Bitcoin helps BlackRock record $10.5 trillion AUM

The rise of stock markets and the popularity of Bitcoin’s new spot trading fund has enabled BlackRock to record $10.5 trillion in assets under management, with net income rising by more than a third.

According to CNN, the world’s largest financial manager announced a 36% year-over-year jump in net income to $1.57 billion in the first fiscal quarter, with an 11% increase in revenues to $4.7 billion. These numbers, in addition to adjusted net income of $1.47 billion, all exceeded analysts’ expectations.

However, net inflows of $57 billion were disappointing, as investors remained cautious about leaving cash to return to equity and debt markets, while the US Federal Reserve kept interest rates at their highest level in 23 years, according to a Financial Times report.

“There is still a record amount of cash on the sidelines, and money market fund balances are now approaching $9 trillion,” BlackRock CEO Larry Fink told analysts D,L Friday. “I think this stems from fear and uncertainty.”

Large pension funds with large allocations to private equity have been particularly hesitant to invest, because those funds have been slow to return money to investors amid a slowdown in acquisitions and initial public offerings, Fink said.

He continued: “An increasing number of clients maintain a higher cash balance to meet their obligations.”

BlackRock was one of those to launch a Bitcoin spot exchange-traded fund in the first quarter, but its product has been a runaway success story: it reached $10 billion in assets in record time and now has $18.7 billion. This helped push total flows into ETFs in the quarter to $67 billion.

Fink highlighted BlackRock’s enthusiasm for private markets and infrastructure, as the company aims to capitalize on global investment in decarbonisation and digital transformation.

The $12.5 billion purchase of Global Infrastructure Partners, announced in January, is on track to close in the third quarter, subject to regulatory approvals and being funded with $3 billion of newly issued debt, the company said.

Fink also said BlackRock was seeing “accelerating momentum” as it was winning new business from “high-end” clients for its technology, retirement and portfolio management services. He added: “All of this will lead to much greater opportunities.”

Technology revenue rose $37 million year over year to $377 million, and Fink told analysts that its Aladdin platform had achieved several “big milestones” with more to come.

Most of the nearly $500 billion increase in the company’s assets under management in the first quarter was due to rising stock markets. In the US, the S&P 500 had its best first quarter since 2019. Fixed income funds reported inflows of $42 billion, and equity funds received $18 billion, out of total long-term inflows of $76 billion.

BlackRock’s operating margin improved to 35.8%, slightly better than analysts expected. Chief Financial Officer Martin Small said on a call with analysts that he expects headcount to be “broadly flat” in 2024, as has been the case over the past two years.

Fink added that he believes AI will allow the company to do more with fewer people.