The record stock market run is great news for BlackRock: The owner of the super popular iShares family of exchange-traded funds reported earnings and revenue for the fourth quarter Thursday that easily topped forecasts.
BlackRock, the world’s largest money management firm, ended the year with nearly $8.7 trillion in total assets — an increase of 17% from a year ago.
Roughly $2.7 trillion of BlackRock’s assets under management are in the company’s iShares ETFs. That’s up 19% from the end of 2019. Investors plowed nearly $79 billion of new money into iShares funds during the fourth quarter alone.
BlackRock held up much better than other big financial stocks in 2020 — a year of turmoil and volatility due to the global Covid–19 crisis and resulting recession. The firm has benefited from the stock market’s quick rebound, even as many big banks saw their profits hit by lower interest rates and weaker demand for loans.
Shares of BlackRock have surged nearly 50% in the past 12 months while the Financial Select Sector SPDR Fund, an ETF that holds most of America’s top banks, is up just 1%. BlackRock stock fell more than 2% on Thursday despite the strong results.
“The world faced unprecedented challenges in 2020 — many of which continue today. Through it all, BlackRock remained steadfast in meeting the needs of all our stakeholders,” said BlackRock CEO Larry Fink in the earnings press release.
Fink added during a conference call with investors and analysts Thursday that “the hardships experienced by people globally in 2020 and inequality further exasperated by the pandemic have only strengthened BlackRock’s sense of savings, to make savings easier and more affordable.”
He stressed that the firm would continue to promote sustainable investing trends as a major economic theme and expressed hope that the eventual economic rebound will lead to a more resilient economy going forward.
“The pandemic has taken a dramatic toll on all our lives, disrupting the way we work, the way we live. At the same time, it has led to a profound shift in economies and how societies even operate, creating opportunities to redesign our society,” he added during the conference call.
Fink said that concerns about rising economic inequality, along with low interest rates and increased inflation expectations, need to be a big picture theme for any investor saving for retirement or other long-term goals.
He did not address the changing political or regulatory landscape during the call, however. No mention was made of the fact that Joe Biden is about to take over as president and that Democrats are going to control both the House and Senate.
But Fink sounded bullish about the future, arguing that even as long-term bond yields start to rise, “the demand for equities will persist” and that higher yields are going to push “the banking system to be much stronger.” He said the increase in bond yields is “a positive sign for the economy.”
He concluded the conference call with a public safety message: “Everyone please feel safe. Everyone please stay healthy, and everyone please get a vaccination. Thank you.”