Markets have staged a comeback so far this year, braving the Federal Reserve's rate hikes and a banking crisis that have raised risks of an economic downturn later in 2023.
New York-based BlackRock ended the second quarter with $9.4 trillion in assets under management (AUM), up from $8.5 trillion a year earlier and $9.1 trillion in the first quarter.
Net inflows for the quarter were $80 billion, down from $89.6 billion a year ago.
Revenue fell 1.4% to $4.4 billion from a year earlier, driven by the impact of market movements over the past 12 months on average AUM, BlackRock said.
"Revenue growth was tepid and could remain pressured in the near-term until there is more clarity on the path of inflation and economic growth," said Kyle Sanders, senior equity research analyst at Edward Jones.
In June, during its investors day, BlackRock said it saw 5% organic growth in base fee revenues between 2023 and 2027, and gains in market share.
The world's largest asset manager, which makes most of its money from fees charged for investment advisory and administration services, saw a 25% rise in its second-quarter adjusted profit, helped by gains in its private equity investments.
The company's adjusted profit of $9.28 per share leapfrogged analysts' estimates of $8.46, according to Refinitiv IBES.
Larry Fink, BlackRock's chairman and chief executive officer, said existing clients were bringing more business to BlackRock, which should boost growth. "Clients are consolidating their portfolios with fewer agile asset managers," he said.
Fink also said the firm expected investors to migrate portfolios to fixed income assets, following the Federal Reserve's interest rate hikes. "80% of all fixed income is now yielding over 4%. This is a remarkable shift in history. We're calling this a once in a generation opportunity."
On the expense side, Chief Financial Officer Martin Small told analysts that it was likely to end 2023 with mid to high single digit growth, as the company continues to invest in its business. The headcount should remain broadly flat.
The company last month laid off employees, impacting less than 1% of its total workforce due to budget reallocations to support critical priorities. It had cut 500 jobs earlier in the year as well.
