BlackRock Earnings Rise 9 Percent, Buoyed by Passive Funds

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BlackRock, the world’s largest asset management firm, said on Monday that second-quarter earnings had risen 9 percent as investors continued to pour money into the company’s expanding fleet of exchange traded funds.

The company, which oversees $5.7 trillion in assets, received $94 billion in net investor money during the quarter, with $74 billion of that amount flowing into the company’s iShares-branded exchange traded funds.

BlackRock now manages $1.5 trillion in exchange traded funds, passive investment vehicles that track a wide variety of indexes and investment strategies.

The continuing strong performance by the iShares division highlights why BlackRock’s chief executive, Laurence D. Fink, made the decision in March to close down and repurpose a number of the firm’s sluggishly performing mutual funds that rely on individuals to pick stocks.

Indeed, as BlackRock cements its place as the industry leader in terms of E.T.F.s — with the index giant Vanguard entrenched in second place — Mr. Fink will remain under pressure to ensure that its other activities, from managing bonds to to its struggling stock-picking division, keep pace with the surging passive business.

More than ever, Mr. Fink is positioning BlackRock to focus on such systematic investment strategies as basic index funds, E.T.F.s and blended strategies like smart beta and factors that target investment themes like momentum and low volatility.

The common theme: low costs and reliance on machines as opposed to experts making bets on stocks.

As of the end of the second quarter, BlackRock managed $3.7 trillion in passive investment money and $1.6 trillion in active strategies.

Mindful of low-cost competitors like Vanguard and Schwab, which through its booming adviser platform is offering E.T.F.s for free, BlackRock has been aggressively slashing the fees of its E.T.F.s.

Reflecting the buoyancy in the markets in the second quarter, BlackRock said that $51.8 billion flowed into equity E.T.F.s and $21 billion was directed toward bond E.T.F.s — an area of increasing focus for the firm.

During a time when bond markets have been less liquid than in the past, institutional investors are increasingly using E.T.F.s to make big bets in emerging markets and high-yield sectors.

For the quarter, BlackRock earned $857 million, or $5.22 a share, up from $789 million, or $4.73 a share, in the quarter a year earlier.