BlackRock’s assets under management ballooned to a record $9tn in the first quarter, boosted by record fund inflows across its investment platform, led by fixed income.

Shares in BlackRock rose 2 per cent to a fresh high on Thursday after the results, which eclipsed earnings and revenue forecasts. Investors in particular cheered higher performance fees and organic growth in assets that came in above the long-term target set by the world’s largest asset manager.

The first quarter was marked by a sharp rise in yields on 10-year government debt and a strong rotation into cyclical sectors of the stock market, such as financials, as investors positioned themselves for a vaccine-led restoration of economic activity this year.

“In conversations with fixed income clients, the questions of inflation and deficits are prominent,” said Larry Fink, chief executive of BlackRock. “As is the question of equity valuations. The dialogues are very robust now.”

Total net investment flows rose to a record $172bn during the first three months of the year, marking the fourth straight quarter BlackRock has attracted more than $100bn of new money.

Long-term investment flows increased $133bn in the period, with fixed income accounting for $60.8bn and equity funds swelling by $49.8bn.

Fixed-income clients sought floating interest rate products and short-term bonds that were less vulnerable to the sharp rise in long-dated market rates during the quarter, BlackRock said. There was also demand for income via the high-yield bond market, an area of fixed income that has recorded a positive performance this year.

Fink said the breadth of BlackRock’s product range put it in the best position to win business from global institutional investors, who have amassed large cash holdings.

“There is an incredible amount of money on the sidelines. Overall, our clients are still sitting on pools of money and they are underinvested,” Fink said.

“While all asset managers will benefit from rising equity markets this quarter, we believe BlackRock’s ability to deliver outsized flow growth remains a key differentiator,” said Kyle Sanders, analyst at Edward Jones. “Robust flows illustrate that the company is widening the competitive gap against rivals and taking market share.”

Bar chart of BlackRock lags asset management index showing Invesco leads share price gains among asset managers in 2021

BlackRock generated annualised organic growth in assets under management of 8 per cent, and a record 14 per cent annualised organic base fee growth.

“It was a very strong organic growth quarter for BlackRock and it exceeded their long term target of 5 per cent, so there will be a pullback in that pace later this year,” said Craig Siegenthaler, analyst at Credit Suisse.

Quarterly revenue rose 19 per cent year-on-year to $4.4bn, beating a forecast $4.3bn. Net income climbed 16 per cent to $1.2bn and the company reported adjusted earnings per share of $7.77. Analysts polled by Bloomberg had expected earnings per share of $7.71.

Greater investment by the asset manager during the quarter clipped the profit margin to 44.4 per cent but “BlackRock’s margins remain among the best within the asset management industry”, Sanders said.

Column chart of Quarterly earnings per share (year-over-year) showing BlackRock extends earnings surprise streak