BOSTON, MASSACHUSETTS: BlackRock Inc, the world’s largest money manager, said fourth-quarter profit rose, helped by a flood of money into its exchange-traded funds.

The company reported adjusted earnings of $5.14 a share, exceeding the $5.02 average estimate of 15 analysts surveyed by Bloomberg. Revenue rose to $2.89 billion from $2.86 billion, the New York-based firm said in a statement on Friday.

BlackRock, led by Chief Executive Officer Laurence D. Fink, has benefited from a move by investors into cheaper passive products even though the shift has contributed to record withdrawals from the firm’s beleaguered US active funds business. The money manager took in a record $140 billion of new flows into its iShares business last year, boosted by fee cuts on 15 ETFs in October.

The company is expected to keep benefiting from flows into passive strategies ahead of a Department of Labor rule that requires advisers to act in the best interests of their clients.

“There is so much money up for grabs and we think iShares will get the lion’s share,” said Kyle Sanders, an analyst at Edward Jones & Co., said before the earnings release.

Investors ploughed $27 billion into BlackRock’s US iShares Core ETFs since the October price cut on stock and bond funds targeting buy-and-hold investors, according to a company press release this month. BlackRock in December trimmed expenses on six smart beta ETFs, signalling that the price war with other asset managers was moving beyond plain vanilla products.

The firm’s stockpicking business hasn’t fared as well, with performance continuing to lag behind many peers. US-based active funds at BlackRock saw a record $19.3 billion of outflows last year, according to data from Morningstar Inc The firm’s quantitative strategies have underperformed, with four of its quant hedge funds on track for their worst returns on record, according to data through November. Fink combined the quant group with the stockpicking unit early last year to boost returns and lure clients into higher fee paying products.

BlackRock is the first big US money manager to report fourth-quarter earnings, providing a view of how other firms may have navigated financial markets. Shares of BlackRock have risen 12 per cent in 2016, compared with an 8.4 per cent increase for S&P’s 19-company index of asset managers and custody banks.