February 23, 2024

BlackRock Shares Lose 16% While Bonds and Stock Markets Fall

Assets under the management of BlackRock Inc. have taken a hit. They dropped by 16% during the third quarter as the stocks and bond markets dropped. This is a direct result of the continuous interest rate increase from the US Federal Reserve.

Investment Drop to Lowest in Years

As of the 30 of September, the firm had assets worth $7.96 trillion under management. It is the lowest the firm has come since 2020. This was contained in a report released by BlackRock on Wednesday.

Investors pulled out money from a lot of BlackRock offers this year. These include stocks and cash management. Major products attracted a cumulative figure of $65 billion net value.

The inflows missed the $104 billion estimate made by analysts during a survey done by Bloomberg. In the same period last year, the firm received $98 billion in investments. The investments include ETFs, as well as mutual funds.

The results showed three months of chaos for the market. This came in the form of hawkish policies from the Federal Reserve. It succeeded in sending investors scampering for safety.

The S&P 500 index slid by 5% during the third quarter. The same went for Bloomberg’s Total Return Bonds Index at the same time. 

The firm’s CEO, Larry Fink, said the power of BlackRock’s diverse platform is evident at such times. Fink said in the same statement that clients are turning to the firm more than ever before. They come for the firm’s integrated and comprehensive solution.

Tiny Ray of Hope

The adjected net inflow dropped by 17% to $1.5 billion from one year before. The shares are at $9.55 and surpassed analysts’ expectations of $7.03. The revenue fell by 15% to reach $4.3 billion, in tandem with Wall Street prediction.

Fink sounded a warning last year that inflation would be more than the ordinary. He has now been proven right. 

The Federal Reserve raise rates by 75 basis points again in September. The target range is now at 3% to 3.25% but prices remain high.

Investors withdrew nearly $40 billion from products under BlackRock’s management in the third quarter. This is huge when compared with the $12.4 billion net withdrawal a year before. Institutional investors also pulled out of index products as they withdrew $23.4 billion.

Analysts expected the equity funds to have inflows. The firm reported a withdrawal of $29.3 billion. 

A bright side for the company is fixed income which had an inflow of $90.6 billion. It was attributed to just one institutional investor.   

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