BlackRock is betting big on iShares ETFs and it’s paying off

April 16, 2013
April 16, 2013

Earnings: BlackRock (NYSE:BLK)

BlackRock quarterly net income

  • The numbers: The world’s largest money manager by assets posted quarterly profits of $632 million, or $3.62 per share, edging out analyst expectations of $3.59 per share. Revenue was up 8.9% from a year earlier, beating expectations as well; BlackRock’s quarter benefited from increased assets under management, which climbed to $3.94 trillion.
  • The takeaway: After announcing plans last month to slash 3% of its workforce as part of a wider company restructuring, the biggest provider of the baskets of assets known as exchange-traded funds (ETFs) in the US appears to be positioning itself well for a landscape increasingly defined by low interest rates and lackluster bond investments. CEO Lawrence Fink noted exactly that when addressing the market’s continued shift away from from fixed-income investments: “Investors turned to iShares as a way to quickly and efficiently increase their exposure to equity markets.”
  • What’s interesting: BlackRock has been trying to keep its position as the world’s leading provider of ETFs, while aspiring for higher profit margins like some of its competitors. BlackRock has unabashedly bet big on iShares, a form of ETF that tracks bond or stock market indices. The company recently signed a deal with Fidelity that has allowed it to sell its iShares to Fidelity’s broad range of customers and 18.5 million brokerage accounts. With nearly 90% of inflows at BlackRock going into equity investments, and iShares ETFs accounting for a large share of it, the company’s positioning appears to be paying off.

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