Why BlackRock attracted record funds in the fourth quarter
BlackRock: A look into the earnings of the world's largest asset manager (Part 2 of 9)
AUM (assets under management) expands organically
In the fourth quarter of 2014, BlackRock (BLK) expanded its product line as well as increased its business outside the United States. BlackRock attracted record funds and is now managing more than a billion dollars for 41 countries around the globe. It has managed to receive $87.8 billion in new funds in the fourth quarter across its product categories.
The infusion was the highest ever witnessed in the company’s history. Growth was mainly in the iShares and Retail product categories as investors continued to invest in low-cost ETFs. BlackRock also witnessed marginal growth in the Institutional segment.
In the Institutional segment, BlackRock faces competition from BNY Mellon Asset Management (BK) and Morgan Stanley (MS), which together make up 3.38% of the Financial Select Sector SPDR Fund (XLF).
iShares and Retail outperform
In terms of the fund’s composition, the fourth quarter was similar to the last few quarters. iShares witnessed its fastest growth in AUM in the last six quarters. Growth was mainly in the low-cost ETF options as well as fixed income ETFs.
Retail grew by 11% backed by strong offerings for retail investors. Over the last few quarters, BlackRock has increased its focus on iShares and Retail. Its institutional funds base has increased substantially and is growing at a slower pace. Overall, Institutional investments grew by $21 billion or 1%, the highest over the last couple of years.
Vanguard and State Street (STT) are trying to penetrate the fast-growing ETF market through low-cost offerings. BlackRock has launched innovative, new, and low-cost ETFs to gain and control the market share in the industry.
BlackRock recently launched iShares MSCI Target U.S. Real Estate UCITS ETFC for tracking investments in physical real estate in the United States. In 2014, it also launched several ETFs for European markets, including iShares MSCI Europe IMI Index ETF (XEU), which seeks to track the MSCI Europe IMI (Investable Market Index).
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