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BLK Blackrock

Participants
Christopher Meade Chief Legal Officer
Gary Shedlin Chief Financial Officer
Laurence Fink Chairman and Chief Executive Officer
Robert Kapito President
Craig Siegenthaler Credit Suisse
Alexander Blostein Goldman Sachs
Michael Carrier Bank of America Merrill Lynch
William Katz Citigroup
Michael Cyprys Morgan Stanley
Patrick Davitt Autonomous Research
Kenneth Worthington JP Morgan
Call transcript
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Operator

Good morning. My name is Jerome, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the BlackRock Incorporated Third Quarter 2019 Earnings Teleconference.

Our host for today's call will be Chairman and Chief Executive Officer, Laurence D. Fink; Chief Financial Officer, Gary S. S. Robert President, Shedlin; Counsel, General Christopher and J. Kapito; Meade.

have background noise. lines a period. been there placed any prevent question-and-answer Instructions]. to mute [Operator After be on will All the remarks, speakers'

your you. conference. Thank you Meade, may Mr. begin

Christopher Meade

of Good morning, Chris am everyone. BlackRock. General Meade, the I Counsel

Before statements. remind that, from We that attention the course like call during make a BlackRock's to we fact may, statements. differ this your these call, may I'd of actual number we the begin, you of of course, results forward-looking to

you BlackRock has filed cause As lists forward-looking and to we with some of duty not may no what differ does results any reports statements. that say undertake which know, assumes update the today. materially from of SEC, the the BlackRock BlackRock factors to

I'll Gary. So, turn to it over with that,

Gary Shedlin

morning, Thanks, XXXX. of It's Chris. third to my the for present good everyone. And results quarter pleasure

performance our I results. over I'll Before it turn review Larry to comments, and business his offer financial to

and be earnings as our While results, results. primarily our focusing I release as-adjusted financial adjusted on both discloses GAAP will

quarter trade The global market associated significant volatility again the by marked ongoing once uncertainty and with world. geopolitical tensions was around third

continued euro down quarter US ended appreciate quarter While emerging US X% to and the dollar market and the X%, against pound. the the equities equities up finished

As slowed fixed favoring income market of in seen continued we flows rebalance have equities. and derisk and in volatility, the clients industry previous periods over to quarter and cash

to from and and shifting Even high investors volatility momentum value caution, within demonstrated equities, funds. low favoring dividend

it has. continues model, however, as business to ever work well as BlackRock's

growth. organic generated last billion XX X% $XXX total the we have approximately Over months, or

client in entire purposely built firm today's model evolving fully Our to bring to was business together BlackRock ecosystem. integrated the needs meet One

comprehensive investment our is to and technology environment. solutions and construction but clients not deliver risk Our tools, management simply matter no market including products, diverse the globally positioned to portfolio platform,

illiquid higher business client in growth evolve on These include focused remain investing of especially highest we and iShares, income, thoughtfully and where fee continue factors, sustainable, and segments demand. analytics in construction like growth long-term megatrend areas technology for fixed portfolio to our alternatives, capabilities. and ETFs, multi-asset the higher We capturing Aladdin's and

position cycles. growth These to higher organic market across will BlackRock and continue revenue consistent more investments delivering

BlackRock generated third the growth, organic quarter inflows by in X% businesses. from fixed total cash net continued billion $XX in income asset or momentum our industry-leading driven and annualized

volatility base growth mix fee organic iShares fee shift but X% products, market-driven higher from annualized this in fee ETFs Total by toward reflected driven of was also lower outflows impacted August.

during ETF, particular, quarter. saw In the markets outflows of $X our flagship EEM, billion emerging

year-over-year were non-operating quarter $X.X revenue of X% a current increased diluted per , of as share Earnings billion the billion by quarter. down a of X% lower offset were results count share Third $X.X by income year a effective $X.XX and ago, lower however to and in rose higher higher operating compared rate operating and income X%. tax

to the Non-operating the results non-operating our reflected our million DSP. reflected gain in year in disposition of of loss, interest valuation that of by ago a mark-to-market attributable the investment Recall Envestnet. primarily million stake results driven $X minority $XX in equity net

a versus interest BlackRock's additional partially eFront acquisition. the to ago year results Non-operating debt mid-April also expense issuance associated with finance reflected

compared tax additional a guidance discrete benefits. to tax differ quarter the reasonable effective of on estimate tax consequence million approximately fourth which Our run as adjusted year the is quarter third rate projected was the ago, $XX of discrete items tax for as XX% and a though reflected issuance non-recurring or We XX% XXXX, rate of for a legislation. actual of rate may XX%

lower exchange growth, the of acquisitions, negative by revenue. primarily investments and by billion partially organic up were of market beta and year-over-year, driven foreign impacts offset $X Third quarter lending base fees impact securities the strategic and positive pricing of X%

appreciation over base decline securities led negative last a while growth, cash year lending spreads in on X% year-over-year Dollar to a X% impact fee the lower year-over-year revenue. our had

last As and $XXX to to change, can't previously But mentioned, the almost BlackRock's our growth divergent months. AUM. differentiated base average as impact platform has we XX mix level generated growth items asset that total beta in control, fee of over billion organic continue growth absolute compared of

the While higher BlackRock X% and resources to natural the emerging equity down year-over-year, were flat fee X% Europe, actually on to the equity linked X%. weighted was down S&P products XXX our markets average was up as revenue in index Asia-Pacific, markets,

and year the growth cash, In recent lower to organic been approximately have other clients' the addition, which in fixed environment, our market assets classes. to in and relatively last fees lower has over XX% asset risk favored compared has preferences income

up were ongoing overall divergent sequentially, beta. impact shift one fee mix higher quarter, rate result on this of fees declined of the and in average a our the and day AUM base of quarter, basis While equivalent X% day additional as count an points second reflecting versus effect the basis, X.X

of $XX of annually a fees increase once and again quarter over reflecting fees decreased Performance European year-over-year, the fund result hedge months. performance $XXX equity from long-only third million XX single in and performance fees Sequentially, alternative million lower a as the products. delivered last locks strong that

the Aladdin. reflecting Quarterly, in technology increased continued services of revenue and XX% the impact growth acquisition year-over-year, eFront

of technology Demand distribution tools. solutions and for our range strong remains full digital

expense year-over-year, by X% expense was to by and linked fund expense acquisition, G&A up lower primarily and expense. compensation eFront driven the direct higher offset Total

foreign-exchange value to expense down a due foreign-exchange due offset higher million partially to Sequentially, the second lower remeasurement and the the product related year lower ago, was current fair quarter was down $XX and in adjustments in of by current quarter. primarily expense consideration contingent primarily technology expense expense and in launch transaction $XX from remeasurement G&A expense, incurred $XX G&A million quarter. costs million,

G&A line January. full-year spend year. we will acquisition three Consistent core first the adjusting the present, full-year spend provided anticipate seasonally be generally of will we that in with our prior in of G&A after than for higher guidance years, fourth-quarter quarters our At be the the eFront, with

reminder, fees. the excludes core of a adjustments, expense contingent costs, impact consideration G&A value launch fair product expense and foreign-exchange remeasurement As transaction-related

AUM year-over-year recognized in X% to despite in sequentially, due quarter. X% higher would normalized benefit average Direct was We expect the a and return quarter. fourth to a fund more down expense the current level to fund direct expense

up Intangible $XX reflecting million amortization year-over-year, expense acquisition. the full intangible a was quarter of to related amortization eFront asset

quarter as levels quarter. the third was Our XXX in points XX% up lower reflecting expense significantly a margin year non-core current adjusted operating ago, G&A of from of basis

market contributing Ongoing environment. industrywide and increased client divergence income to revenue more for a capture fixed beta challenging is preference leading and cash, to volatility

growth continue investing responsibly us strategic long-term. business to high for opportunities allows alignment differentiated the BlackRock's However, model, position, financial and with

dividends share Our capital specifically then repurchases. cash this support and management a designed and return strategy excess through is to ideology Invest shareholders combination of to First

the During share stated be that of to we respect quarter, repurchasing with and of completed would XXXX, targeted we repurchases for $X.X repurchasing shares our shares remainder common during first opportunistic billion year. the additional of level worth the

In an repurchased worth during of line shares taking with $XXX common we the volatility. opportunities during advantage quarter, additional commitment, that August's attractive third of that valuation market million arose relative

in income unique for from ability billion continued to client a market of needs inflows variety fixed alternatives, iShares, demand $XX cash, BlackRock's of environments. and net benefitted reflecting strong meet Quarterly

value both as well options of investors diversified having secondary a asset wealth unique tactically-oriented broadly vibrant serve iShares ETFs as ecosystem. institutional and in that products market who owners, the set buy-and-hold long-term investors are liquidity institutional and

higher iShares organic growth sustainable in net reflected relative billion, fixed strong growth, and segment inflows asset continued to income, fee representing potential and $XX a each total of long-term rate. X% market annualized a factor fee BlackRock's momentum has ETFs, that

by ongoing component billion fixed income Quarterly adoption portfolios. of clients' a ETF driven products of flows as these of was $XX their critical

$XX these increased especially the in of flows the current and Europe, quarterly US Factor investor and sustainable demand ETFs generated for in billion exposures, as environment.

industry three categories. in the these of leader is fast-growing BlackRock all

Retail from billion broad-based income, strength partially net multi-asset allocation inflows offset outflows $X of world products. in fixed active reflected by

continues franchise whole share SMAs, and has gain flat. as of X% remains a advisory wealth seen US organic growth funds and in year-to-date the industry BlackRock's alpha while to

of demand third by quarter, infrastructure private $X.X and in hedge and alternatives estate, driven continued, liquid for real strategies the and with inflows into Institutional retail alternative illiquid funds. billion event-driven net credit,

of strategies, variety in fees. institutional In performance base committed source future of addition, capital clients and have to alternative significant a approximately $XX a billion we of representing deploy for

in more than LDI, generated quarter BlackRock's which to institutional of Positive $X franchise approximately in fixed-income by of active the active client-specific approximately billion billion inflows quarter. institutional the $X index net institutional offset strength redemptions. flows, were due continued several in outflows primarily driven

in active and equities quantitative resulted fee strategies base positive alternative the higher quarter. growth institutional inflows for organic overall Net into fee

and distribution management clients matrix management leverage cash crossed the as we net and BlackRock's and and crisis a billion record to inflows, of $XX threshold billion for through scale solutions AUM innovative Aladdin. $XXX deliver post-financial digital continue saw Finally, cash platform risk

BlackRock's ESG, us and including is and market cash Cash government class a serve continue cash clients' well to diverse needs our share. management asset our offering, to and grow position strategic munis, prime,

variety In consistent drive organic demonstrate and and again in differentiated results globally summary, to environments. once investment our market the of platform resilience quarter of technology third our growth diversified a

on generating all our it market that the We their can't quarter, we performance meet quarter capture our objectives. by or ensure on we long-term of Our volatility our the need control needs investment focus solutions across risk-adjusted the to products. investment may impact delivering remains clients have of but clients revenue our achieve can to exceptional

and positioning competitive stability important our responsibly to that in the and such critically shareholders and are financial our invest technology alike. as leverage of to continue clients alternatives high-growth ETFs, We model areas to

I'll Larry. that, to turn With it over

Laurence Fink

than And They clients deliver and their of can looking who financial are sell and everyone, that and for insight investment changing in just objectives. More asset portfolio Thanks, partners rather solutions the Good want a who morning, you asset investment Gary. than before, managers who partners can provide for landscape. the they're goals. looking products, ever whole meet context their complex joining call. for thank understand manager

market a results. the macroeconomic and global BlackRock's quarter, In geopolitical strong number of generate to events volatility differentiated drove heightened and investor continues uncertainty. model third

full client BlackRock help in to navigate their and our By we needs, investments always the clients looking perspective have positioned market to recognizing with scale environments. all diversity, ahead unmet global portfolio

As areas by X% platforms. active showing and and $XX total operating by We net revenues income billion strength Gary mentioned, we inflows, increased indexed year-over-year. many of the X% across generated in combined

investor impacting geopolitics tensions US the off, treasury markets, had driver curve sentiment. the again a primary August and Global escalated. were third quarter, of as inverted tumultuous sold During yield index market a trade once

momentum higher averaged reversed And sequentially in that US greatest in achieved had of value their rotation the over more course year-to-date gains a and into significant decades and than building year, quarter. September. X% following third last two markets markets However, out in the stocks been

in partial the indexes X% X% emerging September, a in recovery markets. with a market averaged for quarter, even divergence Meanwhile, these lower

rate interest to extend synchronized seeing In persists. signs negative and unprecedented environment globally. central Fixed an intervention low expansion, income, we're the of the by economic effort banks

they spike the since maybe system market, the into liquidity first a supply the repo constraints, short-term time For in rates announced financial signaled would or Fed that liquidity issues. after add brief the

their announced support their Meanwhile, in asset purchase would inflation ECB to Europe, targets. program the restart they

in The path uncertainty of highlights historical in easing. monitoring simultaneous trade the state quarter the the the economy, of third alongside rise about riskier Reserve's safe negotiations investors' and global assets equities Federal

environment this from faster want higher and they asset insight, transforming outcomes. global convenience, financial better are trust. since managers. value, unprecedented than the demand what partners They perspective, an They any returns demand crisis, and time a from In transparency, they clients

positioned client is BlackRock uniquely meet to those needs.

our factors, cash us clients industry-leading technology, is index, and a alternatives, approach before. of ever active, portfolio whole and by portfolio construction take management enables more and powered with resonating than combination to risk Our

is of BlackRock's strategic built have capabilities, the differentiating we as analytics value asset our solutions of increasing make The most to partnerships and we ESG management the to from through risk advice. model

in example how partnership BlackRock is together the Netherlands. recent clients best strategic Rabobank bring our the we One of for of with

transparency needs We risk an custom Rabobank's of that data consisting for and funds technology, solution benefits combine investment innovative of value. clients and management of providing tools the are set a Aladdin and that through

XXX findings from also in includes published recently key than survey report of analysis global insurance representing $XX eighth countries, our more our companies BlackRock's in XX which insurance We assets. of trillion

income, resilience base. our Insurers themes are fixed and integrate on optimize more sustainable increase client better increasingly investing, and broadly want through we focused markets building see private portfolio which diversification construction. portfolio across They to

we insurance BlackRock address our the whole practical that breadth context needs, in technology, could are understand clients and has they that take actions insights, they seeking. help the the to to the portfolio their have solutions

and ability clients' result platform. needs Our be to valued the innovative to we a our of have investments of is stay ahead direct our partner across made the

income fixed our driving much alternatives, factors. Our investments, are innovations across ETFs, illiquid more sustainable cash and inflows.

of months participate last by us And rates. over assets representing billion the have solution-based into clients of as organic approach. fixed our XX of to out Clients and growth cash alone, re-risk income, X% benefit will entrusted $XXX new BlackRock manage virtue

going more technology. the We for have – future invest the in illiquid forward opportunity even and to for iShares, BlackRock highest alternatives areas continue and growth

we've doubled double BlackRock's next the asses $X can we're ETF iShares, $X to of In growth the industry five trillion We support ago and than the and believe trillion today. to our investing over five years from industry itself years maintain more leadership. the

ETF and direct to people investing in eliminate more and is platforms The will for we US movement by increasing more adoption. transaction independent accessibility the financial advisors believe and accelerate costs to

more enables financial invest barriers elimination people It a to and thing. save, long-term their to and access of investing is objectives. The reach good democratizes

to free value commission continue proposition before confident and that we ever clients growth and leadership. we the more access to will have BlackRock than iShares market With iShare now remain drive moves,

$XX in globally, net ETF We led flows categories in market captured fixed number in income, once factors, Europe sustainable generated the iShares again in quarter, share European one ETFs. the strong including and fixed of high-growth factors, the growth by ETFs. core inflows income, billion in

range rather them. iShares different is several core, and with megatrends precision segments each one, factors, but of sustainable, clients not just a fixed using income, that are ETFs, ways different – product

the growth generated factors, XX% five segments, average than asset years BlackRock's over megatrends, average fee of business. than these overall a more and today AUM $XXX and higher represent For billion last have income, on organic rate than fixed and sustainable annual have more

Demand record fixed-income including quarter managers. $XX asset strong other We the as for is of leader. where accelerated, already ETFs billion client inflows and exposures remains billion iShares fixed-income exceptionally for $XX the demand market in year-to-date captured a from net

and sources of as transparency liquidity bonds Growth of times replacement individual is from the coming ETFs and adoption during of stress. for individual market

utilized income active mechanism also a been Fixed-income more ETFs by purposes, fixed and more returns. ETFs active as get have using investors for to

fixed-income accelerating substitute is also increasingly portfolios. for Fixed shorter duration are cash for will ETFs with We as the global free, are this modernize income seeing now a commission And proposition their even ETFs substitutes. adapt technology bond is clients market. and cash stronger in a definitely that

the annual AUM more to $XXX five organic on than industry the tripled years iShares in factor $XX XX% factors a are in We assets leader over growth over from and including our billion average. have rate in today, last billion

as Year-to-date, portfolios as surpassing model support we portfolios. resilience positioning that factor for factor captured and the see high-value well. exposure number in look one share wealth of We adoption flows, from RIAs nine in ETF defensive their and clients factor players a increased

from looking coming clients active Demand is than returns indexes. traditional traditional also greater than European value better and for

measurable the believe impact strategies ESG small a strategic in are billion that today a $XXX while as ETFs to billion at target relatively returns. look over AUM Sustainable industry we segment $XX financial for next that clients grow can more decade in

billion represent years iShares up in assets, $X ago. ETFs $XX from five billion sustainable

more any manager sustainable and five have of have year than other in generated largest industry's inflows sustainable the ETFs out this four ETFs. We

extends investment our sustainable for business. iShares demand beyond solutions Client way

Shifts increased and in investing these forces in driving to likely conviction demographic globally accelerate. interest investment are sustainable are and

choice investment is committed clients that aligns with across BlackRock providing their spectrum goals. the with to investment

billion $XXX apply of in screens. currently an dedicated exclusionary funds, accounts We investment billion additional over $XX sustainable manage that

research with of to data every active their are so incorporate We ESG enhancing material data, can passive, ESG investment into teams, ESG teams risk-adjusted insights integrating the tools, class, all asset idea in and process returns. our support ESG

more priority Technology about differentiator a is past and technology the to BlackRock. strategic in revenues. spoken for BlackRock's a drive using I've

revenues, results enhance we're direct technology our generating in to business. asset to using our technology increasingly management addition In

For integrating example, our business cash we're transforming by model. into management technology our business

quickly delivering to help informed We and streamline technology decisions. cash are efficiently more clients matrix operations their make and

and represents as AUM Five an proposition client key cash ago acquisition, billion are assignment. over five holistic Increasingly BlackRock years share July. is years billion through a more from scale Through was crossed business. basis organic more and increase asset and starting is management cash the in management ago, technology, in class. point milestone value clients important $XXX global relations a $XXX XXX a for growth This market we

alternatives momentum technology expand our platform integrate Illiquid scale to model area innovating business, is our increasing. another is and into business we're and where a

Including net billion inflows the over and commitments, $X we alternatives third in raised by in quarter, in led illiquid credit. assets private real

our private markets and billion seek years longer illiquid returns doubled platform higher We today. the raised in total for as growth a will Demand $XX further $XX alternative illiquid alternatives to and our nearly clients over duration, dry remain and AUM three of eFront billion have and strong support in strengthens powder last time.

service XX% as to flexible businesses looking efficiently. operate Our grew and more their effectively more direct revenues clients and year-over-year solutions holistic technology more technology for are

For institutions, the management investment entire Aladdin is on single process platform. systems an risk one enterprise investment and that power

What from BlackRock multi-asset truly operations. and is construction to trade its analytics sophisticated the ability capabilities model, to entire user/provider differentiates process, portfolio to investment throughout integrated, investment provide business to its compliance and execution

further The eFront investment most Aladdin's world. proposition the Aladdin of reinforces combination operating value as system with the in comprehensive

Aladdin service customers their a as wealth own providers, transparency custodians to to managers through offer well for assets clients Aladdin through who and is also convenience powerful need who solution for and Aladdin their Wealth.

the Wealth wealth expansion and into Aladdin to from using language managers. Aladdin different portfolio and for of growth to world. come clients the around increasingly XX segments have wealth now markets construction We expect further our is

consistent financial the to risk and and intended risk is the critical helping preferences. objectives Understanding managing clients with achieve outcomes

it differentiated a with way We're their grow and as portfolio-based enhance dialogue conversations in business clients business the a Aladdin more client-centric, have more Wealth use also clients. using their markets, in to that their seeing to enabler,

increasing a flexible, and for shifting both need consolidation, as We're holistic and strong institutions are momentum going more at regulations managers. forward the technology-driven solution usage product industry and wealth

capitalize well capabilities to continue these future needs. enhancing is our BlackRock technology to trends meet clients' to to positioned committed is our and their on and needs

In where and company. being to has will merits globalization global a BlackRock by world the many, challenged continue of be a so are

improve a we global working countries. with are with global as XXX over retirement footprint country We have more making employees every such countries, than where in And to we impact, a XX operate. in in clients issues

more BlackRock's This expertise drive financial around and high-growth fulfill in both BlackRock increased world our helping regions well-being. focus positions on more flows using of people the purpose to experience and

anniversary recently Stock X, IPO. $XX New for BlackRock XXXX, for the share, of the On Today, listed our XX% shareholders. We share. crossed $XXX BlackRock's trading a on a October growth per representing XXth rate compounded annual York Exchange around we're

as enabled clients stay from results market the and are and we expect we today. instincts true the our defined has innovative seeing As BlackRock changes us, more that to strong

will our we will at of evolve, innovate, we to differentiators. to our continue continue meet stay clients' clients while front We BlackRock continue our to needs, to strategic key reinforcing in will

culture reach, scale voice on a to heard BlackRock approach Our One needs, global delivering and a client for around global and the centered clients. world a

I'll up With for that, questions. it open

Operator

[Operator Instructions].

Craig question with first Suisse. from Siegenthaler Credit comes Your

question. ask You your may

Laurence Fink

Good morning, Craig.

Craig Siegenthaler

economics Good competitive US distribution commission also Larry. at the weeks your morning, on any over or impact about also, the last overall dynamics Hey. and on And both the still? platforms. I think these will impact wanted e-brokers two how flows we underlying as to the e-broker get either perspective cuts the

Laurence Fink

question, Kapito answer smiling see that face, could my I'm let opportunities. you but at the Rob to if going I'm

Robert Kapito

ETF very for means ability more to going of have the good his investment more this And positive hopefully before iShares. as opening their the simply iShares be of to investors clients have that to as mentioned are Larry trends commission-free and quality More the to achieve market got to and And ever elimination for to BlackRock. investing value have been the Craig, funds So, goals. barriers access use leader, remarks, ETFs. the than in has

and the trillion XX% represents that So, One two annual the commission-free wealth a $X at that has rate. a compound grown trading is channels. market in US actually US accelerating flows is growing RIA growth ETF fastest

that rate. other has trillion investors, $X.X the XX% in market compound is grown US they at a annual growth area direct The and represent

share our engine are commission-free for a the on since has trends platform expanded segments the So, and these e-broker larger growth becoming BlackRock began, overall.

So, using to the an portfolios, part the very lead at will think confident of on as we essential increase with exposures of investors good this industry. and iShares focus number will quality value, that our continue we're their we

and $XX inflows, fixed representing As of you and global driven organic by factor, X% in growth, billion these asset iShares ETFs. growth know, sustainable generated flows annualized net were income, core,

fixed good bond and and of modernization to quarter just had very because by are with important, net high-yield funds. and markets the bond billion ETFs reiterate, is a of $XX So, they're technology, mortgage-backed a corporate accelerating this inflows led treasuries, income

duration We for are cash adapting seeing clients a their ETFs increasingly shorter also fixed portfolios. as income in substitute

ETF. saw ETFs, factor investors their in in $X defensive positioning; sought billion we vol of the for portfolios net and min as On our resilience inflows factor example,

The of of billion demand and client outcomes third ETF mentioned, saw in returns. share market factor, net the financial see core, sustainable European, And sustainable $X captured quarter. achieving alongside increasing for flows the sustainable income, one ETFs number inflows fixed iShares global, as as we Larry

this another ETFs way for we going to for So, increase just and think demand investors. interest is our that is

Laurence Fink

commission makes add market a in ETFs solution free a I'd said deposits, Rob great I funds. thing. for Having it towards my said to prepared bank I duration talk. more really just think low good and one money alternative

And so, so is commission realm – fixed-income more income and cash the a many in for participants. opener fixed free real a

Operator

Goldman Alex with Blostein from Sachs. comes question Your

question. may You ask your

Laurence Fink

Hi, Alex.

Alexander Blostein

Hey, Larry. everyone. Good morning,

of guys curious on the the of maybe savings you reinvestments into of really from In the Just management to and building little the some of additional hoping for not could how platforms last comment you for kind a potential of of trading of are you or could sense. economics that that out ETFs? payment dynamic come help come out was us platforms I lower some the that So, margin an area bit through, a flesh commission-free accelerating economics particular, I of total maybe on some some growth ETF question, improvement or makes better. could Thanks. payments this. was so whether fees could currently guys the spending ETFs making the BlackRock other or on that's that is

Laurence Fink

So, just thing. one say let me

Our as ever. is I of kind relationship strong with Fidelity, it, alluded as as to

ETFs. relationship It's Our is It's beyond about working platform. way about education. their with

with if is you're allude unchanged, to, trying to things. we to and Fidelity that's relationship our what related pay what them so, And other

have We with relation great a Fidelity.

great – opportunities them And ahead. forward have Rob We looking with too. let I'll go

Robert Kapito

to This our clients on major important charging get as portfolio free from commission . and we gives are And have our groups, really individual way to more are tool agreements. as to stock-picking moved are by this portfolio construction it, really a this. ETFs that using a more impacting simply enhances trade, really already It is away us a impacted we and very is in not is construction. just distribution distribution other very They're to access, have we these in and that since which commodity it clients the ETFs for only known fees not a

is getting So, our the it fees. they're saving into impacting Maybe that. not wants add Gary really where to to money. It's

Gary Shedlin

impact this think think see And both great I continue any on there's a our relates got ever our for don't pricing it. it I going don't have. structure I to to well-branded, as to But strategy providers. we're any scaled outcome that as we this guys move. ETFs you there's from ETF question prosecute is

Operator

of Bank America. Carrier line the with Mike question of comes next from Your

ask your may You question.

Laurence Fink

Michael. morning, Good

Michael Carrier

Good morning, Larry.

to view to public. the strength your looking of this outlook the on in how I challenges Maybe private wanted Just to we're near-term you're given alternative rising quarter, go with grow, flows get the seeing given some companies and allocations in markets. positioned private the

Laurence Fink

that's that are trouble. overall having see segment, technology companies companies in going one And think are problems. I Well, is on don't growth-oriented, having problems the I private public. more market much

last of We BlackRock alternatives, $XX now liquid is the estate, for to $X in last real of over commitments infrastructure, doubling And $XXX billion $XX the up our across as raised illiquid a But priority billion, for AUM billion now in BlackRock. and credit a alternatives between related billion years number we we LTPC. category. AUM the and illiquid and said strategic We now raised quarter We're manage wins. strategies. private years three now, to and

which I the of reasons robust us also and helps this greater eFront, it's to penetrate eFront obviously, technology terms Aladdin us why gives fundamental a but think one in also ability the I sales. we flows, alternative system and talked about, believe, connects even in make of our going is in acquisition to more illiquid

And and so, alternatives. is in between believe deeper technology illiquid doing truly connection a there the we then what we're

And our BlackRock consistent platform. all – entire this with the is with

universe we're trying for and XX-odd do of of and differentiated does component to having the consistently eFront in what now, of perspective to doing. for ourselves a unique a all BGI we're in terms have We unique ability technology. the bigger now transaction, fixed-income what a that And the through by integrate sleeves illiquid technology acquisition. years risk It really alternatives. added we help the After became us of having equities

category. of clients more So, more seeing are We utilization asset you're we're XX% XX%. correct from moving alternatives and saying, in as know an to many

XX% to in of terms there that, are area fully Some too. But in also XX% areas within are markets, clients to illiquid priced the valuations the moving allocation. are some

And a so, I perfect it's don't think scenario.

Dhabi, we private, The see infrastructure area will the many, we like and Abu and in to public did Mexico next did component many but bigger going going in of believe, both years to we the be we believe see believe have we like emphasis unique side. where we're bigger is I where and back. opportunities a a – few years, expansion, an to in XX be on infrastructure X We a over that

be demand the entities, key and to looking – that is players the supply. I going are do And and there's this. more more do believe we for So, the and there's client believe more product finding strong firstly, more to great

also renewable say, just gas. one leaders energy. produces fields, electricity natural cheaper in solar we I now of than or the cost would are at The put it up to

Part future. raise going our a renewable a in another energy, of this raised block. close just was fund. about As is to fund. in the big a major final to that energy renewable We're our be of leader component We flows of

very major So, the a and overall, we're organization of having evolving about with it's excited our how component we're more dialogues clients. we're

Operator

question next from Bill with Katz Your comes Citi.

ask You your question. may

Laurence Fink

Bill. Hey,

William Katz

for morning, the Good questions. Thank you everybody. taking

So, guess, year-on-year are into I think about new technology respective of as areas passive – part the could. your you you you maybe if of the is, where you think alternatives, different two-part about sort question and in increase? I year, outlook highlighted – a three it as spending first growth the cycles

And of mentioned to that step value, Can to into seeing August curious the that to present multiples would I'm then, in thinking group opportunity. you the your be about secondly, when clarify, value. Gary, you market? at the what relative you sort you of of – the are relative say thought about which you sort you how that, stock when you're

Laurence Fink

Sure, Bill.

about So, of New spending your a how the was in question, as Year, terms it? thinking question we're it thinking about that is you're

Christopher Meade

that. He can't answer

Gary Shedlin

Okay. it's Well, just question. assume a I'll

yeah. So,

are divergent think volatility on beta very market is, makes predicting in given a beta in beta we're getting is, lower counting world, that where mindful a we're, I that fixed obviously, – income markets where more environment complicated. look, where or return

our we more being we're forward, investment that, as to those incredibly more than to are highlighted mindful much sure long-term we are alternatives. that in make means, three We can aware So, businesses reallocate going There's critical aggressively as beyond invest priorities We get margin highlighted year be we our growth. of basically are major need are shareholders. going that ETFs. continue those can to going the and obviously dollars that but given ever technology. to we to engines obviously to for the we as highlighted much and for to into our creation aware which commitment of margin are both that value as seek continue to we We

In the second the which was question, the capital the of Oh, part return. – was question? you. terms Thank what of second

growth to we mentioned look think market some to constantly and just capital relative we you it trying see that where In think return, prospects market makes look forward. shareholders peers. are basically value value of comes look to and terms We make relative manager our sense relative what asset valuation number sense We sell a our from, of the at at there's value we're for mentality our of I at to the overall. We believe them. the going some down given were we where goes opportunities – think of

we all at Absolutely look So, relative. three investments.

Operator

Your next Stanley. Michael Cyprys Morgan question with comes from

question. your ask may You

Laurence Fink

Hi, Mike.

Michael Cyprys

Hey, morning. for taking Good thanks the question. Hey.

this I guess wanted low With we on rates out the Just and rates. next to couple terms in well. the how industry of more going and negative impact see over as allocations management look how have bit in business, lower asset do impacting you the managing portfolios, the world that little some so low could years, you of the structure you're asset as dig just how across rates negative a parts, and in fees and to

do point just so the at low, you And inflows? but allocation, just a related seen are rates we've What's part into so return maybe of rates to influx low? lot equities, equity flows the flows fixed with for an what second given a of catalyst into income, see asset

Laurence Fink

vol, flows, be navigate outsourcing and built the not markets, the maybe start the on the of it's managers. vol, our be they're risk-on, most let's solutions. for changes. model just work their me consolidating really investors. They environments, for be clear, giant may time, – BlackRock they margin reallocate may the much in At of more They X% to and may that. with portfolio. same key looking more X%, on It's around their portfolio the of able of X%, and big and outs is And working their off. all risk-off We low to high ins long-term Let be clients of

organization important could I'd to – thing a best we to say be our designed that solution we is the how we've diversity the that the But most as we so in can the clients. platform, sure provider have make the

we're class making The other drives thing that drive that our try is sure to business. one not asset

at some still negative have or us to it that, should the the year. navigate. going And sign they to And interest to they're than I trends so, think beginning low expected client of in to appears have question until as answering all rates, where be de-risking longer with been move they think we your with I about

de-risk or some higher the return time, as to looking margin possibly to as At risk they clients much put in categories. illiquid alternatives a of same are try to work that less still as liquid money like in to on the They're strategies some get can.

As opportunities I to areas. of conversation other in there said area, lot an that in us already a the private there but earlier that are some areas rich in are look

rates major low don't lower being a for looking persistence see clients cause fees. in I for

not reallocation if big, a to massive are major a In of are But for of as to fee fact, certainly would looking when those XXXX, able they're do or fee qualify majority of do manager, I to you're many have restructurings looking managers looking assets. one reductions pressure. into giant clients out year

much. doesn't that So, and you impact type offer margins of scale as really it our

the do matters when know pivot do indication more We're But any are when I are about us asking that going, for they jump questions and equities. into moment don't where they it back not at really clients more back seeing in. that clients

As get we in we clients What I is dramatic allocation. portfolio every equities their think changes. see not marginal I It's quarter – in now. heavily are changes said,

Rob, did you to want add…?

Robert Kapito

short-term Michael, that their read are going was that something more into you say, our we report good, the they're portfolios. They're allocating to I was very trade clients dovetailing to very and risk not the so where similar shows portion a to that keeping And that Yeah, using income, alternatives. the adding getting survey alternatives. go that to it's did, equity and same they're original that using back barbell into then fixed

themselves into into clients infrastructure these new very actually find very like for people the we think assets, use which particular assets money have assets. source sourcing by importantly, that they reasons. for we is dovetails in is more it's and putting products But, need others the portfolio two us out way. become are they're offering sourcing alternatives. would cheapest the classes ETFs offering difficult a in and, for can themselves. to therefore, they which are growing Two, difficult to And I that being saying, One, benefit real a and assets time more what passive three, asset which this for the construction, also and Actually, are Larry is

both fitting having to So, whether offering to with grew passive dramatically it's now the to you assets, which and the the source you alternatives are in strategy and going product continue it actually higher-priced quarter and we real lower-priced be other the we saw and grow. have, last asset that agree private which here credit

Operator

from Autonomous Davitt with Research. comes question next Your Patrick

ask may You question. your

Laurence Fink

morning, Good Patrick.

Patrick Davitt

that you morning, Good more you guys. bond against last broadly? Could quarter? the pipeline, through like about what a we talked seeing institutional bond mandate institutional the pretty management still a still like Hey. client-specific outsourcing I dig flows big bit And in lens, are looks on outflows guess, robust capability

Gary Shedlin

Gary. It's Patrick. Sure,

So, really about, again, our across we've we've I broad-based combination also environment talked the performance trends if business. about the some during strong flows we've strong the in seen think come you that talked but and from platform, performance income market fixed of think active the had, about year, some of we've of a candidly. That's that

quarter, $XX quarter. significant called number of the and positive wins about last we large, we in a had strategic actually billion client recall you If flows second very of out

we those a and This billion the I redemptions. went Again, client-specific, quarter, [ph] way we think, outflows average would of the lumpy couple that $X about quarter. more had, clients of I the other in in had call

any to three-month period hard at But look in time. it's this of

look right you running I $XX And of trailing longer-term fixed at billion basis, on need trend. XX-month think, rate. more growth X% now of inflows, the we're about to which income active is about representative asset at organic broadly, a

we but of in trend the strategic of have is issues, very positioning here the I will think clear So, positive timing terms this business.

Operator

with from Morgan. comes Worthington question Your JP final Kent

question. your ask may You

Laurence Fink

Hey, Ken.

Kenneth Worthington

questions been for in Hi. you on in in advisory impact you in. Thank follow-up opportunities you. management? the similar either management the to think One for BlackRock pricing ETFs far? examples and pricing service Thank more in so, earlier have Do on full thus e-brokerage to where the zero are adjust management to might pretty change or me its cash distribution wealth sort if morning. to wealth industry in e-brokerage, approach e-brokerage. for wealth of highlighted And industry? the seems move broadly, Good commissions resilient squeezing You brokerage there there are

Laurence Fink

There's fees wealth starting the the much inelastic platforms resiliency so no to e-brokers fees pretty management than is management advisory far. traditional question, some the in terms overall for lower wealth charge But, the of We're relationship? overall the have have see is having to of fee. of that the make is worthwhile proposition assertion. every free, to make client of going to a And that choice. commission value your are going commissions investor to to having a versus Is when advice unquestionably, the

of is too. like there and believe, we've do I ETFs, just frankly, e-brokerage, see we financial technology, through more now services. But Quite different fee in in connection is distribution pressure more a seen better across segments

wealth, and is where be construction. a are portfolio ESG. I what's do the is evolution going in And we So, believe I going models going on with that and factors portion to believe benefit, though, of to of

cash portfolio a I models duration that. be think believe is those for component the going also advice. will proposition we short-term utilization will lifted that and products major But how value and by constructions of be the said be of we bonds added like to

factors confident And it accelerate that and absolutely a through those play larger we are adaption advice, that role will ESG and will products. of

Operator

Ladies time and you any gentlemen, closing Mr. we allotted questions. for do have Fink, have reached the remarks?

Laurence Fink

your of interest I'd morning this like for all continued and to questions for just thank in your joining BlackRock. you and great

with results clients. third deliberate about the but, linked partnerships our quarter Our time, over directly more making globally loudly deep our investments our are speak importantly, we're made to we results

about periods, the the is that asset organizations we help you asset The $XXX billion purpose. solutions. asset for months, risk-off in who looking continuing our have our it can believe if about not future. look time And of of an are over at for flows product. model last the working. in risk-on. periods XX not them opportunities excited are to be we And BlackRock I in talking for for who's for client said They're looking and are manager's I helping with again, is clients the are time purpose, managers Clients a manager their looking looking them

Thank you.

Operator

teleconference. concludes This today's

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