Even as BlackRock Inc.’s assets advanced to $6.3 trillion and its growth appears unstoppable, there are signs the firm isn’t invincible.
Net flows for its global iShares exchange-traded funds declined 46 percent in the first quarter to $34.6 billion from a year earlier. Yet the world’s largest asset manager’s earnings beat estimates, which pushed the shares up as much as 3.1 percent Thursday.
Choppy markets spurred traders to devote less cash to ETFs and some moved into lower-cost products. ETFs charging 0.2 percent or less have accounted for 82 percent of the industry’s net flows this year, up from 77 percent in the fourth quarter, according to research from Bloomberg Intelligence.
Laurence D. Fink, BlackRock’s chief executive officer, said investors moved money in the quarter because of a spike in market volatility and changes in U.S. tax law.
“The performance of ETFs validated the use of them,” Fink said in an interview with Bloomberg News.
Growth in BlackRock’s ETF business will likely be more subdued compared to the last several years. The money manager came to dominate the market as brokers poured cash into ETFs in anticipation of a rule requiring them to put clients’ interests ahead of their own when handling retirement investments.
“Sustaining growth at double-digits in terms of asset flows will be really tough to do” for BlackRock, said Kyle Sanders, an analyst at Edward Jones & Co.