BlackRock’s net equity flows decreased by around $4.3 billion in Q2 2023 as the shift to fixed income contributes to a broad (but not unexpected) drop in equities trading.
While active institutional equity flows decreased by $6.4 billion, the shortfall was partially offset by retail inflows and a strong equity ETF performance. However, the drop in volumes resulted in a noticeable decline in fee income for the world’s biggest asset manager.
Speaking during the earnings call, Martin Small, senior managing director and chief financial officer for BlackRock and its global head of corporate strategy, said: “Second quarter base fee and securities lending revenue of $3.6 billion was down 2% year-over-year and reflected the impact of underperformance on non-US equity markets and fixed income market movements on our average AUM, partially offset by higher securities lending revenue.”
Overall, active equities saw more than $9 billion of outflows over the quarter and year to date of $14.8 billion. Active equities AUM fell by more than $17 billion year-on-year. Total equities revenue for the quarter was down $34 million with active equities down $44 million. Total BlackRock revenue was down $63 million for the quarter.
Looking ahead, BlackRock believes artificial intelligence will be a game-changer for the future, particularly around governance, data and risk management.
See our recent feature on AI with BlackRock research chief Stefano Pasquali for further insights.
Speaking during the earnings call, BlackRock CEO Larry Fink said: “This year’s US equity market rally has been fuelled by just a few technology firms and hope that artificial intelligence will gain widespread adoption.
“I believe AI has a huge potential to enhance productivity and transform margins across sectors. It may be a technology that could bring down inflation, but in the meantime, potential banks continue to face a sharp trade-off between living with some inflation and/or damaging economic activity.”
©Markets Media Europe 2023
