BlackRock Inc. clients slowed the amount of money they poured into the firm’s core investment funds as markets cratered and inflation surged.

Net inflows into those products, called long-term funds, totaled US$69 billion for the three months ended June 30, US$40 billion less than analysts expected. In the first quarter, that figure was US$114 billion. Total net flows, including cash-management accounts, were US$90 billion, New York-based BlackRock said Friday in a statement. 

Investors are reeling with US inflation running at a four-decade high and the Federal Reserve ratcheting up interest rates as recession fears mount. The S&P 500 tumbled 16 per cent in the quarter, extending its decline for the year to more than 20 per cent and ushering in a bear market. 

“The first half of 2022 brought an investment environment that we have not seen in decades,” BlackRock Chief Executive Officer Larry Fink said in the statement.

BlackRock’s assets under management, which crossed the US$10 trillion threshold for the first time toward the end of last year, have come tumbling back down. They totaled US$8.5 trillion at June 30, the lowest in almost two years.

Investors pulled US$10.3 billion from BlackRock’s actively managed funds in the second quarter. A year earlier, they added US$63 billion. BlackRock’s cash-management funds had record levels of assets in the quarter, Fink said, and took in US$21 billion of net inflows during the market declines.

Adjusted earnings per share were US$7.36, missing the US$7.90 average estimate of analysts surveyed by Bloomberg.

Shares of asset managers and major banks have plunged this year, many of them exceeding the declines in the broader market. BlackRock’s fell 36 per cent through Thursday.