With ETFs drawing billions , Blacrock Q1 results staedy

by Paul Wilson | Wednesday, Apr 18, 2012 | 438 views

Boosted by the strong inflow into the famous  iShares exchange traded fund , Blackrock which is the largest asset manager of the world , has reported first quarter results as being steady.

The investors have taken to the indexed funds of Blackrock over the direct actively managed accounts . This practice might result in generation of high fees but its not necessarily increasing the profit margins. Therefore inspite of the inflows and the upturn of the markets during the first quarter , Blackrock’s revenue came down by 1 % or $33 million to $2.2 billion according to the latest reports .

Even though the Firm came out with a new ad campaign with slogans “investing for a new world “ , the firm, under Chief executive Laurence Fink ,  was seen cutting down the expenses of operations by nearly $50 million . The cuts were made on compensation and fund costs besides lowering office occupancy. Last year the company’s income had increased from $568 million to $572 million in the same quarter. But Blackrock managed to increase the total assets under management by five percent taking it to a staggering $3.68 trillion.

The customers were seen withdrawing from the long-term funds, a net $10.3 billion  ; but if we don’t include the previous announcement of $36 billion from the indexed fixed income accounts , Blackrock managed a total inflow of $25.7 billion . iShares alone , had $18.2 billion added to then which is a jump by 74 percent from the same quarter last year . More than half of this amount was for bond ETFs.

The inflow was a clear reflection of customer preference for indexed offerings . The stock index  funds had an addition if $7.4 billion into them while the active stock funds had $4.5 billion withdrawn from them.

The profit on a share was up by nine percent despite the net income rising by less than one percent . The fully diluted shares of the firm came down form 194 million to 182 million. Barring the costs incurred on compensation plans and other minute expenses , the earnings per share were $3.16 , which beat the analyst expectations of $3.04 .

The shares have gained 12 % on their last year’s value till now and its shares , which are owned by Barclays and PNC partially , gained two percent on NYSE to close at $201.81.


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