Blackrock Inc is the largest asset manager in the world. It manages over $7 trillion in assets. The sheer scale and size of Blackrock make it one of the top asset management stocks. In July, the company reported its Q22020 earnings. Assets under management grew 7% from $6.8 trillion to $7.3 trillion. Revenues were up 6% on a Y-o-Y basis to $3.6 billion. Earnings per share was up 22% to $7.85 per share from $6.41 in the same quarter the prior year.
Another factor that makes Blackrock one of the best asset management stock to buy is its position as the largest ETF issuer in the world. iShares is a family of exchange-traded funds managed by the company. Blackrock’s positioning in this segment is important because there is a significant trend in the industry of moving towards passive investments. During the first half of 2020, ETFs globally saw inflows of $175 billion.
Anyone looking to invest in an asset management stock will have to look at a few things. Firstly, what percentage of income is derived from equity vs fixed income and other sources. Traditionally, the equity segment has the highest expense ratios. However, within equity, active funds are the ones to look for as passive funds have very low expense ratios.
Secondly, one also has to evaluate the size and scale of the asset manager. The higher the AUM and the wider the network, the greater will be the benefit from economies of scale. Lastly, the historical performance of the funds and the evidence of strong performances through increased fund inflows is also important to evaluate the quality of the asset manager.
In most of these metrics, Blackrock seems to be one of the best asset management stocks to buy now.