Volatile Global Markets Have Impacted BlackRock: What Investors Should Know

  • Jan 14, 2019 AEDT
  • Team Kalkine
Volatile Global Markets Have Impacted BlackRock: What Investors Should Know

BlackRock (NYSE: BLK) happens to be an investment management firm. The company is engaged in the business of extending risk management, investment management as well as technology services. These services are extended to the retail and institutional clients. The company is listed on NYSE under the ticker “BLK.”

As the market players are aware, the 2018 year has indeed witnessed significant volatility. There is a range of factors which have contributed to this sort of volatility and the primary reasons were the fears of the trade wars as well as the fears of the economic growth. The trade problems between the United States as well as China have significantly impacted the sentiments of the market participants and these problems have the potential to even dent the economic growth. Amidst all these, there are worries about the performance of the asset managers. This performance of these companies largely depends on the performance of the equity markets. A downturn in the equity markets could significantly impact their assets under management or AUM and hence, their revenues. The higher the AUM, more will be the base fees of these asset managers. As a result, elevated levels of the base fees would favourably impact the revenues of these companies. Therefore, it can be assumed that the performance of the asset managers would be sensitive to the movement in the equity markets. Therefore, the favourable momentum in the global economic environment, as well as a permanent settlement in the US and China trade dispute, would support the asset managers as well.

However, in FY 2018, the global markets have witnessed significant volatility, and in this type of scenario, the investors generally avoid making investments in the equity markets. Thus, these sentiments of the investors can impact the performance of the asset managers. The broader asset management industry has been working for the reduction in the expenses. The industry has been employing the use of technological tools. BlackRock (NYSE: BLK) has also decided to reduce the headcount moving forward, according to the Bloomberg Quint. It can be said that the asset managers are witnessing tough time lately. Earlier, the equity markets were impacted largely because of the worries about the global economic slowdown as well as the fears of the trade wars between the US and China.

We would now see how BlackRock has performed in Q3 2018. As per the release published, BlackRock ended the September 2018 quarter with the total AUM (or Assets Under Management) amounting to $6.4 trillion which reflects the YoY rise of 8%. The leading asset manager has witnessed long-term net inflows in the September 2018 quarter amounting to $11 billion. The release issued by the company also stated that the revenues have also witnessed the rise of 2% on the YoY basis on the back of favourable momentum in the technology services revenue as well as in the base fees. The company’s technology services revenue witnessed the rise of 18% while the base fees grew by 4%.


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