BlackRock BLK.N handily beat third-quarter profit estimates on Friday but posted a sharp drop in net inflows, sending shares of the world’s largest asset manager down 1% in premarket trade.
The company’s adjusted profit of $10.91 per share breezed past analysts’ estimates of $8.26, according to LSEG data, helped by strong investment advisory fees.
However, its net inflows for the quarter fell to $2.57 billion from $16.9 billion last year, reflecting $49 billion of net outflows from lower-fee institutional index equity strategies, including $19 billion from a single international client, the company said.
BlackRock ended the third quarter with $9.10 trillion in assets under management (AUM), up from $7.96 trillion a year earlier and lower than $9.4 trillion in the second quarter this year.
“For the first time in nearly two decades, clients are earning a real return in cash and can wait for more policy and market certainty before re-risking. This dynamic weighed on industry and BlackRock third quarter flows,” CEO Larry Fink said in a statement.
Hopes that the Federal Reserve could soon be done with its monetary tightening has helped calm investor worries about a potential recession.
But the central bank has also indicated it would keep its benchmark interest rate higher for longer, keeping a lid on the positive sentiment.
Revenue at BlackRock rose nearly 5% to $4.52 billion from a year earlier, driven by organic growth and the impact of market movements over the past 12 months on average AUM and higher technology services revenue, it said.
The New York-based company’s chief source of revenue is the management fees it earns as a percentage of the total AUM.