BlackRock’s latest quarterly earnings report revealed a 43% jump in second-quarter profits year-over-year, reports Pauline Skypala for Financial Times.
The company noted exchange traded funds and multi-asset strategies experienced the most growth during the first half while active equity and passive fixed income were mostly down, especially for the second quarter.
The group’s iShares passive index products make up a large chunk of managed assets, accounting for 81% of equities and half of fixed-income. Total revenue that came from passive equities-based funds during the first half was 54%, and 32% for fixed-income.
The revenue data reveals that BlackRock’s ETF business side is as profitable as the actively managed side. For example, ETF assets under fixed-income and equity account for a fifth of total assets, but they have generated 36% of the company’s total revenue during the second quarter. In comparison, actively managed assets made up a third of the total and generated a little over 50% of the revenue.
Christos Costandinides, European head of ETF research and strategy at Deutsche Bank, recently published an analysis on the revenue potential of ETFs and found that ETFs were more profitable than traditional mutual funds, at least in Europe. Additionally, he discovered that synthetic ETFs, which utilize derivatives, were much more profitable than physical ETFs, which hold securities from an underlying index.
Max Chen contributed to this article.