BlackRock Increasing Assets Under Management Focused on ETFs

[Asia Economy Reporter Eunmo Koo] BlackRock's assets under management (AUM) are rapidly increasing, centered on iShares exchange-traded funds (ETFs).

According to Korea Investment & Securities on the 19th, BlackRock's AUM at the end of Q4 last year was $7.4 trillion, a 7% increase from the previous quarter. Baek Doosan, a researcher at Korea Investment & Securities, explained in a report on the same day, "During Q4, net fund inflows amounted to $128.8 billion, accounting for 28% of the AUM increase, while the remaining 72% of the AUM growth appears to be due to returns on deposited assets."

Of the $128.8 billion net fund inflows in Q4, $75.2 billion flowed in through iShares ETFs by product, continuing the momentum focused on passive investments. By asset class, equities and bonds increased by $38.6 billion and $38.3 billion respectively during the same period, maintaining inflows into traditional asset classes.

However, the multi-asset and alternative investment asset classes still have relatively small absolute AUM sizes, but their growth rates compared to the previous quarter were 2.6% and 4.0%, respectively, higher than the increases in equities (1.0%) and bonds (1.6%). In conclusion, the combined effect of net asset value growth due to a strong stock market and net fund inflows led to a 4% increase in management fees in Q4, reaching $3.1 billion.

Earnings per share (EPS) also exceeded market expectations. BlackRock's Q4 EPS last year was $8.34, surpassing the consensus of $7.76 by 7%. This represents a 37% increase compared to the EPS of $6.08 in the same period the previous year. Researcher Baek stated, "The significant increase in management fees was driven by a balanced growth in AUM across all asset and product classes," adding, "Additionally, the rise in performance fees due to a strong stock market and a substantial increase in IT segment revenue from efforts to strengthen the platform business contributed to the strong earnings."

Following mergers and acquisitions (M&A) with Merrill Lynch and Barclays asset management firms, BlackRock is leading industry trends as the world's number one asset manager. Researcher Baek forecasted, "With a well-established lineup of high-growth ETF products, multi-asset, and alternative investment asset classes, BlackRock is expected to benefit significantly from the growth of the global fund market."

He also added, "BlackRock operates 'Aladdin,' a comprehensive service platform for asset managers," and noted, "In May last year, BlackRock acquired 'eFront,' a platform company specializing in alternative investments, highlighting that IT segment revenue centered on Aladdin is emerging as a new growth engine."