BlackRock surpassed profit estimates in the second quarter as it attracted $100bn in new client funds during a bumper Wall Street rally.

The New York group’s assets under management jumped 13 per cent over the period to $7.3tn, reversing a large fall at the start of 2020 and coming within just a whisker of the record high at the end of last year.

BlackRock’s strong inflows boosted the fees it earns from servicing client portfolios by 2 per cent. Its net profits rose by a fifth compared with the previous year to $1.2bn while revenue rose 3 per cent to $3.6bn. The world’s biggest fund manager delivered $7.85 in diluted earnings per share on an adjusted basis for the quarter, 13 per cent above analyst estimates.

US stocks posted the best rally since 1998 in the second quarter, a strong rebound from a 20 per cent drop in the first three months of 2020. The big Wall Street lenders also benefited from the frenetic market activity in the second quarter with JPMorgan Chase, Bank of America, Goldman Sachs and Morgan Stanley all reporting strong rises in bond trading revenues.

The company’s ETF business, iShares, brought in $51bn of the group’s net inflows for the quarter, roughly half of the total. It still trailed Vanguard, the world’s second-largest fund manager, in ETF inflows in the first half of the year, according to data from ETFGI.

Column chart of Quarterly technology and service revenue ($m) showing Aladdin powers BlackRock's tech revenue to record high

BlackRock has taken a prominent role during the pandemic, managing the Federal Reserve’s bond-buying programme that attracted criticism given the central bank’s scheme includes purchasing exchange traded funds, even the asset manager’s own funds. The company has not taken revenue from the ETFs the Fed buys.

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The group’s financial markets advisory unit, which manages the Fed programme and works with central banks around the world, generated $39m in revenue, down on the same quarter a year ago.

Technology revenue hit a record $278m, almost a fifth above the same period last year. The big rise was driven by BlackRock’s Aladdin platform, which links investors to the markets, ensures portfolios hold the right assets and measures risk across a wide range of assets.

Line chart of Rebased showing BlackRock outperforms listed peers

BlackRock stock is a shade off the year’s high point reached in February and just 5 per cent from the record reached two years ago. The shares are up 13 per cent this year compared with an 8 per cent decline for fund managers in the S&P 500 index of US blue-chips.

Via Financial Times