BlackRock Gets Record New Money on ETF Demand, Pimco Woes

BlackRock Inc., the world’s largest money manager, attracted a record amount of new money in the fourth quarter, helped by demand for exchange traded funds and turmoil at a rival bond manager Pacific Investment Management Co.

Clients added a net $87.8 billion in investor money, more than triple what it gathered in the prior three months and the highest amount ever raised in a quarter, the New York-based company said today. The amount includes $44 billion that went into BlackRock’s iShares ETFs.

“The most important thing I can tell you about our year was obviously that the magnitude of flows was huge,” Chief Executive Officer Laurence D. Fink, 62, said in a telephone interview today.

The firm, which is targeting annual growth in assets of 5 percent, benefited as investors made record use of exchange-traded funds, and after Bill Gross in a surprise move quit Pimco at the end of September, which prompted record outflows at the bond firm. Investors poured $48 billion into BlackRock’s fixed income funds in the quarter.

BlackRock shares fell 1 percent to close at $342.45 in New York. The stock climbed 9.5 percent in the past 12 months, compared with the 0.8 percent increase in the Standard & Poor’s 18-company index of asset managers and custody banks.

Profit Declines

Assets rose 2.8 percent in the quarter to $4.65 trillion, from $4.52 trillion as of Sept. 30, and increased 7.6 percent from a year earlier.

Fourth-quarter net income declined 3.3 percent to $813 million from $841 million as fees earned for beating benchmarks declined amid volatile markets and plunging oil prices. Performance fees dropped by 46 percent to $144 million, from $268 million in the same period last year, according to the release.

Adjusted earnings of $4.82 a share beat the $4.68 average of 19 analysts surveyed by Bloomberg.

Fink is seeking to improve performance at the firm’s actively run products and appeal to individual clients.

“It’s a big challenge to grow that 5 percent a year,” Citigroup Inc. analyst William Katz said in a telephone interview before the report, adding that “you have enough things coming together in 2015 you can actually hit that bogey: U.S. retail, Europe, ETFs broadly,” as well as money moving after the abrupt exit of Pimco’s Gross.

Pimco’s main mutual fund had the worst year of client withdrawals in the history of fund management last year as investors pulled $105 billion the Pimco Total Return Fund, which Gross managed until then and which he built into the world’s biggest bond fund.

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