BlackRock Inc (BLK.N), the world's largest money manager, said on Thursday its fourth-quarter profit rose 24 percent, bolstered by increased investor confidence in global stock markets.
Shares of BlackRock jumped 3 percent to $229.06 (143.41 pounds), a three-year high, on the New York Stock Exchange. The stock has been on a tear of late, gaining more than 20 percent since mid-November.
New York-based BlackRock benefited doubly from strong global equity markets. The MSCI All-Country World Index .MIWD00000PUS gained 2.5 percent in the fourth quarter and 13.4 percent over the past year, increasing the value of BlackRock's asset base to a record $3.8 trillion, and encouraging investors to put more money to work in higher-fee stock funds.
Investors poured a total of $47 billion into BlackRock's long-term funds, including $31 billion into stocks, and $14 billion into money market funds and short-term products. Rising markets added $62 billion in value, helping total assets under management to increase 3 percent in the quarter and 8 percent from a year earlier.
And the trend toward stocks appeared to have accelerated into 2013. Investors added $7.5 billion into U.S.-based equity mutual funds last week, the biggest weekly inflow in 11 years, according to data from Lipper, a unit of Thomson Reuters (TRI.TO)(TRI.N).
Net income totaled $690 million, or $3.93 per share, in the fourth quarter, compared with $555 million, or $3.05 per share, a year earlier.
Analysts, on average, expected BlackRock to earn $3.73 per share, excluding certain items, according to Thomson Reuters I/B/E/S. On that basis, BlackRock earned $3.96.
The shift into stocks reflected growing concern that interest rates could finally reverse course and rise, hurting fixed income markets, according to BlackRock Chief Executive Laurence Fink.
As the largest manager of ETFs, BlackRock also benefited from growing investor desire to use the low-cost, index-based funds instead of actively managed funds that have tended to underperform the market in recent years. Of the $47 billion added to BlackRock's long-term funds, almost $36 billion went into iShares.
BlackRock rolled out a new line of even cheaper "core" iShares ETFs in October to better compete with offerings from Vanguard Group and Charles Schwab Corp (SCHW.N).
(Reporting by Aaron Pressman; Editing by Alden Bentley and Jeffrey Benkoe)