BlackRock

  • The world’s largest asset manager, BlackRock, posted a better-than-expected   quarterly profit as global equity markets remained strong. Investors increased   holdings of the company’s funds; this in turn drove fee growth in the period   and boosted assets under management to a record high.

  • Assets under management soared to a record $9.49 trillion in the   second quarter from $7.32 trillion a year earlier, an almost 30% increase.   BlackRock saw net inflows decline 19.2% year-on-year to $81 billion in Q2   after the $172 billion record set in the prior quarter. Despite increased   investments in BlackRock’s various funds, such as its exchange-traded funds   (ETF’s), it was impacted by the loss of a $58 billion equity index mandate   from a US pension fund client.

  • Revenue rose 32% to $4.82 billion, buoyed by improved performance   fees and 14% growth in revenue from technology services. The annualised   organic base fee grew 10% in the quarter thanks to its active platform and   iShares ETF franchise. Adjusted operating income rose 37% to $1.9 billion   with the operating margin improving to 44.9%. Adjusted net income rose 28% to   $1.55 billion, or $10.03 per share. A quarterly dividend of $4.13 per share   was declared. Over the period under review $300 million of cash was returned   to shareholders in the form of share buybacks.

  • The US economy kept up its recovery in the past quarter. Thanks to   the Federal Reserve slashing interest rates to near zero and embarking on a   $120 million-a-month asset purchase program, coupled with trillions of   dollars in fiscal stimulus to aid the struggling US economy and the millions   of Americans who lost their jobs as a results of lockdowns, the stock market   has rallied to record levels after plunging in February and March of last   year after the pandemic crashed asset prices and hurt risk sentiment. The   broad-equity index is up over 100% since its pandemic-era low on March 23,   2020. BlackRock has benefitted from investors ploughing cash from stimulus   efforts into shares and was also hired by the Fed to help execute its   extensive bond buying program.

  • BlackRock is a high quality business with attractive stable margins   (net profit margins of 30%), and is a reliable dividend payer. The company   trades at a premium to its peers (24.4x earnings versus the industry average   of 14.3x), and justifiably so, given its sheer size and quality. The business   is forecast to grow earnings and revenue annually by 6.9% and 6.2%   respectively - and is currently trading slightly below fair value. BlackRock   is likely to continue to benefit from fiscal and monetary stimulus tailwinds   in the short term as well as flows towards passive funds.

BlackRock