BlackRock's assets fall below $6 trillion amid market turmoil

But investors' demand for indexed products produced record Q4 inflows of $81 billion for iShares ETFs

Jan 16, 2019 @ 9:26 am

By Bloomberg News

The brutal stock market took its toll on BlackRock Inc. in the fourth quarter as institutions withdrew money from the company, pushing assets down from their record level. The world's largest asset manager reported assets under management declined 5%, to $5.98 trillion.

"The year was a year of records, good and bad records," CEO Larry Fink said in a CNBC interview Wednesday. He also noted that market volatility is weighing on the asset management industry.

"We're seeing the seeds of a global slowdown," Mr. Fink said.

Big institutional withdrawals hurt BlackRock as firms pulled $34.6 billion from its investment products. Retail investors also pulled out funds, with fourth-quarter retail outflows totaling $3.2 billion, their first quarter of outflows since 2016.

Overall, the flow of money that usually pours into BlackRock slowed, with full-year total net inflows of $124 billion for 2018, about 66% lower than last year's record.

A bright spot was that investors sought out index products despite volatility. BlackRock's iShares exchange-traded fund division reported a record $81 billion in inflows for the quarter. U.S. iShares hit back-to-back monthly inflow records in November and December.

(More: Half of BlackRock clients plan to cut equity exposure this year)

Digging deeper

Mr. Fink added that a resolution in global trade tensions could result in a surge of investing in 2019. The company has already seen customers putting money to work in January, he said.

Last week, BlackRock announced plans to cut 3% of its global workforce, or 500 jobs. That's the company's largest round of dismissals since 2016, and it reported a $60 million charge for expenses related to that decision.

Mr. Fink also made some management changes this month, naming Mark Wiedman, previously the head of BlackRock's powerhouse exchange-traded funds business, to a new global strategy role. Mr. Fink said more leadership changes are coming.

BlackRock's quarterly revenue of $3.43 billion was in line with analyst estimates. It declined 9% from the same period a year earlier. Adjusted earnings per share of $6.08 for the period missed estimates of $6.28.

(More: BlackRock takes equity stake in Envestnet)

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