GLOBAL - BlackRock has reported a US$213.3bn loss in assets under management in Q2, blaming sharp falls in equity markets and costs related to its acquisition of BGI.
AUM fell by 6% over the quarter to $3.15trn as of June 30, with a combination of adverse equity markets and foreign exchange movements blamed for contributing $194.1bn (91%) of the total decrease.
Net new business of $28.4bn in long-term products and advisory AUM were also offset by $33.9bn of "merger related" outflows following the acquisition of Barclays Global Investors and its iShares exchange traded fund business last year. and $24.9bn of redemptions in cash management, the firm added.
Despite the losses, the firm's net income almost doubled from US$218m to $432m over the quarter following the purchase of BGI.
It added the pipeline of business wins funded or to be funded totalled $59.5bn, including $47bn in long-term products, $5.6bn in cash management and $6.9bn in advisory AUM.
Chairman and chief executive officer Laurence Fink (pictured) said: "Going into the merger, we knew that some clients would have to address concentration issues and that the active quantitative style was under stress industry-wide. As expected, these two issues continued to drive outflows, and are expected to do so for at least another quarter.
"While the money market industry continues to contract in favour of bank deposits, the effect on our revenues is significantly less than the headline effect on new business flows and AUM.
"More significantly, recent reports show that non-financial businesses hold more cash and cash equivalents on their balance sheets than at any time over the past 50 years.
As fears over sovereign credit risk and the economic recovery abate, these balances will be a powerful source for market flows, M&A and business investment."
Yesterday both Bank of New York Mellon and State Street said higher stock prices had boosted their Q2 profits and both reported quarterly losses in AUM despite double digit year-on-year growth.
BNY Mellon saw assets grow 13% to $1bn compared with the same period a year ago, but declined 5% since the end of Q1 due to falling equity markets.
State Street said assets under management rose 15% to $1.7bn compared with a year ago, but fell 7.6% during the second quarter, again as a result of tumbling stock markets.
The Next Generation Pensions Committee is on a mission to promote and encourage younger voices in the industry. Kim Kaveh looks at its key objectives
This week's top stories included an analysis finding the cost of equalising guaranteed minimum pensions in schemes could hit FTSE 100 profits by up to £15bn.
Employers whose dividend to deficit recovery contribution (DRCs) ratios fall outside the "normal range" should expect to see higher regulatory scrutiny, although no fixed ratio will be set.
Investment consultants and fiduciary managers should expect a final decision on the investigation into the market to be published by the end of the year, the competition watchdog says.