The world’s largest asset management mutual fund, BlackRock (BLK.US) opened the earnings season among the US financial sector. The fund showed results above expectations although assets under management (AUM) fell.

BlackRock’s revenue and earnings, however, again fell weaker than Wall Street expected. The fund’s shares have fallen more than 40% this year, trading slightly higher before the open:

• Earnings per share (EPS) $9.55 vs. $7.06 forecast (FactSet)

• AUM: $7.96 trillion vs. $8.3 trillion forecast (16% decrease y/y)

• $65 billion of quarterly long-term net inflows driven by continued momentum in strategic ETFs and significant outsourcing mandates, with total net inflows of $17 billion reflecting outflows from cash management and advisory AUM

• 15% decrease in revenue year-over-year primarily driven by the impact of significantly lower markets and dollar appreciation on average AUM and lower performance fees

• 6% increase in technology services revenue year-over-year reflects continued strong client demand for Aladdin, despite the negative impact of foreign exchange movements

• 21% decrease in operating income (22% as adjusted) yearover-year includes the impact of $96 million of fund launch costs in the third quarter of 2021

• 15% decrease in diluted EPS (16% as adjusted) year-overyear also reflects a lower effective tax rate and a lower diluted share count, partially offset by lower nonoperating income, in the current quarter

• $375 million of share repurchases in the current quarter

Looking at BlackRock’s client types, inflows from ETFs (up $22.37 billion) and institutions (up $47.73 billion) increased. In contrast, inflows from the retail segment declined (down $4.89 billion).

Net income also declined, coming in at $1.41 billion compared to $1.68 billion in the same quarter of 2021.

UBS analysts downgraded their recommendation on BlackRock recently and forecast a drop in inflows to $440 billion next year from $540 billion in the record-breaking 2021 quarter.

The active ESG activities of the fund’s manager, Lary Fink, have not affected the fund’s margins. In addition, BlackRock’s activities are opposed by Republicans, who are favored by the mood ahead of the midterms elections. Analysts note the increase in political risk, which does not favor the fund.