BlackRock Inc., the world’s biggest money manager, said second-quarter profit climbed 32 percent as investor deposits into multi-asset products and index funds boosted fees.
Net income rose to $729 million, or $4.19 a share, from $554 million, or $3.08, a year earlier, the New York-based company said today in a statement. Excluding certain items, adjusted earnings of $4.15 a share beat the $3.81 average estimate of 21 analysts surveyed by Bloomberg. Profit included a pretax gain of $39 million related to the initial public offering of PennyMac, a mortgage firm BlackRock backed in 2007.
Chief Executive Officer Laurence D. Fink, 60, has said BlackRock has the potential to increase its asset base by about 5 percent annually by developing new exchange-traded funds to meet client needs and expanding its reach among individual investors. Market declines reduced BlackRock’s assets from a record in the first quarter to $3.86 trillion as of June 30. Investors put a net $11.9 billion into BlackRock’s funds in the quarter, while market losses cut assets by $62.3 billion.
Deposits into BlackRock’s funds were “better than expected,” Daniel Fannon, a San Francisco-based analyst at Jefferies & Co., wrote today in a note to clients. “The primary difference was inflows into index fixed-income products and multi-asset products,” said Fannon, who had expected net withdrawals of $1.5 billion in the quarter.
BlackRock rose 1.5 percent to $276.46 at 10:42 a.m. in New York. The shares gained 32 percent this year through yesterday, compared with the 28 percent increase in the 20-member Standard & Poor’s index of asset managers and custody banks.
Stock and bond markets worldwide fell in June amid concern that the Federal Reserve may reduce its bond purchases. Investors pulled about $60 billion from U.S. bond mutual funds in June, the biggest monthly redemptions in records going back to 1961, according to estimates from the Investment Company Institute. Stock funds industrywide gathered a net $300 million in June, according to ICI estimates.
“Institutions worldwide stayed the course,” Fink said today in a telephone interview. “We are seeing a rotation from index-oriented fixed-income products to more unconstrained products -- that’s where we believe this great rotation will come from.”
BlackRock, which acquired Barclays Global Investors in December 2009 to expand into passive investments, was helped by the diversity of its product offerings during the quarter, Fink said. The firm offers actively managed stock and bond funds, the iShares ETFs, hedge funds and portfolios that use mathematical models.