BlackRock, the world’s most essential asset manager, took in less money last quarter as traders moved into lower-cost bond funds, and it made much less money lending out shares.
The corporate, controller of $6.8 trillion in assets, missed analysts’ projections for quarterly sales and profits on Friday, regardless of attracting $151 billion in new cash, as much of that money moved into lower-fee fixed-income accounts and funds used to store money.
The corporate’s income for the three months through June 30 sank 2.2% to $3.52 billion from the previous earlier, also affected by some commission cuts the firm has made and lower fees for attaining efficiency targets.
“While lower rates is a headwind that can likely continue, we assume BlackRock is pleased to accept modest pricing drops to be able to take massive amounts of market share,” stated Kyle Sanders, an analyst at Edward Jones, which keeps its buy ranking on BlackRock shares.
Lower demand for borrowing shares also damages fees. The borrowers are typically hedge funds that wish to “short” those stocks, selling the shares and hoping to purchase them back later at a lower value.
“I can’t monitor that; that’s more environmental,” stated BlackRock Chief Executive Larry Fink in an interview.
Traders did pour more cash into BlackRock’s actively controlled funds aimed at beating the market over the low-charge passive-funding products. The corporate further posted 20% growth in its business that licenses software program and other technology to different financial firms.
In the meantime, BlackRock said its iShares-branded ETFs took in $36.10 billion of new cash, up from $30.69 billion in the previous quarter.