BlackRock recorded better than expected profits in the first three months of the year as inflows from investors held up in the face of market turmoil triggered by a tech sell-off and then deepened by Russia’s invasion of Ukraine.
The world’s largest money manager said on Wednesday that adjusted net income hit $1.46bn in the first quarter, up 18 per cent from a year ago and ahead of analysts’ forecast of $1.35bn.
Larry Fink, chair and chief executive, said the group had received “positive flows across all product types, investment styles and regions”.
Inflows proved resilient in a quarter in which stocks and bonds fell in tandem, leaving few havens for investors grappling with rising inflation and the turmoil Russia’s invasion of Ukraine unleashed in commodity markets.
Overall, BlackRock generated $114bn of net inflows in the quarter, surpassing analysts’ forecast of $96bn. This was led by net inflows of $56bn to its iShares exchange traded funds that track an index, and $20bn into its active business, which includes alternatives strategies that investors are increasingly turning to.
However, BlackRock’s assets under management dipped to $9.6tn in the quarter, below the record $10tn it crossed for the first time at the end of 2021.
BlackRock cited “the military conflict between Russia and Ukraine” as a risk factor in the footnotes to the results, but there was no other mention of the war in its 15-page earnings statement.
BlackRock said last month that it had taken about $17bn in losses on its Russian securities. Shuttered markets and worldwide sanctions imposed after President Vladimir Putin sent troops into Ukraine has left the vast majority of Russian assets unsaleable, forcing BlackRock to mark down their value.
Kyle Sanders, an analyst at Edward Jones in St Louis, Missouri, noted ahead of the results that “tailwinds last quarter have quickly turned into headwinds. Surging inflation, Fed tightening and the conflict in Ukraine have severely shaken investor confidence.” He added: “Everything will be lower in the first quarter, and 2022 will be a challenging year for BlackRock and asset manager peers.”
BlackRock’s shares are down by more than a fifth this year, underperforming the almost 8 per cent drop for the S&P 500.
