BlackRock profit falls 16%

A souring market weighed on investing giant BlackRock Inc. in the third quarter, pushing profit down 16%. The world’s largest asset manager reported net income of $1.41 billion, down from $1.68 billion in the same period a year earlier. Earnings amounted to $9.25 a share. That exceeded the $7.06 expected by analysts polled by FactSet. Revenue dipped 15% to $4.31 billion, above analysts’ estimates of $4.2 billion. Central banks including the Federal Reserve are raising interest rates to try to cool red-hot inflation, adding stress to a market that is increasingly jittery over a possible recession. Stocks started the third quarter relatively strong, but soon headed lower as the Fed made increasingly clear that its rate increases are here to stay.

BlackRock is a top provider of exchange-traded funds and other low-cost alternatives that track market indexes, and demand for passive investing has helped fuel the firm’s growth. BlackRock is also a large provider of actively managed investments, which include businesses like stock-and bond-picking funds. Investors’ faith in the market declined, evidenced by slowing inflows of $17 billion, down from $75 billion a year ago. The firm’s assets under management were about $8 trillion, down from $8.5 trillion in the second quarter. That marks the third quarter-over-quarter decline in a row. BlackRock ended last year with $10.01 trillion in assets, the first time any money manager surpassed that milestone. BlackRock’s base management fees—fees not tied to performance that the firm receives for administering fund holdings—dipped 10% from a year ago to $3.53 billion. Performance fees from the firm’s actively managed funds fell 76% to $82 million. BlackRock said that partly reflected lower fees from a single hedge fund. Its technology remains the asset manager’s bright spot. Revenue from Aladdin, its proprietary software that helps investors manage their portfolios and assess risk, rose 6% to $338 million.