BlackRock 4Q ETF Revenue Slid; Inflows Jumped from 3Q

January 13, 2023

BlackRock Inc.’s iShares unit, the world’s biggest issuer of exchange-traded funds, reported a mixed fourth quarter amid what the firm’s chief executive officer called “economic malaise.”  

The New York-based asset manager’s iShares unit pulled $90 billion into its ETF products during the fourth quarter, more than quadruple the previous period’s $22 billion. Still, that was down from $104 billion in the prior year’s fourth quarter. Inflows fell for the year to $220 billion from $306 billion in 2021. 

Revenue from ETFs dropped 15% to $1.3 billion in the quarter. 

BlackRock struggled with an 18% revenue decline and a 14% drop in assets under management to $8.59 trillion. CEO Larry Fink, according to a memo seen by the Financial Times, said “negative markets had a substantial impact” and the operating environment “is unlike anything we’ve seen in decades.” 

Still, despite iShares reporting year-over-year declines in inflows, the firm’s bond ETF unit reported encouraging numbers, as most quarterly and yearly ETF flows went into bond funds.  

Fixed income ETFs posted a $47 billion haul in the fourth quarter, the second-best in the firm’s history, followed by the $45 billion into equity products. Fixed income ETFs brought in $123 billion in 2022, while $101 billion piled into equity funds. In 2021, those figures were $79 billion into fixed income ETFs, while $223 billion poured into equity products.  

Fink said the focus on bonds will continue this year. He pointed to investors’ interest in high yield, corporate bond and short-duration Treasury funds as of late. “The role of bonds in the portfolio is increasingly relevant for the first time in years,” Fink said during an earnings call Friday. He added that rising interest rates have buffered yields across the board, with high yield bonds earning over 8%. 

Rob Kapito, BlackRock’s president, said ETFs will be investors’ primary method to access bonds. He predicted the ETF industry will reach $15 trillion in “the next few years” from the nearly $6.5 trillion in assets it currently holds.  

BlackRock’s net income fell to an adjusted $8.93 per share, which beat Bloomberg-polled analyst estimates of $8. Revenue dipped to $1.4 billion, adjusted, in the last quarter of 2022, from $1.7 billion reported for the same period the year prior. Year-over-year advisory and administrative fees dropped 5.4% from $15 million to $14 million in 2022. Shares of the company were little changed at $754. 

Contact Shubham Saharanat[email protected]      

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