BlackRock profit falls in third quarter but tops expectations

Wed Oct 14, 2015 1:31pm EDT
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By Trevor Hunnicutt

NEW YORK (Reuters) - Investors piled into BlackRock Inc (BLK.N: Quote) bond ETFs and paid more in hedge fund fees in the third quarter, helping the world's largest asset manager beat Wall Street's earnings forecasts and offsetting a higher tax hit that cut profits 8 percent from a year earlier.

Rough-and-tumble markets saw BlackRock trim core investment advice and administration fees by $12 million from 2014 and give up 5 percent of assets under management from the second quarter.

But both institutional and retail investors sent a net $23.3 billion in new money to the firm's iShares exchange-traded funds unit, the company said in an earnings report on Wednesday. That, plus a gain in performance fees by one of its hedge funds, helped bolster revenues to $2.9 billion, up $61 million from a year earlier.

"We had a great quarter because our positioning as an organization," said BlackRock chairman and chief executive officer Laurence D. Fink. "Despite the volatility, clients have to put their money to work."

BlackRock shares were up 3.45 percent in trading Wednesday in New York.

New money moving into BlackRock's long-term asset management business rose to $35 billion from $29 billion a year earlier in net terms, including the iShares business. Seventy-nine percent of all the new money BlackRock saw moved into fixed-income products.

But the new money wasn't enough to offset the impact of volatile markets which hurt assets and of currency swings which hurt fee income. It took a hedge fund to do that.

While the New York-based company took in more revenue during the three months that ended Sept. 30 this year than it did during the same period in 2014, that growth was driven "primarily," the company said, by a single unnamed hedge fund whose "strong" annual performance was measured during the quarter. Performance fees were up $75 million for the quarter to $208 million.   Continued...

A man walks next to a BlackRock sign pictured in the Manhattan borough of New York, October 11, 2015.  REUTERS/Eduardo Munoz -