iShares Pumps Up BlackRock Q3 Net

October 18, 2012

BlackRock’s iShares was on center stage this week with strong flows that helped its parent’s bottom line.

iShares helped pump up its corporate parent BlackRock Inc.’s third-quarter bottom line by 8 percent, as the world’s biggest  exchange-traded fund sponsor raked in more than a third of the nearly $60 billion in total U.S. ETF inflows in the quarter ended Sept. 30.

In its earnings report released Wednesday, BlackRock boasted that iShares had $25.2 billion in “net flows” in the third quarter—the highest since 2009—and leads the U.S. ETF industry in year-to-date inflows. BlackRock’s iShares ended the quarter with total assets under management of almost $526 billion, according to data compiled by IndexUniverse.

BlackRock, the biggest asset-management company in the world, posted third-quarter net income of $642 million, or $3.65 a diluted share, compared with $595 million, or $3.23 a share in the same year earlier quarter. Revenue jumped 4 percent to $2.32 billion compared with almost $2.23 billion in the 2011 third quarter.

“We achieved a milestone in our iShares business, with the highest net new business production since our merger with Barclays Global Investors in December 2009,” BlackRock Chairman and Chief Executive Officer Laurence Fink said in the press release.

Apart from its earnings on Wednesday, iShares’ fortunes were front and center this week, as BlackRock cut fees on six of its existing funds ETFs and launched four new ETFs—all with the purpose of offering long-term, buy-and-hold, investors broad pure beta funds that are among the cheapest in the entire ETF industry.

The launch of this “iShares Core” series also coincided with the beginning of the integration of BlackRock’s and iShares’ sales forces. Both initiatives aimed at expanding the iShares franchise which, in recent years, has been losing market share to low-cost providers such as Vanguard Group.

SSgA Helps State Street Too

Like iShares, State Street Global Advisors, the fund sponsor behind the SPDR family of ETFs, also helped its parent’s bottom line in third quarter.

A total of $78 billion of net new assets were added to SSgA’s total assets under management. SSgA, which also manages money for institutional clients, is the No. 2 U.S. ETF company by assets. It ended the quarter with ETF assets of $327 billion, according to data compiled by IndexUniverse.

State Street Corp (NYSE: STT) posted third quarter net income on this week of $654 million, or $1.36 a share compared with $543 million, or $1.10 share in the same year-earlier quarter. The third quarter of 2012 included a net after-tax benefit of $0.35 per share, the majority of which pertains to claims associated with the 2008 Lehman Brothers bankruptcy.

Revenue dipped 3 percent to $2.36 billion from $2.43 billion, the company said.



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