more flows toward various asset classes primarily due to rising valuations of the broad markets (SPY)(SPX-INDEX).
Asset classes other than equities
Institutional investors have deployed funds in debt and multi-asset class in the last several quarters in order to diversify their risk amid high valuations of equities. On the product front, there is a strong preference for passive fund offerings seen in the high traction for index funds.
In index offerings for 4Q17, BlackRock added $24.0 billion in fixed income index offerings—partially offset by an outflow of $9.0 billion from equity index offerings—and $2.5 billion from alternatives, resulting in a net addition of $12 billion.
On the active offering front, BlackRock added $2.9 billion in the multi-asset category with continued demand for LifePath target-date series and other strategies. The company added $2.3 billion in the fixed-income category, which was partially offset by outflows of $1.2 billion in equity inflows.
In the active category, alternatives added $2.1 billion of new flows, more than offset by capital returns in real estate and private equity funds.
BlackRock earned total base fees of $765.0 million in 4Q17 from institutional offerings, forming 27.0% of its total fees. The division’s assets increased by $150.0 billion sequentially due to a $97.0 billion rise in equities, $53 billion rise in fixed income, alternatives, and multi-asset categories.
In the last few quarters, institutional investors have deployed a portion of funds from equities to multi-asset categories, alternatives, equities.