BlackRock’s assets under management swelled to a record $7.8tn in the third quarter as the rebound in financial markets that began in March helped the fund manager beat revenue and profit forecasts.

The world’s biggest fund manager said revenue jumped 18 per cent compared with 2019 to $4.37bn, while net income climbed more than a fifth to $1.36bn.

New York-based BlackRock reported earnings per share of $9.22 on an adjusted and diluted basis for the third quarter, beating the expectations of analysts polled by Bloomberg.

The company’s operating margin reached a record 47 per cent for the period, one percentage point above the previous high water mark reached a year ago. That is well ahead of industry rivals and highlights BlackRock’s hefty global presence in the financial system.

“I don’t think anyone believes margins will stay at that 47 per cent,” Larry Fink, chief executive of BlackRock, told the Financial Times. The company “does not manage to margin” and will invest in growth, particularly in technology, he said.

“If we believe that the investment will pay off in the long run, we will invest.”

The company attracted net inflows of $129bn in the third quarter, which pushed its assets above the previous record of $7.4tn reached in the fourth quarter of last year. It comes after the firm attracted $100bn in new money in the second quarter.

The third-quarter inflows included $47bn into actively managed funds, making it one of the best quarters in recent years and helping to push its actively managed assets above $2tn.

Line chart comparing BlackRock's stock with the S&P 500 asset manager index (rebased)

BlackRock’s stock has rallied more than 20 per cent this year and pushed further into record territory after its latest earnings release, with shares up 4.3 per cent on Tuesday. The bumper run compares with a 2 per cent loss for fund managers in the S&P 500.

“They’re almost the Amazon of asset management,” said Kyle Sanders, financial services analyst at Edward Jones. “It’s a one-stop shop for a lot of clients. Everything went their way during the quarter.”

In March, BlackRock was awarded a mandate from the Federal Reserve to purchase corporate debt, including its own fixed income exchange traded funds. BlackRock credit ETFs swelled in assets following news of the appointment, leading to criticisms over the arrangement despite BlackRock waiving fees on the money the central bank invests in its products.

BlackRock also generated $282m in technology services revenue, up 9 per cent from the previous year. The company attributed the growth to higher revenue from its Aladdin platform, which connects institutional investors, rival fund managers and corporate clients to the markets and helps them gauge risk. The system accounts for just a fraction of BlackRock’s revenues, but has allowed the group to diversify with hefty subscription contracts.

In January, BlackRock adopted a strong position on climate change by dropping its holdings of certain fossil fuel companies and indicating it would take a tougher line with the companies it owns through its funds.

The fund manager has punished 53 companies in annual meetings this year over climate change, but has faced criticism for backing just 6 per cent of climate-related shareholder votes in the year through June, down from 8 per cent in the previous year, according to Proxy Insight.


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