BlackRock beat third-quarter forecasts with help from a single hedge fund. Performance fees reached $630 million, about $200 million above analyst estimates. BlackRock charges performance fees when funds exceed set targets. BlackRock's filing showed that performance fees more than doubled from $305 million in the second quarter.
Most of the performance-fee increase came from hedge-fund-style products that BlackRock calls liquid alternatives. Liquid alternatives fees rose from $100 million to $409 million in one quarter. BlackRock attributed the year-over-year increase largely to one hedge fund. The fund measures results annually, with the measurement period closing in the third quarter. The increase in liquid alternatives fees accounted for nearly half of BlackRock's $668 million revenue increase from the second quarter.
BlackRock, the world's largest asset manager, reported a 38% increase in adjusted earnings per share to $15.93. Clients added $205 billion. Assets reached a record $15.5 trillion. BlackRock shares rose about 3% before the market opened.
BlackRock booked an $80 million gain on Securitize, a firm that turns funds and stocks into blockchain tokens. Securitize stock rose 15% in September after a US regulatory exemption. BlackRock also recorded a $22 million gain on Circle, which issues the USDC stablecoin pegged to the US dollar. The same Circle stake produced a $115 million loss a year earlier. Both gains came from higher valuations, not sales. Circle stock fell 11% in a single day in September, illustrating how quickly those valuations can change.
BlackRock said higher income outside BlackRock's core business helped adjusted earnings per share grow 38%. Adjusted operating income rose 27%. Chief executive Larry Fink said BlackRock enters its "seasonally strongest fourth quarter with accelerating momentum." The hedge fund behind the quarterly fee increase does not reach its next annual measurement date until the third quarter of 2027.
BlackRock did not name the fund in BlackRock's earnings release. BlackRock has offered a similar explanation before. In 2020, then-finance chief Gary Shedlin attributed a fee increase to "a single hedge fund that locks annually in the third quarter".
BlackRock Q3 Earnings Beat Driven by Single Hedge Fund and Crypto Gains
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Summary
BlackRock’s Q3 earnings surged 38% to $15.93 per share, fueled by a single hedge fund’s performance fees and crypto market gains. Performance fees hit $630 million, beating estimates by $200 million, with liquid alternatives contributing nearly half the rise. The firm also booked an $80 million gain from Securitize and $22 million from Circle’s USDC. Amid shifting sentiment, the fear and greed index remains a key barometer for crypto market moves.
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