BlackRock didn't say how many jobs it cut during the quarter. Based on the year-end headcount, a 3.4 percent reduction would translate into about 350 positions. The asset manager doesn't have any plans to eliminate jobs in 2012 and will have some headcount growth, Fink said today.
Northern Trust, the third-largest independent U.S. custody bank, said yesterday it will eliminate about 700 jobs to join larger rivals Bank of New York Mellon Corp. and State Street Corp. in cutting costs as record-low interest rates hobble profit.
Investors have fled actively managed funds, while putting money into lower-cost index funds and ETFs. Investors pulled $9.4 billion from active funds in 2011, while putting $76.4 billion into passive funds, according to data compiled by Morningstar Inc. In the 12 months ended in November, ETF assets increased almost 13 percent to $1.05 trillion, based on data from the Investment Company Institute, the trade group for the mutual-fund industry.
Active Versus Passive
BlackRock's index-tracking equity products attracted $21 billion in investor deposits during the quarter, while the active stock funds lost $8.2 billion to withdrawals. Bond index products attracted about $24 billion, and active fixed-income funds had redemptions of $14.1 billion.
"Even if part of your business is facing challenges, it doesn't mean other parts can't be doing relatively better," Robert Lee, an analyst with Keefe, Bruyette & Woods Inc. in New York, said before the earnings were announced. "They have the ability via the ETF business or the index business to benefit from some of the trends you could argue are eating away at more traditional equity flows." Lee rates BlackRock "outperform."
Excluding certain one-time items, BlackRock earned $3.06 a share, compared with the $2.98 average estimate of 17 analysts surveyed by Bloomberg.
BlackRock, which acquired Barclays Global Investors in December 2009 to add ETFs to the actively run stock and bond funds it oversees, said in July that redemptions related to its takeover of the Barclays Plc unit had come to an end.
Series Of Acquisitions
Fink, who co-founded BlackRock in 1988, has built the firm through a series of acquisitions, including the 2006 purchase of Merrill Lynch & Co.'s investment unit. BlackRock acquired the hedge fund-of-funds business of Quellos Group LLC in 2008. The company last year expanded the alternatives division, which manages hedge funds, real estate funds and private-equity strategies.
BlackRock isn't looking at any "large-platform" purchases, although the firm is considering smaller acquisitions to fill product gaps, Fink said today.