The world’s biggest asset manager, BlackRock, Inc. (NYSE: BLK), reported a great entry of cash into its low-cost funds but fell short on revenue. Their large index tracking iShares exchange traded funds have been increasing at an incredible pace resulting in $74 billion during the most recent quarter, up from $16 billion a year earlier.
As a way to access the market, many investors have been lifting up funds and moving away from more expensive products. BlackRock has been facing competition from asset managers offering ETF’s at or near their cost of managing them and many products have lead to 0 fees.
BlackRock’s assets have totaled to nearly $5.7 trillion while revenue gained 6 percent to $2.97 billion after receiving help from fast asset gathering. After adjusting for non recurring items, earnings per share also increased 10 percent to $5.22 which missed Wall Street analysts’ average target of $5.40 per share and $3.02 billion revenue forecast.
BlackRock’s plan to win business when investors move money has lead them to cut some fees on funds. As a result, the decline in fees was a bad move and revenue became lighter and lighter due to the fact that high fee funds result from low targets. The company’s overall shares have decreased in premarket trading on Monday.