BlackRock’s assets hit record US$13.46 trillion on third-quarter markets rally

Flags fly on the front of BlackRock headquarters in New York. (AP Photo/Mark Lennihan, File)

NEW YORK — BlackRock on Tuesday reported a higher third-quarter profit as a rally in global markets lifted fee income and pushed its assets under management to a record US$13.46 trillion.

BlackRock’s assets under management rose to $13.46 trillion, up from $11.48 trillion a year earlier. Long-term net inflows totaled about $171 billion, led by continued strength in its ETF business, which remains the firm’s key driver of organic growth.

The world’s largest asset manager reported adjusted earnings of $1.91 billion, or $11.55 per share, for the three months to Sept. 30, up from $1.72 billion, or $11.46 per share, a year earlier.

Total revenue - most of which is earned as a percentage of assets under management - rose to $6.5 billion from $5.2 billion a year ago, driven mainly by the market rally and an eight per cent growth in organic base fee.

Analysts on average were expecting earnings of $11.24 per share on revenue of $6.2 billion. On a diluted basis, net income fell 19 per cent to $1.32 billion, or $8.43 per share.

“Top organic base fee growth contributors included our systematic franchise, private markets, digital assets, outsourcing, cash and iShares ETFs, which saw record demand,” said BlackRock CEO Larry Fink.

“We’re entering our seasonally strongest fourth quarter with building momentum and a fully unified platform. One that’s anchored by a public-private investment model, backed by Aladdin technology, and united by a shared culture of performance and client service.”

Resilient consumer spending despite higher borrowing costs helped sustain the U.S. economic momentum, fueling gains in equity markets and prompting investors to pour money back into lower-cost index strategies.

A cooling labor market and moderating inflation pushed the Federal Reserve to cut interest rates in September - its first reduction this year - while expectations of further easing later in 2025 fueled strong inflows into BlackRock’s fixed-income exchange-traded funds (ETFs).

“Overall, results were strong and benefitted from a favorable market backdrop,” said Kyle Sanders, senior equity research analyst at Edward Jones. “BLK’s three recent acquisitions of GIP, Preqin and HPS all made healthy contributions this quarter. In our view, BLK is entering into a new chapter in its growth story.”

The New York-based firm’s long-term net inflows grew to $171 billion during the quarter, up about seven per cent from a year ago.

Diversification strategy

Large asset managers like BlackRock have in recent years been actively diversifying their revenue streams as they grapple with pressure from index strategies that typically generate lower fees compared to faster-growing areas such as private markets, real estate and infrastructure.

During the latest quarter, BlackRock’s private markets drew inflows of $13.2 billion. Private assets generate significantly higher fees than exchange-traded funds, a core part of BlackRock’s business through its iShares franchise.

Its investment advisory performance fees rose 33 per cent to $516 million in the reported period, after falling nearly 42.7 per cent in the second quarter. Overall net flows came in at $205 billion, driven mainly by strength in its ETF business.

Equity product inflow declined to $46 billion, compared to $74 billion a year ago, while fixed-income products saw inflows of $47.5 billion in the quarter.

Investor demand for U.S. Treasuries remained solid as the Federal Reserve began cutting rates, though appetite for longer-dated Treasuries remained cautious, since yields are tied to growth and fiscal trends rather than Fed policy alone.

Overall retail inflows for BlackRock rose to about $9.7 billion from $6.9 billion a year earlier, driven by investor enthusiasm during the quarter. Its total expenses rose to $4.6 billion from $3.2 billion last year, largely due to higher compensation expenses and acquisition-related costs.

Technology services and subscription revenue rose 28 per cent to $515 million, buoyed by its Aladdin platform and the newly acquired data business Preqin.

(Reporting by Anirban Sen in New York and Prakhar Srivastava in Bengaluru; Editing by Maju Samuel and Chizu Nomiyama )