BlackRock profit beats as ETF demand holds up against market rout

Oct 13 (Reuters) – BlackRock Inc posted a smaller-than-expected drop in quarterly profit on Thursday as strong demand for exchange-traded funds and other low-risk products cushioned the hit to fee income from a global market rout.

The threat of a recession, rapidly rising interest rates and the Ukraine crisis have slammed both bonds and stocks this year, keeping investors on the back foot in a blow to businesses such as BlackRock.

The company’s assets under management (AUM) dropped 16% year-on-year to $7.96 trillion in the third quarter as a stronger dollar also piled on pressure by dampening the value of investments in key European and Asian markets.

The world’s largest asset manager, which makes most of its money from fees charged for investment advisory and administration services, recorded a 16% fall in adjusted profit to $9.55 per share.

That still surpassed analysts’ expectations of $7.07 per share, according to IBES data from Refinitiv, as BlackRock managed to partially offset the market downturn thanks to its diversified business model spearheaded by iShares ETFs.

Shares of the company, down 42% so far this year, gained 0.4% in premarket trading after the results.

Overall net inflows were positive in the quarter, coming in at $65 billion, as the continued momentum from ETFs offset the hit from BlackRock’s retail clients withdrawing about $5 billion.

Revenue fell 15% to $4.31 billion.

The decrease was “primarily driven by the impact of significantly lower markets and dollar appreciation on average AUM and lower performance fees,” the company said in a statement.

The benchmark S&P 500 Index has lost nearly 25% so far this year, with analysts expecting more pain in the face of an aggressive U.S. Federal Reserve stance.

BlackRock’s net income fell to $1.4 billion, or $9.25 per share, for the three months ended Sept. 30, from $1.68 billion, or $10.89 per share, a year earlier.

Reporting by Manya Saini in Bengaluru and Davide Barbuscia in New York; Editing by Devika Syamnath

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