BlackRock Inc., the country's largest publicly traded asset manager, said its fourth-quarter net income plunged 84% from a year earlier, to $53 million, or 40 cents a share, as a result of poor investment performance.
The profit decline, which BlackRock reported Wednesday, shows how the bear market has taken a bite out of even asset management firms, which are considered far more stable businesses than securities firms, since their revenue is dependent on fees, rather than trading or principal investments.
BlackRock said its performance fees also dropped 84% from a year earlier, to $24 million.
Assets under management declined 3.7% last year, to $1.307 trillion as of Dec. 31.
Laurence Fink, BlackRock's chairman and chief executive, said in a press release that last year's market was the toughest he could remember, and that this year "is beginning on difficult footing."
Fourth-quarter revenue decreased 26%, to $1.06 billion, in part because of the decline in performance fees and hits from alternative investments.
Analysts surveyed by Thomson Reuters on average had expected earnings of $1.02 a share on revenue of $1.14 billion.
One bright spot for BlackRock was the BlackRock Solutions risk management and advisory business, which added business last year. The parent company said revenue from its investment system, risk management, and advisory businesses more than doubled last year, to over $400 million.
For the quarter, BlackRock reported $8.1 billion of outflows from retail and high-net-worth clients, along with $137.2 billion of inflows from institutional investors. Net withdrawals across all businesses totaled $2.3 billion, or less than 1% of the company's assets under management.
BlackRock also said it was able to meet all redemption requests in its hedge funds and funds of funds — something many smaller firms were not able to do.
Even some large hedge fund companies, like Citadel Investment Group, have halted withdrawals for some of their funds.