Global stock markets surged in the first quarter on expectations that major central banks would shift from tightening monetary policy to cutting interest rates, which helped drive up BlackRock's assets under management (AUM). The MSCI's global stock performance gauge rose 7.7% in the first three months of the year, while the S&P 500 jumped 10%.
BlackRock's AUM increased by 15% in the first quarter compared to a year earlier. Investment advisory and administration fees, which are typically a percentage of AUM and a key source of revenue for the company, climbed nearly 8.8% to $3.63 billion.
"I see the greatest opportunities I've ever seen for BlackRock, for our clients, and for our shareholders," said Larry Fink, the company's chairman and CEO, during a conference call discussing the results. He highlighted opportunities for investors in areas such as artificial intelligence, certain emerging markets, and the need for new infrastructure.
In January, BlackRock announced the acquisition of Global Infrastructure Partners for $12.5 billion, aiming to expand into private markets and alternative assets through infrastructure investments worldwide. The acquisition is expected to close in the third quarter, according to BlackRock Chief Financial Officer Martin Small.
Fink stated that BlackRock remains open to pursuing additional opportunities in the private market, although he did not hint at any imminent deals. He also mentioned that the company was finalizing large mandates that would drive future asset flows and attract new clients to its technology platform, Aladdin.
Kyle Sanders, senior equity research analyst at Edward Jones, commented, "Results were better than feared, and they seem really upbeat and confident about growth accelerating." BlackRock's shares were up 0.3% in early trading, though they are down about 3.4% for the year.
Total net inflows declined to $57 billion from $110 billion a year earlier, partly due to seasonal outflows from institutional money market funds at the end of March. However, BlackRock's President Rob Kapito noted that inflation concerns and an inverted Treasury yield curve were delaying further allocations to fixed income.
Analysts anticipate that flows in the asset management industry will pick up once interest rate cuts begin, as this would encourage cash currently on the sidelines to move into riskier assets. Despite the slowdown, first-quarter net flows into fixed income products reached nearly $42 billion, exceeding expectations.
Exchange-traded funds (ETFs) attracted the majority of inflows, with BlackRock's iShares Bitcoin Trust drawing $14 billion in net inflows in the first quarter since its January launch.
BlackRock's total revenue rose 11% to $4.73 billion in the quarter, driven by higher performance fees, technology revenue, and the impact of higher markets on average AUM. Its technology revenue increased by about 10.9% to $377 million, reflecting sustained demand for its investment risk management platform, Aladdin.
Net income for the company increased to $1.57 billion, or $10.48 per share, in the three months ended March 31, from $1.16 billion, or $7.64 per share, a year earlier.
