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BlackRock reported this week that alternative investment AUM had decreased $0.2bn to $101.9bn. AUM growth during Q1-10 was driven by positive investment performance and net new business, primarily from institutional investors. Net new business totaled $2.5bn, including net inflows in single strategy hedge funds and FoFs, as well as currency and commodity offerings. Commercial real estate continued to lag the recovery, however.

Performance fees were $50m in Q1-10, compared to $11m in Q1-09. The increase primarily relates to an increase in performance fees from hedge funds and fixed income products.

The estimated economic investments in hedge funds and FoHFs at the end of Q1-10 amounted to 10 to 15%.

BlackRock’s chairman and CEO Laurence D. Fink, made the statement as the firm announced $423m in net income during Q1-10, compared with $339m in Q1-09. In its Q1-10 financial report, Blackrock said its AuM rose by $17.6bn to $3.36tln as at March 31, 2010, compared with $3.34tln as at Dec. 31, 2009.

“Institutional ‘re-risking’ activity slowed down and reallocations focused primarily on shifting from active to passive and from money market funds to deposits,” Fink said.

Operating income was $654m and non-operating expense, net of non-controlling interests, was $3m. The operating margin was 32.8%, which included the effect of $52m of pre-tax Barclays Global Investors (BGI) integration costs. BlackRock completed its acquisition of Barclays’ investment unit for $13.5bn in cash and shares in December 2009.

In the last quarter of 2009, operating income was $389m and non-operating income was $17m. The operating margin was 25.2%, which included the impact of $152m of pre-tax BGI transaction and integration costs.

Fink said, “I am pleased with BlackRock’s first quarter performance and progress on our integration. Most importantly, our focus on investment and risk management has been steadfast, and the organization has come together quickly to share insights and expertise across disciplines. While our record is not unblemished, we have achieved strong investment performance across much of our platform, including fixed income, international equities, single strategy hedge funds and fund of funds.”

According to the report, BlackRock’s revenue was $1,995m for the period, up 102% compared to Q1-09 ($987m) and 29% compared to Q4-09 ($1,544m). Q1-10 revenue included $1,753m of base fees, which included the full quarter effect of acquired BGI AUM, revenue associated with $63bn of growth in long-term AUM and net market appreciation and $50m of performance fees in Q1-10 .
- Dumlao, Bischoff, Gravrand

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