Global investors flock to stocks and bonds in Q4, BlackRock's AUM returns to $10 trillion

Zhitong App learned that on January 12th, before the US stock market opened, global asset management giant BlackRock announced its financial performance for the fourth quarter of 2023. The data shows that BlackRock's total revenue in Q4 was $4.63 billion, a year-on-year increase of 7%, which is basically in line with market expectations. Under GAAP, BlackRock's net profit in Q4 was $1.375 billion, a year-on-year increase of 9%. Under non-GAAP, BlackRock's adjusted earnings per share in Q4 were $9.66, exceeding market expectations of $8.84 and higher than the $8.93 in the same period last year.

The financial report also shows that BlackRock's clients bought a large number of long-term investment funds issued by the institution in the fourth quarter of last year, increasing the investment scale in various long-term ETFs and other fund products under BlackRock by $63 billion. This indicates that investors have poured funds into the stock and bond markets amid the soaring value of global stock and bond assets.

The financial report also shows that in the fourth quarter of last year, clients also added approximately $33 billion to the company's independently managed cash management business and money market funds. This indicates that the asset management giant is increasingly positioning itself as a "one-stop investment service provider" globally. Overall, global investors invested approximately $88 billion in all ETF products under BlackRock in the fourth quarter of last year, and approximately $32 billion in all fixed-income funds under BlackRock.

Prior to this, global clients of BlackRock withdrew approximately $13 billion from long-term funds in the third quarter of 2023. However, in the last three months of 2023, this situation suddenly reversed. As investors began to believe that the Federal Reserve would stop raising interest rates and shift to an interest rate cut cycle this year, stocks and bond assets in most global markets rebounded sharply, triggering a large influx of buying funds.

The most important data is that the massive inflow of funds into BlackRock's fund products and the rise in the value of stocks and bonds in the last three months of 2023 have slightly exceeded $10 trillion in total assets under management, fully consolidating BlackRock's title as the "largest asset management institution in the world". With such a huge asset management scale, BlackRock is at the forefront of global asset management, and its asset management scale even exceeds the GDP of most countries in the world.

This figure far exceeds the scale of $8.5 trillion in the same period last year, and slightly lower than the widely expected $9.8 trillion by Wall Street analysts, but it is lower than the record of the highest asset management scale set two years ago.

In terms of business segmentation, BlackRock's revenue from investment advisory and management fees in Q4 was $3.448 billion, compared to $3.26 billion in the same period last year. Revenue from securities lending was $157 million, compared to $139 million in the same period last year. Revenue from performance-based fees for investment advisory was $311 million, compared to $228 million in the same period last year. In terms of technical services revenue, it reached USD 379 million, compared to USD 353 million in the same period last year. Distribution expenses generated revenue of USD 303 million, down from USD 314 million in the same period last year. Consultation and other business revenue amounted to USD 33 million, compared to USD 43 million in the same period last year.

In terms of shareholder returns, BlackRock returned USD 4.5 billion to shareholders in 2023, including a USD 1.5 billion share repurchase program. BlackRock announced that, with approval from the board of directors, the latest quarterly cash dividend will increase by 2% to USD 5.10 per share.

Larry Fink, CEO of BlackRock, stated in the performance statement, "BlackRock experienced a challenging market and asset management industry environment in 2022 and 2023, achieving differentiated organic growth trends and operating profit margins." He further added, "When investors are ready to reinvest their money for asset appreciation, they will collaborate with BlackRock."

Regarding the expectations for the US economy and the Federal Reserve's interest rate cuts, Larry Fink, CEO of BlackRock, stated in an interview after the earnings report that he expects a significant improvement in the US economy in the fall, but the growth rate will not be too strong. Fink predicts that the first interest rate cut by the Federal Reserve will occur in June.

Regarding the latest launch of the Bitcoin spot ETF by BlackRock, Fink expressed his belief that cryptocurrencies such as Bitcoin are an asset class, not just a currency. After the approval of 11 Bitcoin spot ETFs by the US SEC, the CEO of BlackRock also expressed interest in Ethereum spot ETFs, stating that Ethereum ETFs are worth looking forward to.