BlackRock Assets Sink Below $10 Trillion; Firm's Fees Shaky As Well

BlackRock Inc. showed assets under management back below $10 trillion, hurt by the market rout in the first quarter, and cautioned that fees could come under pressure over the rest of the year because of volatile markets, Sohini Podder and Carolina Mandl reported for Reuters.

Photo Insert: The quarterly drop occurred mainly due to the sell-off in equities and fixed income markets, although there were also some outflows in retail fixed income and cash management.

Still, BlackRock posted a better-than-expected quarterly profit as the world's largest asset manager benefited from investors continuing to pour money into its various index-traded and active funds.

"Our clients are trying to understand the implications of the rapidly changing investment environment," said Laurence D. Fink, chairman and chief executive, who pointed to Russia's invasion of Ukraine as creating "a supply shock in commodities that is further increasing inflation."

Adjusted profit rose to $1.46 billion, or $9.52 per share, in the three months ended March 31, from $1.2 billion, or $8.04 per share, a year earlier. Analysts on average had expected a profit of $8.75 per share, according to Refinitiv IBES data.

The New York-based firm ended the quarter with $9.57 trillion in assets under management. While that was up from $9.01 trillion a year earlier it was down from its record $10 trillion in the fourth quarter of 2021.

The quarterly drop occurred mainly due to the sell-off in equities and fixed income markets, although there were also some outflows in retail fixed income and cash management.

That was driven by redemptions from offshore prime and US government money market funds, BlackRock said, in line with the broader money market fund industry.

As investors anticipate that the US Federal Reserve will aggressively hike rates to combat sky-high inflation, bond yields have shot higher and the yield curve has inverted, which many see as an omen for a pending recession.

"Across the board, you're seeing portfolios are being navigated around fixed income," Fink said, adding that clients "are reevaluating where they should be across the yield curve."

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