BlackRock Assets Tumble 16% as Stock and Bond Markets Slide
The firm oversaw $7.96 trillion as of Sept. 30, the lowest since 2020, according to a statement.
(Bloomberg) -- BlackRock Inc.’s assets under management fell 16% in the third quarter, along with equity and bond markets, as central banks continued raising interest rates to counter surging inflation.
The firm oversaw $7.96 trillion as of Sept. 30, the lowest since 2020, according to a statement Thursday from New York-based BlackRock, the world’s biggest asset manager.
Investors pulled money from several BlackRock offerings, including equities and cash management. Core products, known as long-term funds, attracted $65 billion of net inflows, missing the $104 billion average estimate of analysts in a Bloomberg survey. In last year’s third quarter, clients put a net $98 billion into those investments, which include exchange-traded funds and mutual funds.
The results reflect a chaotic three months for markets as hawkish central bankers sent investors scurrying for safety. The S&P 500 and the Bloomberg US Total Return Bond Index each slumped about 5% in the third quarter.
“The power of our diversified platform is most evident in times of uncertainty, and clients are turning to us more than ever for our comprehensive and integrated solutions,” Chief Executive Officer Larry Fink said in the statement.
Shares of BlackRock fell 3% to $515 a share in early trading at 8:40 a.m. in New York, after the US Labor Department released data showing a key gauge of US consumer prices rose to a 40-year high last month. The stock had tumbled 42% this year through Wednesday.
Inflation Warning
Adjusted net income fell 17% from a year earlier to $1.5 billion, or $9.55 a share, beating analysts’ average estimate of $7.03. Revenue fell 15% to $4.3 billion, roughly in line with Wall Street predictions.
Fink, 69, who warned last year that inflation would be more than a fleeting phenomenon, has been proven right. In September, the Federal Reserve lifted its benchmark lending rate by 75 basis points to a target range of 3% to 3.25% as prices remained stubbornly high.
Investors pulled almost $40 billion from BlackRock’s cash-management products in the third quarter, compared with net withdrawals of $12.4 billion a year earlier. Institutional investors also fled index products, withdrawing $23.4 billion.
While analysts expected inflows into BlackRock equity funds, the firm reported $29.3 billion of net withdrawals. One bright spot was fixed income, with inflows of $90.6 billion, partly attributable to a single institutional investor.
BlackRock is the largest issuer of exchange-traded funds, with $2.6 trillion in ETF assets. Clients added $22.4 billion to its ETFs in the quarter, compared with $58 billion in the third quarter of 2021.
ESG Blowback
Fink finds himself at the center of a backlash over BlackRock’s advocacy for ESG investing, which Republican leaders say threatens oil and gas interests in their states. The clashes are starting to weigh on the firm’s assets, with Louisiana pulling almost $800 million from BlackRock funds.
Read more: BlackRock Faces More ESG Fallout as Louisiana Pulls $794 Million
On Wednesday, speaking at an Institute of International Finance event in Washington, Fink reiterated that he’s not opposed to oil and gas companies.
“Facts are not important with some subgroups in this country,” he said.
(Updates with CPI data and stock decline in sixth paragraph, ESG controversy in 12th.)
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