The record stock market run is great news for BlackRock: The owner of the super popular iShares family of exchange-traded funds reported earnings and revenue for the fourth quarter Thursday that easily topped forecasts.
BlackRock (BLK), the world’s largest holding company, finished the year with about $ 8.7 trillion in total assets – a 17% increase from last year.
About $ 2.7 trillion of BlackRock’s assets under management are in the company’s iShares ETF. That is a 19% increase from the end of 2019. Investors invested nearly $ 79 billion in new iShares funds in the fourth quarter alone.
Stock Performance
BlackRock is holding out much better than other major financial stocks by 2020 – a year of turmoil and volatility due to the Covid 19 crisis and the resulting recession. The firm has benefited from the rapid stock market rally, even though major banks have seen their profits hit due to low interest rates and weaker demand for loans.
BlackRock shares have risen by almost 50% in the last 12 months while the Financial Select Sector SPDR Fund (XLF), the ETF that included largest U.S. banks, has increased by only 1%. BlackRock stock fell more than 2% on Thursday despite strong results.
“The world is facing unprecedented challenges in 2020 – many of which continue to this day. In all of this, BlackRock remained focused on meeting the needs of all our stakeholders,” BlackRock chief executive Larry Fink said in a salary statement.
Fink added during a conference with investors and analysts on Thursday that “the hardships people face around the world in 2020 and the growing inequalities exacerbated by the pandemic have only strengthened BlackRock’s sense of savings, to make savings easier and more affordable.”
Hopes Of Economic Stability
He emphasized that the company would continue to promote sustainable investment as a major economic entity and expressed hope that ultimately economic recovery would lead to a more stable economy going forward.
“The pandemic has taken a dramatic toll on all our lives, disrupting the way we work, the way we live. At the same time, it has led to a profound shift in economies and how societies even operate, creating opportunities to redesign our society,” he added during the conference call.
Fink said concerns about rising economic inequality, as well as rising interest rates and rising inflation expectations, need to be a major picture of any retirement savings investor or other long-term goals.
He did not mention political or regulatory world changes during the call, however. There is no mention of Joe Biden transition to president and that Democrats will run the House and the Senate.
But Fink has sounded optimistic about the future, saying that even if the long-term mortgage yield begins to rise, “the demand for equities will persist” and that higher yields are going to push “the banking system to be much stronger.” He said the increase in bond yields is “a positive sign for the economy.”
He concluded a conference call with a message of public safety: “Everyone please feel safe. Everyone please stay healthy, and everyone please get vaccinated. Thank you.”
