(Reuters) - BlackRock's assets under management hit a new high in the second quarter as global markets rallied on the prospect of trade deals and interest-rate cuts from the U.S. Federal Reserve, brushing aside earlier tariff-related jitters.
A robust labor market and hopes that President Donald Trump would ease some of his harsher trade measures pushed major U.S. indices to all-time highs through the end of June.
That marked a sharp reversal from early April, when tumult in U.S. trade and geopolitical policy battered confidence and fueled recession fears, concerns that BlackRock CEO Larry Fink echoed at the time.
The benchmark S&P 500 index rose 10.57% in the second quarter of 2025, escaping bear market territory.
BlackRock's assets under management rose to $12.53 trillion in the quarter ended June 30, from $10.65 trillion last year.
Long-term net inflows fell to $46 billion in the quarter, down 9.8% on a year ago, with $52 billion pulled from a lower-fee index fund by a single institutional client.
Overall net flows came in at $68 billion, driven mainly by cash-management and money-market funds.
Equity product inflow surged to $28.8 billion, compared to $6.44 billion a year ago, although fixed-income products saw outflows of $4.66 billion, BlackRock said.
“Our expanding client relationships are resonating in higher, more diversified organic base fee growth," Fink said.
Trends for the business are being closely scrutinized, given the turbulence in U.S. treasuries this quarter. The benchmark 10-year yield recorded one of its biggest weekly increases since 2001 after the "Liberation Day" shock.
BlackRock's fixed-income executives expressed concerns last month that ballooning U.S. debt could suppress appetite for longer-dated treasuries and the dollar, which recorded its worst first-half performance this year since 1973.
Safe haven assets like treasuries and the greenback have also suffered as markets price in tax cuts and spending hikes from Trump's recently passed "Big Beautiful Bill", which nonpartisan analysts predict will add more than $3 trillion to the country's $36.2 trillion debt.
Thanks to a weaker dollar, BlackRock recorded a positive foreign exchange impact of $171.52 billion in the quarter, compared with a $35.45 billion decline in the year-ago period.
Its performance fees fell 42.7% to $94 million in the reported period, after falling nearly 71% in the first quarter.
PRIVATE MARKET BOOST
BlackRock has been pivoting towards private markets, which provide higher margin revenue compared to those from low-cost ETFs, where it faces intense competition and fee compression as the market matures.
Private markets saw inflows of $6.82 billion in the quarter. The New York-based firm said at its investor day last month that its private markets and technology businesses would make up 30% or more of its total revenue by 2030, up from 15% in 2024.
As part of this push, BlackRock last month unveiled plans to include private assets in its retirement plans, which account for more than half of the money the company manages.
Technology services revenue rose 26.3% to $499 million, reflecting the first full quarter of data provider Preqin, which BlackRock bought in a $3.2 billion deal last year. The deal closed on March 3, 2025.
Its total revenue - most of which is earned as a percentage of assets under management - rose to $5.42 billion from $4.81 billion a year ago, driven mainly by a 6% rise in organic base fee growth, as well as fees from its takeover of Global Infrastructure Partners and higher technology services and subscription revenues.
BlackRock's total expenses rose to $3.69 billion from $3.01 billion last year.
Excluding the impact of some one-time charges, net profit jumped to $1.88 billion, or $12.05 per share, for the three months ended June 30, up from $1.55 billion, or $10.36 per share, a year earlier. Analysts on average were expecting a profit of $10.82 per share on revenue of $5.46 billion.
Shares of the asset manager reversed early gains and were down nearly 2% in premarket trading. The stock has risen over 9% so far this year.
By Ateev Bhandari in Bengaluru and Anirban Sen in New York
Editing by Alden Bentley, Pooja Desai
