BlackRock profit went down 3.66% to $789m (€708m) in the second quarter of the year, as investors shifted money to lower-fee fixed income and cash from equities, as a result of global market turmoil.
The world’s largest money manager said revenue it takes from fees for managing money and lending out securities fell 1.8% to $2.49bn in Q2 2016 from the same period a year ago, even as the total assets it manages rose to nearly $5trn. Revenue was down 3.5% to $2.8bn.
“Our clients are facing unprecedented challenges as they attempt to navigate the current investment environment,” said BlackRock chairman and CEO Laurence D. Fink.
“Political and macroeconomic uncertainty, historically low yields and elevated market volatility are leading clients to pause, as evidenced by more than $55trn in bank deposits in the US, China and Japan alone,” Fink said.
Analysts quoted by Reuters said sales of BlackRock funds were lower than expected. The asset manager attracted $1.54bn in “long-term” net flows in the second quarter, compared with outflows of $7.3bn in the year-earlier quarter.
BlackRock’s iShares, the asset manager’s family of ETFs, generated $15.67bn of net new business during the quarter, up from $10.85bn a year earlier. Growth in the iShares ETF business was driven driven by fixed income net inflows of $10bn, diversified across corporate, emerging market and municipal bond funds.
Strong sales of bond ETFs were offset by BlackRock results in its actively managed business. Active outflows totaled $12.8bn in the quarter.