BlackRock’s assets hit record $13.46 trillion on third-quarter markets rally, M&A boost 

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By Anirban Sen and Prakhar Srivastava

NEW YORK (Reuters) -BlackRock, the world’s biggest asset manager, swept past its own record for assets under management, as it reported a higher third-quarter profit on Tuesday that was driven by a rally in global markets and its recent dealmaking spree that boosted fee income. 

BlackRock’s assets under management rose to $13.46 trillion for the quarter ended September 30, up from $11.48 trillion a year earlier. Long-term net inflows totaled about $171 billion, led by continued strength in its exchange-traded funds business, which remains the firm’s key driver of organic growth.

Resilient consumer spending, despite higher borrowing costs, has helped sustain U.S. economic momentum, fueling gains in equity markets and prompting investors to pour money back into lower-cost index strategies.

A cooling labor market and moderating inflation pushed the Federal Reserve to cut interest rates in September – its first reduction this year – while expectations of further easing later in 2025 fueled strong inflows into BlackRock’s fixed-income ETFs. Moreover, investor demand for U.S. Treasuries has remained solid as the Fed began cutting rates, though appetite for longer-dated Treasuries remained cautious, since yields are tied to growth and fiscal trends rather than Fed policy alone.

In an interview with CNBC on Tuesday, BlackRock CEO Larry Fink said the U.S. was “still the best place in the world to invest.”

BlackRock reported adjusted earnings of $1.91 billion, or $11.55 per share, for the three months to September 30, up from $1.72 billion, or $11.46 per share, a year earlier.

Total revenue – most of which is earned as a percentage of assets under management – rose to $6.5 billion from $5.2 billion a year ago, driven mainly by the market rally and an 8% growth in organic base fee, which exceeded BlackRock’s own targets.  

The results were the first to include the firm’s earnings from some of its recent acquisitions, including that of private credit manager HPS Investment Partners, which was completed at the start of the third quarter. BlackRock, which spent about $30 billion on big takeovers over the past two years, benefited from a $500 million revenue boost from some of those deals during the latest quarter.  

Analysts on average were expecting earnings of $11.24 per share on revenue of $6.2 billion. On a diluted basis, net income fell 19% to $1.32 billion, or $8.43 per share. 

“Our third-quarter results reflect the strength of our global relationships. The accelerating activity we’re seeing is a validation of BlackRock’s business model,” Fink said on a post-earnings call with analysts. 

“As I meet with clients around the world, they’ve been excited about the opportunity to do more with BlackRock, and expanding the growth potential (from recent acquisitions). Our history of integrations (of acquisitions) is very different and it has set us apart.”

The New York-based firm’s long-term net inflows grew to $171 billion during the quarter, up about 7% from a year ago. Overall net flows surged to $205 billion, driven mainly by strength in its ETF business.

As of Monday’s close BlackRock’s shares had jumped nearly 14% so far this year, just ahead of the S&P 500 index’s 13% gain during the same period. The shares were up 3.5% at a record high in early Tuesday trading.

“Overall, results were strong and benefitted from a favorable market backdrop,” said Kyle Sanders, senior equity research analyst at Edward Jones. “BLK’s three recent acquisitions of GIP, Preqin and HPS all made healthy contributions this quarter. In our view, BLK is entering into a new chapter in its growth story.” 

DIVERSIFICATION STRATEGY 

Large asset managers like BlackRock have in recent years been diversifying revenue streams as they grapple with pressure from index strategies that typically generate lower fees than faster-growing areas such as private markets, real estate and infrastructure. Still, those low-cost funds continue to be a huge fee generator for BlackRock. 

During the latest quarter, BlackRock’s private markets drew inflows of $13.2 billion. Private assets generate significantly higher fees than ETFs, a core part of BlackRock’s business through its iShares franchise. Its investment advisory performance fees rose 33% to $516 million in the reported period, after falling nearly 42.7% in the second quarter. 

Equity product inflows declined to $46 billion, compared to $74 billion a year ago, while fixed-income products saw inflows of $47.5 billion in the quarter.

Overall retail inflows for BlackRock rose to about $9.7 billion from $6.9 billion a year earlier, driven by investor enthusiasm during the quarter. Its total expenses rose to $4.6 billion from $3.2 billion last year, largely due to higher compensation expenses and acquisition-related costs.

Technology services and subscription revenue rose 28% to $515 million, buoyed by its Aladdin platform and the newly acquired data business Preqin.

(Reporting by Anirban Sen in New York and Prakhar Srivastava in Bengaluru. Editing by Maju Samuel, Chizu Nomiyama and Mark Potter)