BlackRock's share price, after losing nearly 23% between January 1 and April 7, rebounded 40% until the publication of its Q2 results. The resilience of the economy is reflected in the accounts of the manager, which is broadly diversified both geographically and sectorally.
Assets under management at a historic high
At the end of June, BlackRock managed $12.5 trillion in assets, up 18% y-o-y, a double record in terms of volume and speed.
The size effect is in full swing: the bigger BlackRock gets, the more it can reduce its costs, gain market share and boost its revenues. The result: revenue up 12.6% to $5.42bn and adjusted net income up 21% to $1.88bn. Costs remain under control. It should be noted that employee compensation accounts for 50% of expenses, followed by sales and asset management fees (32%).
A downside for long-term cash flow
The group recorded $46bn in net long-term inflows, or nearly 20% of its target. This figure was penalized by a massive $52bn withdrawal by a single Asian institutional client from an index fund. BlackRock did not disclose the identity or reasons for the withdrawal, but according to the Financial Times, it involved fixed-income products.
The weakness of long-term flows and the nature of the divestment raise questions.
The record assets under management were made possible by the market rally and currency fluctuations.
If another downside must be added, BlackRock reported performance fees of $94m, well below the average estimate of $114m from analysts surveyed by Bloomberg.
Growth in strategic segments
Alternative investments continue to drive growth. Their assets under management rose from $326 billion in Q2 2024 to $474bn a year later, an increase of 45%. This segment accounts for only 3% of assets, but 15% of base fees, thanks to a higher fee structure.
Digital assets are also emerging for the first time as a separate asset class, now accounting for 1% of assets under management and fees. Bitcoin ETFs are proving successful and could exceed $100bn in assets under management this month.
Offensive in private credit
On July 1, BlackRock completed its acquisition of HPS Investment Partners, a heavyweight in private credit, adding $165bn under management. The deal, announced in December 2024 for approximately $12 billion, follows the purchase of Global Infrastructure Partners ($12.5bn) and Preqin, a private market data specialist ($3.2bn).
BlackRock is thus addressing a historical weakness in this niche market, following the relative failure of its takeover of Tennenbaum in 2018. The integration of these new activities will be decisive in establishing the group in this field, alongside Apollo Global Management, Blackstone, and KKR.
