(Reuters) - BlackRock Inc (BLK.N), the world's largest money manager, reported a higher-than-expected quarterly profit on Thursday, benefiting from strong markets and a flow of new money into its exchange-traded funds and retail business.
The New York-based asset manager ended the fourth quarter through December 31 with $4.3 trillion in assets, including new money and market gains, surpassing the $4 trillion mark for the first time last year.
That asset growth helped drive BlackRock's 24-percent gain in quarterly profit to $841 million, or $4.86 per share, up from $690 million, or $3.93 per share, a year earlier.
BlackRock and its peers make money by charging fees as a percentage of assets under management.
BlackRock shares jumped 4.2 percent in early trading to $325.98 on the New York Stock Exchange. The stock surged 53 percent in 2013, riding an equity market rally that also boosted its peers.
The company said its board had approved a 15 percent increase in its quarterly cash dividend to $1.93 per common share, payable in March.
Excluding long-term compensation expenses and other items, earnings were $4.92 a share, above analysts' average forecast of $4.33, according to Thomson Reuters I/B/E/S.
Revenue grew 9 percent to $2.8 billion. Revenue generated by fees based on a portfolio's performance rose 2 percent to $268 million from a year earlier.
BlackRock has benefited from increased investor appetite for the less-expensive indexed funds provided by iShares, which the company acquired from Barclays in 2009 and is now the largest U.S. provider of ETFs. IShares makes up 21 percent of the company's assets under management.
Of the $40.5 billion that investors poured into long-term funds during the quarter, nearly half - $19.1 billion - went into the company's iShares exchange-traded funds business. Retail investors accounted for $16.6 billion, or 41 percent of total long-term net flows.
BlackRock has been expanding its iShares business within the U.S. and abroad.
"We think Europe is going to be a place of accelerated growth" for ETFs, Chief Executive Officer Laurence Fink said in an interview on Thursday.
BlackRock last year acquired Credit Suisse's ETF business and hired Rachel Lord, previously with Citigroup, to head its iShares business in Europe, the Middle East and Africa.
The bulk of investor money during the quarter went into equities, which accounted for $24.7 billion, or roughly 61 percent, of BlackRock's long-term net inflows.
Investors also added more money than they withdrew in fixed-income funds, which had net inflows of $1.5 billion, and multi-asset products, which had $17.4 billion.
BlackRock is increasingly turning its focus to the retirement market, where it sees a ripe opportunity.
"We believe the defined contribution area is the greatest growth area," Fink said. "We have to start focusing on things like longevity" and education around saving for retirement.
BlackRock said it had $30 billion in net inflows into its defined contribution channel for the year, increasing its total assets in the unit to $525 billion.
BlackRock last year introduced a new series of indexes and funds called the "CoRI" Retirement Index series that allows pre-retirees to estimate how much their current savings would produce in terms of annual income when they turn 65.
Reporting by Ashley Lau in New York; Editing by David Holmes, Lisa Von Ahn and Bernadette Baum