BlackRock: The $6 Trillion Money Manager

Posted January 12, 2018 3:30 p.m. EST

BlackRock is now a $6 trillion firm.

Continuing to cash in on the boom in exchange-traded funds, the world’s largest money manager ended 2017 with $6.29 trillion under management, up 22 percent from a year ago.

BlackRock reported adjusted net earnings of $3.7 billion for the year Friday, up 16 percent from 2016 and easily beating analysts’ expectations. The firm also reported a $1.2 billion tax benefit for the fourth quarter, resulting from the recent tax cut package.

Including the tax benefit, earnings were up 59 percent for the year.

In an interview, Laurence D. Fink, chief executive of BlackRock, highlighted how, despite reductions in fees for its active and passive funds, increased flows drove the firm’s rise in profits.

“We have been very aggressive with fee cuts and yet our margins continue to expand,” he said.

Fink, who in the past has been cautious about the market’s rise, said that robust earnings growth, a solid global economy and the effects of the tax cut should, for the moment, sustain the stock market’s nearly 9-year rally.

“It’s hard not to be constructive right now,” he said.

BlackRock has been one of the main beneficiaries of the current bull market. Investors have poured money into passive investment funds that follow a wide variety of indexes and strategies at minimal cost since the end of the financial crisis. Investors are increasingly using exchange-traded funds, or ETFs, to make bets on the stock and bond markets as opposed to buying the individual securities themselves.

BlackRock reported a record $367 billion in net inflows last year. Of that, $245 billion came via the firm’s iShares suite of ETFs, which track major equity indexes as well as broad fixed-income strategies such as corporate and high yield bonds.

BlackRock bought iShares from Barclays in 2009 for $13.5 billion. At the time, iShares had $300 billion of assets under management. Under the BlackRock umbrella, that figure has exploded to $1.7 trillion, making that deal one of the more lucrative ones in recent financial history.