What’s going on?
BlackRock’s quarterly results came in ahead of expectations on Wednesday, as the world’s biggest investment firm continues to take good care of investors’ pride and joy.
What does this mean?
The amount of money BlackRock looks after – a.k.a. assets under management (AUM) – hit a record $9.5 trillion last quarter, thanks to buoyant markets and the $81 billion worth of new client money invested into its funds (tweet this). And since the company makes most of its money from the fees it charges on that AUM, its profit saw a better-than-expected 14% jump last quarter compared to the same period last year. Top work, BlackRock: that makes this the eighth quarter in a row where its profit has come in above expectations.
Why should I care?
For markets: BlackRock’s best isn’t good enough.
An investment firm’s AUM can grow for one of two reasons: a rise in the value of its investments or a fresh influx of client cash. The former is much more dependent on financial market movements and, in turn, much more unpredictable. The latter is considered a much more reliable source of growth: new cash suggests investment firms are outperforming both their competitors and the market at large, which should attract even more business. But while BlackRock did bank $81 billion, that was 30% less than investors were expecting – which might be why they sent its shares down on Wednesday.
The bigger picture: China’s stance isn’t going unnoticed.
BlackRock might also be riding high since getting the okay to operate as a private wealth manager in China, as well as becoming the first overseas firm to win approval to launch an independent investment fund business in the country. It might want to start by, uh, selling all its Chinese tech stocks: that’s what the world-renowned ARK Investment Management has been doing at record pace as the Chinese government intensifies its crackdown on the sector.