Booming ETFs help BlackRock weather investors' cost-cutting

Thu Apr 20, 2017 4:13am EDT
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By Trevor Hunnicutt

NEW YORK (Reuters) - BlackRock Inc BLK.N, the world's biggest asset manager, on Wednesday reported double-digit profit gains as investors plowed money into lower-cost index funds, but the company's share price slipped as revenue fell short of analysts' expectations.

For graphic on BlackRock’s growth paradox, click:

Revenues of $2.8 billion came in 2 percent below analysts' estimates as advisory and distribution fees declined. Chief Executive Officer Larry Fink said the miss was not attributable to the fees it charges for managing funds.

Nonetheless, while BlackRock's assets grew 22 percent from a year ago to $5.4 trillion, fees for managing those assets and lending out the securities grew by a smaller 12 percent.

"There is a greater belief that long-term returns are structurally lower than they were 10 and 20 years ago," Fink told analysts on a conference call. "Fees take up a lot of that return. And as long as we believe the world is going to be in a low-return environment, our clients are under a lot of pressure.

BlackRock shares closed down 1.7 percent.   Continued...

FILE PHOTO: The company logo and trading information for BlackRock is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 30, 2017. REUTERS/Brendan McDermid/File Photo