BlackRock (BLK) Inc.’s Laurence D. Fink, who leads the world’s biggest provider of exchange-traded funds, said investors will continue to put money into passive stock products rather than active funds as they get back into equities.
“What we are seeing, and the industry overall, are still a majority of flows moving more into passive,” Fink, chairman and chief executive officer of New York-based BlackRock, said in a telephone interview today.
BlackRock’s iShares unit, which manages $759 billion in exchange-traded products and offers about 600 funds, is seeing investor deposits heavily skewed toward equities, Fink said. The firm’s stock ETFs drew $30.1 billion in the fourth quarter, while investors removed $5.4 billion from active stock funds, the firm said today in a statement.
The deposits helped lift assets at the world’s biggest money manager, which posted a 24 percent increase in fourth- quarter earnings to $690 million, or $3.93 a share, from $555 million, or $3.05, a year earlier. Assets rose to a record $3.79 trillion.
U.S. stock mutual funds attracted $14.8 billion in new money last week, the most since at least 2007. Investors had been avoiding domestic stock funds since the 2008 financial crisis, missing out as the Standard & Poor’s 500 Index more than doubled from a 12-year low in March 2009. Money instead flowed to bond funds, which were perceived as safer.
Investors poured more than six times as much money into BlackRock’s stock ETFs as they did into bond ETFs in the last three months of 2012.
“I’m not here to say people are bullish and rerisking,” Fink said. “If they’re not bearish on the world, but not bullish, they probably have overallocation to bonds, and they’re probably looking and re-orienting that.”
BlackRock’s shares rose 4.6 percent to $232.46 at 12:46 p.m. in New York, the most since December 2011. The stock gained 19 percent in the 12 months through yesterday, compared with the 25 percent increase in the 20-member Standard & Poor’s index of asset managers and custody banks.
U.S. economic growth in the first quarter may be harmed by the bill U.S. lawmakers passed to avert spending cuts and tax increases because it doesn’t address the budget deficit, Fink said. He said he still expects the economy to pick up in the second half of this year.
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