Via Financial Times

BlackRock achieved its strongest ever year of inflows in 2019, helping the fund manager outpace analyst earnings estimates for the fourth quarter as its total assets swelled to $7.4tn.

The world’s largest asset manager reported adjusted earnings per share of $8.34 for the fourth quarter of 2019, ahead of analyst estimates of $7.69. The firm delivered $3.97bn in revenue for the quarter and $14.5bn for the year.

Investors poured $428bn into the firm’s funds for the year, more than three times as much as 2018 and 16 per cent higher than its previous record set in 2017. Inflows in 2019 included $183bn into iShares, the group’s exchange traded fund business, and $110bn in the firm’s actively managed funds.

Column chart of Annual net asset flows ($bn) showing BlackRock hits inflow record for 2019

The inflows outpaced BlackRock’s index fund rival, Vanguard, the second largest fund manager, which had $268bn of net inflows last year.

BlackRock’s assets were buoyed by the US stock market’s 29 per cent return last year, its best year since 2013. When markets rise, the amount fund managers receive in fees, which are charged as a proportion of assets, increases.

“BlackRock’s 2019 results confirm the uniqueness of our globally integrated, asset management and technology platform,” Larry Fink, BlackRock’s chief executive, said. He pointed to positive inflows across the group’s products and investment styles as reflective of BlackRock’s breadth.

BlackRock is one of the main beneficiaries of the shift toward passive investing, where portfolios track indices like the S&P 500. But its rampant growth has attracted a new level of responsibility. As BlackRock funds own larger blocks of listed companies around the world, it faces pressure to use its powerful shareholder votes to weigh in on topics like climate change and diversity of corporate boards.

READ ALSO  India falls into recession as pandemic weighs on output

On Tuesday, the company outlined new efforts to further incorporate climate risk into its investment process. This included offloading $500m in shares from companies that generate a quarter or more of revenue from thermal coal from its actively managed funds, doubling its count of sustainable ETFs to 150 and using its sway as one of the world’s largest shareholders to vote against companies it believes are lagging on addressing climate change. The changes come after criticism the company’s actions have failed to match its rhetoric on climate.