BlackRock, Inc. (NYSE:BLK) posted higher profit in the first quarter of fiscal 2013 with a 10 percent increase. The profit was backed by investors who invested in the Black Rocks high fee stock funds, reports Reuters.
Laurence Fink, BlackRock, Inc. (NYSE:BLK) Chief Executive, said that the inclination towards stock was backed by the low yield on bonds, and also the suspicion that interest rates may increase thus affecting the bond prices.
“This is having a significant impact on where we’re seeing asset flows as investors seek other sources of yield, including from equities,” Fink said in a statement.
The reason behind the growing investment into the ETF’s-mutual funds was that investors preferred lower cost saving investment products.
The income for the fund manager came in at $632 million or $3.62 per share, an increase from $572 million, or $3.14 per share in the corresponding quarter of the previous year. The investment in the equities rose for the first time since the financial slowdown. The investors collectively invested $33.7 billion into the equity offerings out of net inflows of $39.4 billion, which were put in long term funds.
The company hit the record in Asset Under Management (AUM), recording it at $3.94 trillion towards the end of the quarter.
There was less inclination towards the Bond funds of BlackRock, Inc. (NYSE:BLK) as investors withdraw more money in comparison to funds invested in these funds. The total fund withdrawn out of the bond funds stood at $2.6 billion. The amount withdrawn from currency funds came in at $2.2 billion, whereas $9 billion were invested in the multi-asset portfolios. Another $1.5 billion were invested in core alternative funds.
BlackRock, Inc. (NYSE:BLK) is the most dominant player in the exchange traded funds segment. Lately, there have been competitors giving tough fight to the company. The firm, as a measure to cope with the rising competitor’s strength, decided upon trimming its workforce by about 3 percent or 300 people.
A report from Nomura says that though BlackRock, Inc. (NYSE:BLK) has experienced inflows from all client channels, active equity and fixed income, there have been outflows in the U.S. The performance has significantly improved in fixed income side along with some huge changes on the equity side.
Some of the issues that the report highlights are $5.6 billion of net LT outflows in equities mainly from fundamental U.S. equity, net long-term outflows of $7.8 billion mainly from U.S. targeted duration, core and sector-specialty mandates, and roughly flat Sec lending fees of $112 million.