Adjusted profit fell to $1.12 billion, or $7.36 per share, for the three months ended June 30, from $1.61 billion, or $10.45 per share, a year earlier. It missed an average analyst estimate of $7.90 per share, according to IBES data from Refinitiv.
Retail investors withdrew roughly $10 billion in the quarter. BlackRock (NYSE: BLK) showed the first drop since the beginning of the pandemic in March 2020. Still, the firm attracted $89.6 billion in total net inflow from clients.
BlackRock’s assets under management (AUM) fell 11% to $8.49 trillion compared to last year, well below the $10 trillion milestone from the fourth quarter of 2021. Besides market turmoil, a stronger dollar made it more difficult for BlackRock as 35% of its assets under management are in Europe and Asia.
The current macroeconomic environment, ridden with worries of surging inflation, geopolitical turmoil, and rate hikes, has only added to the pressures of fund managers, as a large part of their business is dependent on market conditions.
Fed Hit with Risk
Moreover, the pullback in the pandemic-era stimulus from the U.S. Federal Reserve has hit the risk appetite of investors who have rejigged portfolios this year towards safe-haven and fixed-income products, with equity markets tumbling on recession fears.
More rate hikes by the U.S. central bank to combat decades-high inflation could put more pressure on asset managers as investors refrain from large investments. They also face tough comparisons to last year, when easy monetary policy and cheap borrowing led to frenzied investment activity.
BlackRock’s shares, which have shed nearly 36% so far this year, were down 0.8% in premarket trading after the results.