Net inflows in the first three months of the year were at $110 billion, compared to $86 billion a year earlier.
"Recent market volatility and stress in the regional banking sector are the consequences of prolonged periods of aggressive fiscal and monetary policy coming to an end," Larry Fink, chairman and chief executive of BlackRock, said during a conference call.
"Throughout our history, moments of dislocation and disruption have been inflection points for BlackRock. This is where opportunity arises for both BlackRock and for our clients," he said.
Stocks and bonds fluctuated wildly in the first three months of the year as investors switched from expectations of tighter monetary policy to anticipating interest rate cuts following the collapse of two U.S. regional banks in March.
Despite the volatility, markets were up in the first quarter, with the S&P 500 rising over 5%.
"Volatility within the market has led to risk-off positioning with many investors rotating out of equity products and into safer fixed income and money market mutual funds, which often have lower fees relative to equity funds," said Kyle Sanders, senior equity research analyst at Edward Jones.
"This mix shift has pressured management-fee revenue, which declined nearly 9% from last year," he said.
On an adjusted basis, BlackRock earned $1.2 billion, or $7.93 per share, for the three months ended March 31, compared to $1.46 billion, or $9.52 per share, a year earlier. Analysts had estimated a profit of $7.76 per share, according to Refinitiv IBES data.
Quarterly revenue fell to $4.2 billion from $4.7 billion. The drop was primarily due to "the impact of significantly lower markets and dollar appreciation on average AUM and lower performance fees," BlackRock said in a statement.
BlackRock's shares were up over 2% at $685 in morning trade after the quarterly earnings beat.
Global investors have been big buyers in
money market funds over the past few weeks, benefiting from high interest rates that push deposits out of the banking system.
In March, BlackRock saw over $40 billion in net inflows into its cash management strategy, Fink said on Friday, adding that he expected the shift in deposits to money market funds to be a long-term trend.
"Cash is the lifeblood of individuals and organizations,
especially in times of stress," he said, with liquidity having
become "paramount" for BlackRock's clients.
(Reporting by Jaiveer Singh Shekhawat in Bengaluru and Davide
Barbuscia in New York; Editing by Shounak Dasgupta and Mark
Porter)
