BlackRock raises dividend after record net inflows

BlackRock says it will raise its quarterly dividend after reporting the largest net inflows of new client money in its history in 2016, despite a 5 per cent fall in net income for the year.

Reporting its fourth quarter and full-year results, the world’s largest asset manager said that it took in total net inflow of $202bn in 2016, as its total assets under management rose by 11 per cent year-on-year to stand at $5.14tn.

Yet while inflows of client money were up, BlackRock’s revenues and profits fell compared with 2015. Revenues for the year dropped 2 per cent, and operating income came in at $4.57bn, down 2 per cent year-on-year. Net income fell 5 per cent from 2015 to 2016 to stand at $3.172bn, and diluted earnings per share fell 2 per cent for the year to $19.29.

These falls happened at the same time as BlackRock managed to defend its operating margin, which for the whole of 2016 rose by 10 basis points to 41 per cent compared with 2015, and by 270bp in the fourth quarter compared with the same period last year — an increase it attributed to keeping expenses and other costs low.

With many in the asset management industry fearing for the future of higher-fee, so-called active investment products, Larry Fink, BlackRock’s chairman and chief executive officer, said clients had continued to use active and passive strategies together.

“Investors are rethinking their approach to active management, asset allocation and portfolio construction, and we’re seeing more clients use active and index strategies together to deliver returns,” he said in a statement.

Mr Fink, who had before the US election spoken of his concern about trade protectionism, was late last year picked to join an advisory panel of American business leaders assembled by president-elect Donald Trump.

Year-on-year BlackRock suffered outflows from its actively managed retail equity business, multi-asset and alternatives businesses, with inflows into its retail fixed income arm. In total $11.3bn of assets left the retail division but overall assets under management in the division stayed broadly flat, helped by investment gains of $20.8bn.

Its iShares Exchange Traded Fund arm fared better, attracting $140bn of net inflows for the year, while BlackRock’s institutional active funds also gained $17.9bn for the year.

BlackRock said it would increase its quarterly cash dividend to $2.50 per share, a rise of 9 per cent, and would buy back an additional 6m shares under its current repurchase programme. Over the year its weighted average diluted share count fell 1 per cent to 166m.