BlackRock hits record US$6 tril, helped by Trump tax law

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NEW YORK (Jan 12): BlackRock Inc charged past a record US$6 trillion in assets, its profit beating Wall Street forecasts, as investors flooded into the relatively low-cost funds of the world's largest asset manager.

A new US tax law, which sliced corporate and individual income rates, also helped the company's results in the fourth quarter ended Dec. 31. BlackRock said it saw a US$1.2 billion tax benefit related to the law and raised its quarterly cash dividend by 15%.

"We've been winning more share of wallet," Chief Executive Larry Fink told Reuters.

"Fees are really important and are becoming more important."

Fink said the tax reform was putting more money in his clients' pockets, which they would need to invest, and that the increased cash could allow him to invest more in the company's future. He declined to identify such investments but said they were discussed at the company's board meeting.

The New York-based company's shares were up 2.3% in trading on Friday morning. Shares have gained 47% over the last year, including dividends.

"Just when we thought, after the third-quarter report, things couldn't get better, it seems that they did," said Edward Woods, portfolio manager at Bahl & Gaynor Inc, which owns BlackRock shares.

Strong economic growth, tame inflation and supportive government policies propped up assets in 2017, with most countries' equity markets recording gains, often at double-digit percentages.

BlackRock has the largest lineup of exchange-traded funds (ETFs), many of which track segments of the market at a relatively low fee. The move to those funds caught many of its once-larger competitors flat-footed.

BlackRock said its iShares ETF business took in US$54.8 billion in new money in the quarter, up from US$49.3 billion a year earlier. The US$367 billion the company took in from investors in 2017 overall was a record, while assets under management expanded to US$6.29 trillion.

"Our view is this acceleration — we saw 18% growth rate last year — we think something like that is going to continue for the next couple of years," said Jennifer Grancio, a managing director at BlackRock focused on the iShares business.

BlackRock shareholders and analysts are, however, keeping a close eye on how fast expenses are rising and fees are falling given the demand for lower-fee products. General and administration expenses for the quarter rose 26% in the quarter to US$448 million, compared to the year-ago period.

BlackRock's net income surged to US$2.3 billion, or US$14.07 per share, from US$851 million, or US$5.13 per share, a year earlier.

Excluding the benefit from the new tax law, BlackRock earned US$6.24 per share. Analysts on an average expected the company to earn US$6.02 per share, according to Thomson Reuters I/B/E/S.