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Larry Fink
BlackRock CEO Larry Fink

BlackRock CEO Says ‘Fear of the Future’ Reshapes Investing

Assets under management at BlackRock surged to a record $7.81 trillion in the third quarter, buoyed by a rising stock market and flows into all of its product lines. Retail clients added a net $19.6 billion to BlackRock funds in the period.

(Bloomberg) -- BlackRock Inc. Chief Executive Officer Larry Fink said retail investors are transforming the global asset-management business, with the Covid-19 pandemic forcing people to rethink how they save and invest.

“Covid and the fear of the future has created probably a higher savings rate -- we have people focusing on the long term a little more,” Fink said in an interview Tuesday after BlackRock reported third-quarter results. “It’s leading to more savings and more investing for the long term.”

Individual investors seeking advice from financial advisers are a boon for the New York-based firm, which posted profit and revenue that topped Wall Street estimates. Assets under management surged to a record $7.81 trillion in the third quarter, buoyed by a rising stock market and flows into all of its product lines. Retail clients added a net $19.6 billion to BlackRock funds in the period. Such investors are also among the buyers of its iShares exchange-traded funds, which took in a net $41.3 billion.

Shares of BlackRock, the world’s biggest asset manager, advanced 2.5% to $630.34 at 9:33 a.m. in New York. The stock had gained 22% this year through Monday, compared with a 9.4% increase for the S&P 500.

Interest Rates

BlackRock benefited as global markets rebounded from the wreckage of the pandemic. The S&P 500 gained 8.5% in the period, and the Federal Reserve signaled it intends to keep interest rates near zero until at least 2023 to bolster the economy.

“Our diverse platform saw inflows across all asset classes, investment styles and regions,” Fink, 67, said in a statement. “More than 50% of long-term flows were driven by clients in Europe and Asia.”

Fixed-income net inflows doubled from the year-ago period to $70.4 billion, an increase from the second quarter’s $60 billion.

The strength in bond funds helped the firm’s overall flows into its long-term products, a category that excludes cash management, which took in a net $98 billion in the third quarter.

Wide Range

BlackRock’s variety of products, including cheap, index-tracking ETFs and actively managed stock and bond vehicles, as well as alternative investments, have helped it navigate the fallout from the pandemic.

The performance may be tested in coming months as Covid-19 cases rise and investors grapple with the uncertainty surrounding the U.S. presidential election.

Other results:

  • Adjusted earnings per share were $9.22, beating the average estimate of $7.78 by 15 analysts in a Bloomberg survey.
  • Adjusted net income jumped 27% to $1.42 billion, beating the average Wall Street estimate of $1.2 billion. Revenue rose 18% to $4.37 billion, compared with analysts’ estimate of $3.9 billion.
  • Actively managed products had net flows of $47 billion, up from $741 million.
  • Clients added a net $50.5 billion to BlackRock’s iShares and other indexed products in the third quarter, compared with $51.5 billion in net inflows in the same period a year earlier.

--With assistance from Taha Mansoor.

TAGS: ETFs
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