(Bloomberg News) BlackRock Inc., the world's biggest asset manager, reported higher first-quarter profit as rising markets more than made up for client redemptions and a continuing shift to lower-fee passive products.
Net income at the New York-based firm rose 0.7 percent to $572 million, or $3.14 a share. Rising markets and foreign- exchange swings lifted assets to $3.68 trillion. BlackRock fell the most in four months as customers removed a net $48 billion in the quarter.
Chief Executive Officer Laurence D. Fink has been urging clients to invest in equities as markets have rallied. BlackRock has started a new advertising campaign aimed at making it better known and is seeking to increase higher-fee assets as investors have turned away from actively-managed funds in recent years. The firm's share of fees from active funds has fallen as investors moved money into BlackRock's iShares ETFs.
"We saw renewed confidence in global markets driven by European stability following the European Central Bank's announced liquidity plan together with positive economic data in the U.S., leading investors to seek out macro exposures primarily through index products," Fink said in today's statement.
BlackRock fell as much as 3.9 percent, the most since Dec. 8, and declined 2.7 percent to $196.32 at 10:18 a.m. in New York. Before today, the shares gained 4.4 percent in the 12 months through April 17, compared with the 8.3 percent decline in the 20-member S&P index of asset managers and custody banks.
ETFs Gain
BlackRock drew $18.2 billion into its iShares ETFs in the quarter, compared with deposits of $1.1 billion into active bond funds and redemptions of $4.5 billion from active stock funds.
BlackRock's net withdrawals were driven by a $36 billion redemption from a single institutional fixed-income client. Excluding that previously-disclosed redemption and withdrawals from cash funds, BlackRock said clients added $25.7 billion during the quarter.
Money managers such as BlackRock, which earn fees based on the assets that they manage for clients, traditionally benefit from rising stock markets and investor deposits into higher-fee stock and bond funds. The MSCI ACWI Index of global stocks rose 11 percent in the first quarter and the U.S. benchmark Standard & Poor's 500 Index rose 12 percent.
'New World'
BlackRock's assets rose about 1 percent to $3.68 trillion from a year earlier and increased 4.9 percent compared with the prior quarter. BlackRock's investment advisory fees fell about 0.4 percent compared with a year earlier.