As a result of an increase in investment advice and administration fees driven by a recovery in global equities markets, BlackRock announced a record-breaking $10.5 trillion in AUM for the first quarter and announced a 36% increase in profit on Friday.
In the first quarter, global equities markets surged, leading to an increase in AUM, on the assumption that the world's leading central banks would switch gears from tightening monetary policy to cutting interest rates.
In the first quarter, BlackRock's assets under management (AUM) increased by 15% year-over-year, while the company's principal revenue generator, investment advising and administration fees, which are usually expressed as a percentage of AUM, increased by roughly 8.8% to $3.63 billion.
Premarket trading saw a 2.6% increase in shares of the biggest asset management in the world. But overall net inflows dropped to $57 billion from $110 billion the previous year. Clients are sitting on their hands, waiting for interest rate drops to start before re-engaging in riskier assets, so inflows are still sluggish.
As a result of the impetus to reinvest large sums of money into riskier assets created by interest rate decreases, analysts anticipate a reacceleration of flows within the asset management business.
Due to increased performance fees, technology income, and the effect of larger markets on average AUM, the company's overall revenue increased 11% to $4.73 billion in the quarter.
Retail and institutional clients worldwide, including insurance companies, sovereign wealth funds, and major organizations, are served by BlackRock's investment management and technology services. The continued demand for its Aladdin investment management platform is seen in its technology revenue, which increased by approximately 10.9% to $377 million.
In the three months ending March 31, the company's net income increased to $1.57 billion, or $10.48 per share, from $1.16 billion, or $7.64 per share, in the same period last year. The benchmark S&P 500 index has increased by 9% this year, while BlackRock's shares have decreased by approximately 3.2%.
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