BlackRock's AUM hits record $10.65 trillion amid market rally and ETF inflows

BlackRock Inc., the world's leading asset manager, has announced its assets under management (AUM) rose to record highs of $10.65 trillion in the second quarter, helped by rising asset values in client portfolios and large inflows into the company's exchange-traded funds (EFTs).

Market conditions and AI stocks boost AUM

Just recently, the stock market has hit a record high, fueled by optimism about a soft landing for the US economy, and the interest in artificial intelligence-linked shares—the S&P 500 index that bounced around 4 per cent in the latest reported quarter—further helps BlackRock's AUM rise above $9.43 trillion a year earlier and $10.5 trillion in the first quarter.

Growth opportunities in acquisitions and strategy

BlackRock announced that it will be making two major acquisitions in the last half of the year, strengthening its footing in areas of infrastructure investment and private markets.

"We see unbelievable growth opportunities for our clients and shareholders for 2024 and beyond," said Larry Fink during a conference call; he is the chairman and CEO of BlackRock.

He highlighted the potential for investments in the energy transition and AI data centres.

In the latest development, BlackRock signed an agreement with private markets data power Preqin for the purchase of almost $3.2 billion.

The acquisition has taken place on the heels of a $12.5 billion deal through the takeover of Global Infrastructure Partners that has placed the company in a leading position for projects under global infrastructure investment.

The deals would be finalised in closing in the current year.

Changing gear to high-margin products

Kyle Sanders, senior equity research analyst at Edward Jones, said the move was all about shifting to more lucrative product lines.

"There's been more movement on the institutional side because they want to move into higher-margin, higher-fee products, and alternatives would be at the top of the list," he said. He added the recent private markets expansion was "ridiculously high fees compared to an iShares ETF."

Record ETF inflows and revenue growth

BlackRock's total net inflows for the quarter amounted to $81.57 billion, slightly topping last year's $80.16 billion, which was enormous for ETFs, pulling in $83 billion in the best start to a year on record.

Investment Advisory and Administration fees generally form in percentage terms of the AUM and clocked at $3.72 billion went up by 8.6 per cent.

Revenue from technology services rose 10 per cent and reached $395 million, driven by the persistent demand for the firm's investment risk management platform Aladdin.

The average rising revenue for the firm was 8 per cent and reached $4.81 billion. Profit net climbed further in the same track and rose to $1.50 billion, or $9.99 per share, from $1.37 billion, or $9.06 per share from the previous year.

Stock performance

While the earnings report looks sound, BlackRock shares have still been retreating little by little.

Since the start of the year, the stock has risen by 2 per cent, while the S&P 500 has advanced by 17.7 per cent.

(With inputs from Reuters)