BlackRock sees $13 billion withdrawal from long-term funds: Here's why
BlackRock Inc. faced a net withdrawal of $13 billion from its long-term investment funds, marking the first time this has happened since COVID-19 began in 2020. This suggests that investors are choosing to keep their cash in money-market funds or specific bond strategies as interest rates stay high. The outflows from long-term funds, such as mutual funds and exchange-traded funds (ETFs), were notably lower than the $50 billion inflow Bloomberg analysts had predicted.
Cash management and money-market funds gain
CEO Larry Fink explained that clients are now earning a real return on cash and are waiting for more policy as well as market certainty before taking on extra risk. This trend impacted the industry's flows in the last quarter. On the other hand, clients added $15 billion to BlackRock's cash management and money-market fund business, investing $29 billion in ETFs and $13 billion in fixed-income funds. Actively managed funds experienced a withdrawal of $7.7 billion.
Total assets under management decline
BlackRock's total assets under management dipped by 3.2% to $9.1 trillion, down from $9.4 trillion in the previous quarter. The total net withdrawals included $49 billion from lower-fee institutional index equity products, with one international client accounting for $19 billion of that sum. Despite this, adjusted net income climbed 13% from a year before to $1.6 billion, or $10.91 per share, beating Wall Street's average estimate of $8.20. Revenue rose by 5% to hit $4.5 billion.
Investor anxiety affects market performance
Throughout the year, money managers have faced a tough market due to shifting inflation expectations and volatility in share and bond markets. Investors have turned to money-market funds as yields rose above 5% and concerns about the financial health of many mid-size US banks gave rise to a flight to safety. Many investors are still on the sidelines because of worries about a potential recession and interest rates.
