https://ift.tt/fBLMx4I AUM Drop Below $10 Trillion, Warns Fees May Be Pressurized – Cryptovibes.com – Daily Cryptocurrency and FX News

Hurt by the market rout in the first quarter, BlackRock Inc (BLK.N) confirmed that its assets under management (AUM) are back below $10 trillion and warned that volatile markets could cause fees to come under pressure over the rest of the year.

But since it benefited from investors continuing to pour money into its various index-traded and active funds, it managed to post a better-than-expected quarterly profit. The BlackRock chairman and chief executive, Laurence D. Fink, blamed Russia’s invasion of Ukraine for creating a supply shock in many commodities, which has further increased inflation. He added:

“Our clients are trying to understand the implications of the rapidly changing investment environment.”

In the three months ended March 31, adjusted profit climbed to $9.52 per share, or $1.46 billion from $8.04 per share, or $1.2 billion, a year earlier. According to Refinitiv IBES data, analysts on average had expected a profit of $8.75 per share.

At the end of the quarter, the New York-based firm had $9.57 trillion in assets under management. Although that was a rise from $9.01 trillion a year earlier, it was still a drop from its record $10 trillion during last year’s fourth quarter.

Even though there were some outflows in retail fixed income and cash management, the major cause of the quarterly drop was the sell-off in equities and fixed income markets. The plunge happened in line with the broader money market fund industry, which was steered by redemptions from offshore prime and U.S. government money market funds.

While bond yields have charged higher and the yield curve has inverted, which many see as an indication of a pending recession, investors expect that rates will be aggressively hiked by the U.S. Federal Reserve to combat sky-high inflation.

Fink commented:

“Across the board, you’re seeing portfolios are being navigated around fixed income. Clients are reevaluating where they should be across the yield curve.”

Flows into the asset manager’s funds remained positive, drawing total net flows of $86 billion in the first quarter, a drop from $172 billion a year earlier, mainly because of seasonal cash management outflows of $27 billion.

According to Chief Financial Officer Gary Shedlin, BlackRock predicted that lower performance fees from liquid alternatives and long-only products during the remainder of the year could be possible results of the recent market volatility.

BlackRock stock closed down marginally at $715.74 despite the results being beat. In the first quarter, they fell by nearly 17%.

Cathy Seifert, an analyst at CFRA, stated:

“The risk for this year is that visibility is low, and there’s a lot of uncertainty and that’s a negative for the stock. Over the longer term, there still remains several positive growth catalysts at the firm.”

Assisted by higher administration and investment advisory fees, total revenue grew about 7% to $4.69 billion. That amount was a bit lower compared with estimates of $4.73 billion.