BlackRock hits record $6 trillion, helped by Trump tax law
BlackRock Inc charged past a record $6 trillion in assets, its profit beating Wall Street forecasts, as investors flooded into the relatively low-cost funds of the world`s largest asset manager.
A new U.S. tax law, which sliced corporate and individual income rates, also helped the company`s results in the fourth quarter ended Dec. 31. BlackRock said it saw a $1.2 billion tax benefit related to the law and raised its quarterly cash dividend by 15 percent.
"We`ve been winning more share of wallet," Chief Executive Larry Fink told Reuters.
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"Fees are really important and are becoming more important."
Fink said the tax reform was putting more money in his clients` pockets, which they would need to invest, and that the increased cash could allow him to invest more in the company`s future. He declined to identify such investments but said they were discussed at the company`s board meeting.
The New York-based company`s shares were up 2.3 percent in trading on Friday morning. Shares have gained 47 percent over the last year, including dividends.
"Just when we thought, after the third-quarter report, things couldn`t get better, it seems that they did," said Edward Woods, portfolio manager at Bahl & Gaynor Inc, which owns BlackRock shares.
Strong economic growth, tame inflation and supportive government policies propped up assets in 2017, with most countries` equity markets recording gains, often at double-digit percentages.
BlackRock has the largest lineup of exchange-traded funds (ETFs), many of which track segments of the market at a relatively low fee. The move to those funds caught many of its once-larger competitors flat-footed.
BlackRock said its iShares ETF business took in $54.8 billion in new money in the quarter, up from $49.3 billion a year earlier. The $367 billion the company took in from investors in 2017 overall was a record, while assets under management expanded to $6.29 trillion.
"Our view is this acceleration - we saw 18 percent growth rate last year - we think something like that is going to continue for the next couple of years," said Jennifer Grancio, a managing director at BlackRock focused on the iShares business.
BlackRock shareholders and analysts are, however, keeping a close eye on how fast expenses are rising and fees are falling given the demand for lower-fee products. General and administration expenses for the quarter rose 26 percent in the quarter to $448 million, compared to the year-ago period.
BlackRock`s net income surged to $2.3 billion, or $14.07 per share, from $851 million, or $5.13 per share, a year earlier.
Excluding the benefit from the new tax law, BlackRock earned $6.24 per share. Analysts on an average expected the company to earn $6.02 per share, according to Thomson Reuters I/B/E/S.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)