Q3 2023 BlackRock Inc Earnings Call
Speaker 1: To withdraw your question, please press star 2. Thank you. Mr. Meade, you may begin your conference.
Thank you Mr. Meade you may begin your conference.
Speaker 2: Good morning, everyone. I'm Chris Meade, the general counsel of BlackRock.
Good morning, everyone I'm, Chris Meade, the general counsel of Blackrock.
Speaker 2: Before we begin, I'd like to remind you that during the course of this call, we may make a number of forward-looking statements.
Before we begin I'd like to remind you that during the course of this call. We may make a number of forward looking statements.
Speaker 2: We call your attention to the fact that BlackRock's actual results may, of course, differ from these statements.
We call your attention to the fact that Blackrock actual results may of course differ from these statements.
Speaker 2: As you know, BlackRock has filed reports with the SEC, which lists some of the factors that may cause the results of BlackRock to differ materially from what we see today.
As you know Blackrock has filed reports with the SEC, which list some of the factors that may cause the results of Blackrock to differ materially from what we say today.
Speaker 2: BlackRock assumes no duty and does not undertake to update any forward-looking statements. So with that, I'll turn it over to Martin.
Blackrock assumes no duty and does not undertake to update any forward looking statements.
So with that I'll turn it over to Martin.
Okay.
Thanks, Chris and good morning, everyone.
Speaker 3: It's my pleasure to present results for the 3rd quarter of 2023. Before I turn it over to Larry, I'll review our financial performance and business results.
It's my pleasure to present results for the third quarter of 2023 before I turn it over to Larry I will review, our financial performance and business results. Our earnings release discloses, both GAAP and as adjusted financial results I'll be focusing primarily on our as adjusted results.
Speaker 3: Our earnings release discloses both GAAP and as-adjusted financial results. I'll be focusing primarily on our as-adjusted results.
Speaker 3: Rate hikes over the last 18 months mean that for the first time in nearly 20 years, clients can earn a real return in cash. In the short term, this has benefited many portfolios. Investors have been able to generate positive returns while waiting for inflation to cool and for more policy certainty from central bank.
Rate hikes over the last 18 months mean that for the first time in nearly 20 years clients can earn a real return in cash in the short term. This has benefited many portfolios investors who've been able to generate positive returns while waiting for installation to cool and for more policy certainty from central bankers.
Speaker 3: This weighting has weighed on industry flows, including here at BlackRock, consistent with prior periods of policy uncertainty like 2013, 2016, and 2018.
This weighting has weighed on industry flows, including here at Blackrock consistent with prior periods of policy uncertainty like 2013, 2016 and 2018.
Speaker 3: At September's Federal Reserve meeting, central bankers decided to pause, keeping the policy rate steady, but communicated forward guidance that interest rates will stay higher for longer. We think this is good news. It begins to offer investors more clarity about timeframes and entry points into fixed income inequities and a path to re-risking global investment portfolios.
At September Federal Reserve meeting Central bankers decided to pause keeping the policy rates steady, but communicated forward guidance that interest rates will stay higher for longer. We think this is good news. It begins to offer investors more clarity about timeframes and entry points into fixed income and equities and a path to re risking global <unk>.
<unk> portfolios.
Speaker 3: At BlackRock, we never pause. We've used this period of investor portfolio redesign to stay close to our clients. We're providing insights, advice, and solutions to help clients prepare to deploy assets following greater certainty on markets, terminal rates, and the shape of the yield.
Blackrock, we never pause we've used this period of investor portfolio redesign to stay close to our clients, we're providing insights advice and solutions to help clients prepare to deploy assets following greater certainty on markets terminal rates and the shape of the yield curve.
Speaker 3: Clients entrusted BlackRock with $193 billion of total net inflows in the first nine months of 2023, representing 3% annualized organic asset growth.
Clients entrusted Blackrock with 193 billion of total net inflows in the first nine months of 2023, representing 3% annualized organic asset growth.
Speaker 3: While our clients' decisions to take advantage of state-taving cash, as they redesign portfolios or reflected in our third quarter flows, clients are actively engaging to do more with BlackRock. We believe the long-term trend of clients consolidating business with fewer managers will be accelerated as a result of this period.
Clients' decisions to take advantage of safe Haven cash as they redesign portfolios are reflected in our third quarter flows clients are actively engaging to do more with Blackrock. We believe the long term trend of clients consolidating business with fewer managers will be accelerated as a result of this period.
Speaker 3: Third quarter gross fund sales were 95% of average levels over the last 12 months, and flows would have been meaningfully positive excluding a 19 billion single client index redemption and 13 billion of market related precision ETF net outflows. So client momentum remains strong.
Third quarter gross fund sales were 95% of average levels over the last 12 months and flows would have been meaningfully positive excluding a $19 billion single client index redemption, and 13 billion of market related precision ETF net outflows so client momentum remains strong.
Speaker 3: Today we manage 9.1 trillion in assets for our clients. These units of trust are 1.1 trillion higher than a year ago. Revenue is 5% higher, operating income is up 7% and earnings per share increased 14% over this time theory.
They we managed nine one trillion in assets for our clients. These units of trust at 1.1 trillion higher than a year ago revenues, 5% higher operating income was up 7% and earnings per share increased 14% over this time period.
Speaker 3: Powering these numbers are clients increasing use of BlackRock as a platform and staying within our ecosystem of capabilities, combining investment, technology, and portfolio servicing to meet their specific business needs.
During these numbers, our clients' increasing use of Blackrock as a platform and staying within our ecosystem of capabilities, combining investment technology and portfolio of servicing to meet their specific business needs.
Speaker 3: This platform approach is driving our industry leading organic growth over the long-
This platform approach is driving our industry, leading organic growth over the long term market fluctuations and client risk appetite may temporarily lift or lower our AUM in revenues, but our focus remains on delivering blackrock platform to clients through access to unique opportunities expertise and world class client service.
Speaker 3: Market fluctuations in client risk appetite may temporarily lift or lower our AUM in revenues, but our focus remains on delivering BlackRock's platform to clients through access to unique opportunities, expertise, and world-class client service.
Speaker 3: Our strategy is working. Clients are choosing to build bigger relationships with BlackRock. We've grown our asset base over the long term with over one trillion of net inflows since the start of 2021, and over 300 billion of that in just the last 12 months.
Our strategy is working clients are choosing to build bigger relationships with Blackrock, we've grown our asset base over the long term with over one trillion of net inflows since the start of 2021 and over 300 billion of that and just the last 12 months.
Speaker 3: We know our shareholders and clients have high expectations of BlackRock. We believe in our 5% organic face-to-face growth target over the long term. And we challenge ourselves to envision what it takes to rise above that target. We've said before that we don't strive to be the fastest-grower in any given quarter, but we continue to drive durable, consistent organic growth well above our peer group over the long term.
We know our shareholders and clients have high expectations of Blackrock, we believe in our 5% organic base fee growth target over the long term and we challenge ourselves to envision what it takes to rise above that target. We have said before that we don't strive to be the fastest grower in any given quarter, but we continue to drive durable consistent organic.
Growth well above our peer group over the long term.
Speaker 3: Third quarter total net inflows were $3 billion, and included $49 billion of lower fee institutional index equity redemptions driven by client-specific index allocation change.
Third quarter total net inflows were 3 billion and included 49 billion of lower fee institutional index equity redemptions, driven by client specific index allocation changes institutional index equity represents less than 3% of Blackrock total base fees.
Speaker 3: Institutional index equity represents less than 3% of BlackRock's total basic.
Speaker 3: These lower fee strategies are often only a portion of our client's overall relationships with BlackRock. For example, results included in a 19 billion redemption from a single client, but the client's working with us to extend its mandates and active strategy.
These lower fee strategies are often only a portion of our clients overall relationships with Blackrock. For example results included in the 19 billion redemption from a single client, but the clients working with us to extend its mandates and active strategies.
Speaker 3: Total quarterly annualized organic base V2K of 2%, reflected net outflows from pyrephe precision ETFs, and redemptions in active equity, and retail liquid alternatives offer.
Total quarterly annualized organic base fee decay of 2% reflected net outflows from higher fee precision Etfs and redemptions in active equity and retail liquid alternatives offerings.
Speaker 3: Third quarter revenue of 4.5 billion was 5% higher year over year. Driven by organic growth, the impact of market and foreign exchange movement served the last 12 months on average AUM and higher technology services revenue.
Third quarter revenue of $4 5 billion was 5% higher year over year, driven by organic growth the impact of market and foreign exchange movements over the last 12 months on average AUM and higher technology services revenue.
Speaker 3: Operating income of 1.7 billion was up 7% year-over-year. Burning's per share of $10.91 increased 14%, also reflecting a lower effective tax rate partially offset by lower non-operating income compared to a year ago.
Operating income of $1 7 billion was up 7% year over year earnings per share of $10 91 increase.
Increased 14% also reflecting a lower effective tax rate, partially offset by lower non operating income compared to a year ago.
Speaker 3: Our as adjusted tax rate for the third quarter was approximately 12 percent, reflecting 215 million of discrete tax benefits associated with the resolution of certain outstanding tax matters. We continue to estimate that 25 percent is a reasonable projected tax run rate for the remainder of 2023. The actual effect of tax rate may differ because of non-recurring or discrete items for potential changes in tax legislation.
Our as adjusted tax rate for the third quarter was approximately 12%, reflecting $215 million of discreet tax benefits associated with the resolution of certain outstanding tax matters. We continue to estimate that 25% is a reasonable projected tax run rate for the remainder of 2023 the actual.
Effective tax rate may differ because of nonrecurring or discrete items or potential changes in tax legislation.
Non operating results for the quarter included $127 million of net investment gains driven primarily by noncash mark to market gains and the value of our private equity co investment portfolio.
Speaker 3: Non-operating results for the quarter included 127 million of net investment gains driven primarily by non-cash market market gains in the value of our private equity co-investment portfolio.
Speaker 3: Third quarter, base fee and securities lending revenue of 3.7 billion increased 4% year over year, reflecting the positive impact of market beta and foreign exchange movements on average AUM, positive organic base fee growth and higher securities lending revenue.
Third quarter base fee in securities lending revenue of $3 7 billion increased 4% year over year, reflecting the positive impact of market beta and foreign exchange movements on average AUM positive organic base fee growth and higher securities lending revenue.
Speaker 3: sequentially, face-fiend securities lending revenue was up to percent. On an equivalent day count basis, our annualized effective fee rate was approximately two tenths of one basis point lower compared to the second quarter. This was due to lower securities lending revenue, underperformance of non-US equity markets, and changing client risk preferences favoring risk off lower fee exposure.
Sequentially base fees and securities lending revenue was up 2% on an equivalent day count basis, our annualized effective fee rate was approximately two tenths of one basis point lower compared to the second quarter. This was due to lower securities lending revenue underperformance of non U S equity markets and changing client risk.
<unk> favoring risk off lower fee exposures.
Speaker 3: As a result of continued global equity and bond market depreciation toward the end of the third quarter, including the impact of FX-related dollar appreciation, we entered the fourth quarter with an estimated base fee run rate, approximately 3% lower than our total base fees for the third quarter.
As a result of continued global equity and bond market depreciation toward the end of the third quarter, including the impact of FX related dollar appreciation, we entered the fourth quarter with an estimated base fee run rate approximately 3% lower than our total base fees for the third quarter.
Speaker 3: Performance fees of 70 million decreased from a year ago, primarily reflecting lower revenue from liquid alternatives.
Performance fees of $70 million decrease from a year ago, primarily reflecting lower revenue from liquid alternatives.
Speaker 3: Quarterly technology services revenue was up 20% compared to a year ago driven by sustained demand for our technology off.
Quarterly technology services revenue was up 20% compared to a year ago, driven by sustained demand for our technology offerings.
Speaker 3: Current quarter technology services revenue also benefited from the impact of several large client renewals of their eFront on premises licenses for which accounting treatment recognizes a majority of the revenue at time of renewal.
Current quarter Technology services revenue also benefited from the impact of several large client renewals of their E front on premises licenses for which accounting treatment recognizes a majority of the revenue at time of renewal.
Speaker 3: Approximately half of the year over year technology services revenue increase resulted from these eFront contract renewal.
Approximately half of the year over year technology services revenue increase resulted from these E contract renewals.
Speaker 3: Annual contract value or ACV increased 10% year over year. We remain committed to low-to-mid teens ACV growth over the long term, driven by demand for laden's broadening technology capabilities and the growing value proposition it presents for clients.
Annual contract value or HCV.
<unk>, 10% year over year, we remain committed to low to mid teens ACB growth over the long term driven by demand for Aladdin broadening technology capabilities and the growing value proposition it presents for clients.
Total expense was 4% higher year over year higher compensation and direct fund expenses were partially offset by lower distribution and servicing costs and G&A.
Speaker 3: Total expense was 4% higher year over year. Higher compensation and direct fund expenses were partially offset by lower distribution and servicing costs and GNA.
Speaker 3: At present, we expect full year 2023 Core GNA to fall on the low end of our previously communicated guidance of a mid to high single digit percentage increase.
At present, we expect full year 2023 core G&A to fall on the low end of our previously communicated guidance of a mid to high single digit percentage increase in.
Speaker 3: In line with this outlook, we would also expect fourth quarter core GNA to reflect seasonal increases in marketing spend and execution of plan technology investment spend.
In line with this outlook, we would also expect fourth quarter core G&A to reflect seasonal increases in marketing spend and execution of planned technology investments spend.
Our third quarter as adjusted operating margin of 42, 3% was up 30 basis points from a year ago benefiting in part from the favorable impact of market movements on quarterly revenue over the last year. Our platform strategy has delivered scale and operating leverage through time, and we aim to be disciplined in driving <unk>.
Speaker 3: Our third quarter as adjusted operating margin of 42.3% was up 30 basis points from a year ago.
Speaker 3: benefiting in part from the favorable impact of market movements on quarterly revenue over the last year.
Speaker 3: Our platform strategy is delivered scale and operating leverage through time. And we aim to be disciplined in driving profitable growth. We're prioritizing investments to propel our differentiated organic growth and drive operating leverage. We'll look to find more opportunities to variableize expenses, generate fixed cost scale through technology automation, and align investment spend with organic revenue growth potential.
<unk> growth, we're prioritizing investments to propel our differentiated organic growth and drive operating leverage will look to find more opportunities to variable expenses generate fixed cost scale through technology, and automation and align investment spend with organic revenue growth potential.
Speaker 3: Our capital management strategy remains consistent. We invest first, either the scale strategic growth initiatives or drive operational efficiency.
Our capital management strategy remains consistent we invest first either to scale strategic growth initiatives or drive operational efficiency, and then return excess cash to our shareholders through a combination of dividends and share repurchases.
Speaker 3: and then return access cash to our shareholders through a combination of dividends and share repurchase.
Speaker 3: During the third quarter, we closed our acquisition of Creos Capital, adding venture debt capabilities to our credit and private markets franchises. And earlier this week, we announced a minority investment as part of a strategic partnership with UP.
During the third quarter, we closed our acquisition of <unk>, kapital, adding venture debt capabilities to our credit and private markets franchises and earlier. This week, we announced a minority investment as part of our strategic partnership with up best our M&A focus is on extending our capabilities and technology and private markets tapping into revenue pools are.
Speaker 3: Our M&A focus is on extending our capabilities and technology in private markets, tapping into revenue pools of adjacent industries and building scale.
<unk> industries and building scale.
Speaker 3: We repurchased 375 million worth of common shares in the third quarter. At present, based on our capital spending plans for the year and subject to market conditions, we still anticipate repurchasing at least 375 million of shares in the fourth quarter, consistent with our previous guidance in January .
We repurchased $375 million worth of common shares in the third quarter at present based on our capital spending plans for the year and subject to market conditions, we still anticipate repurchasing at least $375 million of shares in the fourth quarter consistent with our previous guidance in January .
Speaker 3: BlackRock had 3 billion of total net inflows in the third quarter, which were impacted by 49 billion of low fee institutional index equity redemptions. BlackRock was not immune to an overall slowing of investor activity, but we once again outperformed in what has been a challenging industry environment.
Blackrock had $3 billion of total net inflows in the third quarter, which were impacted by $49 billion of low fee institutional index equity redemptions Blackrock was not immune to an overall slowing of investor activity, but we once again outperformed and what has been a challenging industry environment.
Speaker 3: Momentum in our ETF business continued with 29 billion of net inflows in the third quarter led by core equity and fixed income ETF net inflows of 34 billion and 12 billion respect.
<unk> and our ETF business continued with 29 billion of net inflows in the third quarter led by core equity and fixed income ETF net inflows of 34 billion and $12 billion, respectively. Overall ETF flows were impacted by redemptions concentrated in certain market driven precision and fixed income products.
Speaker 3: Overall ETF flows were impacted by redemption's concentrated and certain market driven precision and fixed income products.
Speaker 3: The fourth quarter has historically been the strongest quarter of ETF flows for BlackRock. When we've seen on average 35% of our annual ETF net inflows. BlackRock typically has been a large beneficiary of ETF industry seasonality related to year-end rebalancing and tax-
The fourth quarter has historically been the strongest quarter of ETF flows for Blackrock when we've seen on average 35% of our annual ETF net inflows and Blackrock typically it's been a large beneficiary of ETF industry seasonality related to year end rebalancing and tax planning in line with these historical results, we would expect to see in access.
Speaker 3: In line with these historical results, we'd expect to see an acceleration in I-SHIRS ETF flows as we get closer to the end of 2023.
<unk> and Ishares ETF flows as we get closer to the end of 2023.
Speaker 3: With safe haven cash providing positive returns, retailing that outflows of $4 billion primarily reflected industry pressure in active equities and liquid alternatives. Partially offset by continued strength in SMAs through Reparia.
With safe Haven cash providing positive returns retail net outflows of $4 billion, primarily reflected industry pressure in active equities and liquid alternatives, partially offset by continued strength in SMA is through <unk>.
Speaker 3: Institutional index net outflows of 36 billion reflected the previously mentioned low fee index equity redempts
Institutional index net outflows of 36 billion reflected the previously mentioned low fee index equity redemptions.
Speaker 3: Our institutional active franchise experienced one billion of net outflows, primarily from active fixed income, which was impacted by a handful of client-specific partial redemptions, including reinsurance activity. These outflows were partially offset by continued demand for our target date, illiquid alternatives, and outsourcing capability.
Our institutional active franchise experienced $1 billion of net outflows primarily from active fixed income, which was impacted by a handful of clients specific partial redemptions, including reinsurance activity. These outflows were partially offset by continued demand for our target date, illiquid alternatives and outsourcing capabilities.
Speaker 3: We've built our private markets capabilities across multiple years, and we continue to see strong demand for our illiquid alternative strategies. We generated nearly 3 billion of net inflows in the third quarter, driven by infrastructure and private credit. We're only seeing bigger and better private markets opportunities for BlackRock and for our clients.
We've built our private markets capabilities across multiple years, and we continue to see strong demand for our illiquid alternative strategies, we generated nearly $3 billion of net inflows in the third quarter, driven by infrastructure and private credit, we're only seeing bigger and better private markets opportunities for Blackrock and for our clients.
Speaker 3: BlackRock's relationships across the world drive our differentiated deal flow. Deal flow alongside great teams with great tech and great data, mean we can deliver differentiated investment performance and grow vintage over vintage.
<unk> relationships across the World drive our differentiated deal flow deal flow alongside great teams with great tack and great data, meaning we can deliver differentiated investment performance and grow vintage over vintage we're investing as we scale, our private markets platform by using our financial strength to bridge successor funds.
Speaker 3: We're investing as we scale our private markets platform by using our financial strength to bridge success or funds, facilitate growing co-investments activity, and seeding new fund launches. These investments can unlock future revenue and earnings potential for our shareholders.
Facilitate growing co investments activity and seeding new fund launches these investments can unlock future revenue and earnings potential for our shareholders.
Speaker 3: Finally, cash management net inflows were 15 billion in the quarter. Money market funds returned to earning yields not seen in nearly two decades. We're leveraging our scale and integrated cash offerings to engage with clients who are using cash, not only to manage liquidity, but also to earn attractive returns.
Finally cash management net inflows were $15 billion in the quarter money market funds returned to earning yields not seen in nearly two decades, we're leveraging our scale and integrated cash offerings to engage with clients. We are using cash not only to manage liquidity, but also to earn attractive returns.
Speaker 3: The current macro environments causing some clients to pause, slowing overall activity in the asset management industry. Nevertheless, BlackRock's delivered positive organic asset and base fee growth over the last 12 months. We see significant opportunity to deepen relationships and consolidate our share with clients as they resume actively allocating assets. We're staying connected with our clients and positioning for what we believe can be massive growth unlock.
The current macro environment is causing some clients to pause slowing overall activity in the asset management industry. Nevertheless, Blackrock delivered positive organic asset and base fee growth over the last 12 months, we see significant opportunity to deepen relationships and consolidate our share with clients as they resumed actively allocating assets, we're staying connected.
<unk> with our clients and positioning for what we believe can be massive growth unlocks looking ahead. We believe our platform strategy will continue to deliver for both our clients and shareholders, resulting in sustained market, leading organic growth differentiated operating leverage and earnings and multiple expansion over time.
Speaker 3: Looking ahead, we believe our platform strategy will continue to deliver for both our clients and shareholders, resulting in sustained market leading organic growth, differentiated operating leverage, and earnings and multiple expansion over time. With that, I'll...
With that I'll turn it over to Larry.
Speaker 4: Thank you, Martin. Good morning and thank you all for joining the call.
Thank you Martin good morning, and thank you all for joining the call.
Speaker 4: I'd like to begin saying that our thoughts are with everyone who has friends, family, or loved ones impacted by a terrorist act in Israel.
I'd like to begin saying that our thoughts are with everyone, who has friends family or loved ones impacted by terrorist attacks in Israel.
Speaker 4: The violence and the loss of innocent lives has been shocking and truly heartbreak.
The violence of the loss of illicit lives has been shocking and truly heartbreaking.
Speaker 4: We at Black Hawk will continue to do everything we can to support our colleagues and all our clients in the region.
We at Blackrock will continue to do everything we can to support our colleagues and all our clients in the region.
Sure.
Turning to our results clients have always been at the center of Blackhawk's growth strategy I believe that Blackrock is better positioned today than ever before to help our clients achieve the long term outcomes. They need we are having comprehensive conversations with clients globally, and how we can partner with them to navigate.
Speaker 4: Turning to our results, clients have always been at the center of BlackRock's growth strategy. I believe that BlackRock is better positioned today than ever before to help our clients achieve the long-term outcomes they need. We are having comprehensive conversations with clients globally, and how we can partner with them to navigate on a new market regime and capitalize on investment opportunities.
On a new market regime and capitalize on investment opportunities.
Speaker 4: BlackRock is uniquely positioned in this environment to serve our clients with an integrated advisory, investment management and technology expertise, something no other asset manager can provide.
Blackrock is uniquely positioned in this environment to serve our clients with an integrated advisory investment management and technology expertise something no other asset manager can provide.
Sustained organic growth and market appreciation depreciation has led to a $1 one trillion increase in Blackrock <unk> alongside margin improvement.
Speaker 4: To stay in organic growth and market appreciation, it has led to 1.1 trillion increase in BlackRock's AUM, alongside margin improvement, and 14% growth in earnings per share over the last 12 months.
And 14% growth in earnings per share over the last 12 months.
Let's draw your question, please press star two. Thank you.
Speaker 4: The clients have entrusted us with over $300 billion in net inflows over the same time period.
Clients have entrusted us with over $300 billion in net inflows over the same time period.
Christopher Meade: Mr. Meade, you may begin your conference. Good morning, everyone. I'm Chris Meade, the general counsel of BlackRock.
Speaker 4: Technology service revenues increased 20% year over year, reflecting sustained demand for Latin and E-Front renewals from several large clients.
Technology service revenues increased 20% year over year, reflecting sustained demand for Aladdin at E renewals from several large clients.
Christopher Meade: Before we begin, I'd like to remind you that during the course of this call, we may make a number of forward looking statements. We call your attention to the fact that BlackRock's actual results may of course differ from these statements. As you know, BlackRock has filed reports with the SEC, which lists some of the factors that may cause the results of BlackRock to differ materially from what we say today. BlackRock assumes no duty, and does not undertake to update any forward looking statements.
Speaker 4: We remain committed to delivering differentiated organic growth in margin. We've invested ahead of major opportunities for BlackRock in private markets, technology, and whole portfolio solutions. Through disciplined execution, we aimed at both growth, client assets, and drive profitable growth, unleashing financial success for our clients alongside revenue and earnings power for our shareholders.
We remain committed to delivering differentiated organic growth and margin. We've invested ahead of major opportunities for Blackrock in private markets technology and whole portfolio solutions through disciplined execution, we aimed at both grow client assets and drive profitable growth.
<unk> financial success for our clients alongside revenue and earnings power for our shareholders.
Martin Small: So with that, I'll turn it over to Martin. Thanks, Chris, and good morning, everyone. It's my pleasure to present results for the third quarter of 2023. Before I turn it over to Larry, I'll review our financial performance and business results. Our earnings release, difficult, losses both gap and as adjusted financial results, I'll be focusing primarily on our as adjusted results. Rate hikes over the last 18 months mean that for the first time in nearly 20 years, clients can earn a real return in cash.
Structural and sexual sexual secular changes in business models technology and most of all monetary and fiscal policy have made the last two years extremely challenging for traditional asset management with a majority of industry players are seeing outflows Blackrock differentiated business model has enabled us to grow.
Speaker 4: Structural and sexual, sexual, secular changes in business models, technology and most of all monetary and fiscal policy have made the last two years extremely challenging for traditional asset management. With a majority of industry players seen outflows. BlackRock's differentiated business model has enabled us to grow consistently with our clients and maintain positive, organic, basic growth since 2022. So thanks E.T.
Italy, with our clients and maintain positive positive organic base fee growth since 2022.
Investors face continued uncertainty.
Martin Small: In the short term, this has benefited many portfolios. Investors have been able to generate positive returns while waiting for inflation to cool and for more policy certainty from central bankers. This waiting has weighed on industry flows, including here at BlackRock, consistent with prior periods of policy uncertainty, like 2013, 2016 and 2018. At September, several reserve meetings, central bankers decided to pause, keeping the policy rate steady, but communicated forward guidance that interest rates will stay higher for longer. We think this is good news. It begins to offer investors more clarity about time frames and entry points into fixed income inequities and a path to re risking global investment portfolios.
Speaker 4: The S&P saw its best start to July in 26 years, but retreated in August and September .
The S&P saw its best start through July in 2006 years, but retreated in August and September .
Speaker 4: Central banks are being forced to keep policies tight as they lean against inflationary pressure.
Central banks are being forced to keep policies tight as a lean against inflationary pressures.
Speaker 4: Two and 10 year treasuries climbed to 16 year highs as investors anticipated rates remaining higher for longer.
Two and 10 year Treasury has climbed to 16 year highs as investors anticipated rates remaining higher for longer.
Rapid advancements in technology and artificial intelligence, the rewiring of globalization the transition to a low carbon economy aging populations and the fast evolving financial system are all macro trends clients are evaluating.
Speaker 4: Rapid advancements in technology and artificial intelligence, the rewiring of globalization.
Speaker 4: The transition to a low carbon economy, aging populations, and a fast evolving financial system where all macro-trans clients are evaluated.
Speaker 4: There's market dynamic shift and uncertainty increases. Clients are pausing to think about the future, assessing their options, and seeking out blocks.
As market dynamic shift in uncertainty increase as clients are pausing to think about the future assessing their options and.
Martin Small: At BlackRock, we never pause. We've used this period of investor portfolio redesign to stay close to our clients. We're providing insights, advice and solutions to help clients prepare to deploy assets, following greater certainty on markets, terminal rates, and the shape of the yield curve. Clients entrusted BlackRock with $193 billion of total net inflows in the first nine months of 2023, representing 3% annualized organic asset growth. While our clients' decisions to take advantage of state-taving cash, as they redesigned portfolios are reflected in our third quarter flows, clients are actively engaging to do more with BlackRock.
In seeking out Blackrock to take action.
Speaker 4: BlackRock's quarterly net inflows were not immune to an overall industry slowdown as Martin discussed. Of course, I'm disappointed when we have softer flow quarters, but the long-term trends of clients can solidate a more of their portfolio of BlackRock is only accelerating.
Blackhawk's quarterly net inflows were not immune to the overall industry slowdown as Martin discussed of course, I am disappointed when we have softer flow quarters, but the long term trends of clients consolidating more of their portfolio of Blackrock is only accelerating.
Speaker 4: Raid hikes over the past year and a half, the fastest in the US since the early 1980s have made cash, not just a safe place, but now a very profitable place where investors to wait for the time being.
Rate hikes over the past year and a half the fastest in the U S. Since the early 19 eighties have made cash not just a safe place, but now a very profitable place for investors to wait for time being.
Speaker 4: In short, investors are being paid to wait. Something we haven't seen to this degree in years.
In short investors are being paid to wait something we haven't seen to this degree in years.
Martin Small: We believe the long-term trend of clients consolidating business with fewer managers will be accelerated as a result of this period. Third quarter gross fund sales were 95% of average levels over the last 12 months, and flows would have been meaningfully positive excluding a 19 billion single-client index redemption and 13 billion of market-related precision ETF net outflows. Client momentum remains strong. Today, we manage 9.1 trillion in assets for our clients. These units of trust are 1.1 trillion higher than a year ago.
Speaker 4: Investors can earn 5 to 7% from conservative cash and bond portfolio.
Investors can earn 5% to 7% from conservative cash and bond portfolios.
Speaker 4: This dynamic reduces the near-term incentive to implement portfolio changes, resulting in temporarily slower client activity and inflows. The degree to which investors have hunkered down in cash is shown by nearly $7 trillion in money market funds AUM across the industry.
This dynamic reduces the near term instead of the implement portfolio changes, resulting in temporarily slower client activity inflows to degree to which investors have hunkered down in cash as shown by nearly $7 trillion in money market funds AUM across the industry.
Speaker 4: Investors will eventually put that money to work. We've seen this dynamic before as recently as 2016 and 2018. When policy uncertainty and the ability to earn yields and cash resulted in temporarily slowing in activity. Through these times, BlackRock stayed connected with our clients connected across our businesses. And what immediately followed those periods in the past were new records for BlackRock and organic basic growth at or above 5% target.
Investors will eventually put that money to work, we see that this dynamic before as recently as 2016 and 2018 when policy uncertainty and the ability to earn yields in cash resulted in temporarily slowing in activity through.
Martin Small: Revenue is 5% higher, operating income is up 7%, and earnings per share increased 14% over this time period. Powering these numbers are clients increasing use of BlackRock as a platform, and staying within our ecosystem of capabilities, combining investment, technology, and portfolio servicing to meet their specific business needs.
Through these times Blackrock stayed connected with our clients connected across our businesses and what immediately followed those periods in the past were new records for Blackrock client flows and organic base fee growth at or above 5% target.
Martin Small: Keys. This platform approach is driving our industry-leading organic growth over the long-term. Market fluctuations and client risk appetite may temporarily lift or lower our AUM in ravages, but our focus remains on delivering BlackRock's platform to clients through access to unique opportunities, expertise, and world-class client service. Our strategy is working. Clients are choosing to build bigger relationships with BlackRock. We've grown our asset base over the long-term, with over one trillion of net inflows since the start of 2021, and over 300 billion of that in just the last 12 months.
Speaker 4: We expect that investors will begin redeploying assets once there's a conviction in a term or rate and the shape of the yield curve.
We expect that investors will begin redeploying assets once theres, a conviction and a terminal rate and the shape of the yield curve.
Speaker 4: We see that effect play out at prior cycles, most recently following the Fed pause in 2019, when flows rebounded, particularly in fixed income.
We see that effect play added prior cycles. Most recently following the fed pause in 2019.
When flows rebounded, particularly in fixed income.
Speaker 4: BlackRock's integrated platform and deep, longstanding relationships with clients position us to be a major beneficiary, one slows return. We are the only methods asset manager delivering our platform as a service. Clients and trust us with 9.1 trillion in assets, and we are serving them with excellence.
Blackrock integrated platform and deep long standing relationships with clients position us to be a major beneficiary. Once flows return we are the only method asset manager delivering our platform as a service clients entrust us with $9 one trillion in assets and we're serving them with excellence.
Martin Small: We know our shareholders and clients have high expectations of BlackRock. We believe in our 5% organic base-be-growth target over the long-term, and we challenge ourselves to envision what it takes to rise above that target. We've said before that we don't strive to be the fastest-grower in any given quarter, but we continue to drive durable, consistent organic growth well above our peer group over the long-term. Third quarter total net inflows were 3 billion, and included 49 billion of lower fee institutional index equity redemptions driven by client-specific index allocation changes.
Speaker 4: We lead our industry in delivering accessibility, affordability and innovation. This is very important.
We lead our industry in delivering accessibility affordability and innovation.
Speaker 4: Times of uncertainty are often when transformational opportunities emerge.
Types of uncertainty are often when transformational opportunities emerge.
Speaker 4: Moments in our history like this have led to new ideas, led to new partnerships and acquisitions.
Moments in our history like this has led.
Led to new ideas led to new partnerships and acquisitions.
Speaker 4: BlackRock has a strong track record, a successful transformational M&A.
Blackrock has a strong track record of successful transformational M&A.
Speaker 4: Most people think of BGI and M-M-M-M-M-LIM when I say that, but I also think of acquisitions like E-Front and Appearia. They have been smaller in size, but we're also transformational in their own way. In both we anticipated and delivered on our clients' needs. We scaled strong existing technologies and built new revenue streams for our shareholders.
Most people think of Pgi.
<unk> when I say that but I also think of acquisitions like a front end of period. They have been smaller in size, but we're also transformational in their own way and both we anticipated and delivered on our clients' needs, we scaled strong existing technologies and build new revenue streams for our shareholders organic growth in a period.
Martin Small: Institutional index equity represents less than 3% of BlackRock's total base fees. These lower fee strategies are often only a portion of our client's overall relationships with BlackRock. For example, results included in a 19 billion redemption from a single client, but the client's working with us to extend its mandates and active strategies. Total quarterly annualized organic base fee decay of 2% reflected net outflows from higher fee precision ETFs and redemptions in active equity and retail liquid alternative offerings.
Speaker 4: Organic growth in a period has been over 20% since our acquisition and e-front revenues have grown nearly 50% while also strengthening our value proposition and positioning in Aladdin and private markets.
It has been over 20% since our acquisition at a front revenues have grown nearly 50%, while also strengthening our value proposition and positioning in Aladdin and private markets.
Speaker 4: BlackRock has been a successful acquire and today advancements in tech and AI
Blackrock has been a successful acquirer and today advancements in tech in AI <unk>.
Martin Small: Third quarter revenue of 4.5 billion was 5% higher year over year driven by organic growth, the impact of market and foreign exchange movements over the last 12 months on average AUM and higher technology services revenue. Operating income of 1.7 billion was up 7% year over year, earnings per share of $10.91 increased 14%, also reflecting the lower effective tax rate partially offset by lower non-operating income compared to a year ago. Our as-adjusted tax rate for the third quarter was approximately 12%, reflecting 215 million of discrete tax benefits associated with the resolution of certain outstanding tax matters.
Speaker 4: Galing a private market and more attractive valuations means black rock is once again becoming increasingly engaged in M&A trends.
Scaling our private markets at more attractive valuations means Blackrock has once again, becoming an increasingly engaged in M&A trends discussions.
Speaker 4: What made our acquisitions post-successful? Was there enduring commitment to fuse the best of the acquired companies into a stronger and faster growing one, BlackRock? Fully connecting all parts of the firm to our clients.
What made our acquisitions. So successful was our enduring commitment to fuse the best of the acquired companies into a stronger and faster growing one blackrock fully connecting all parts of the firm to our clients.
We have a proven history of realizing long term benefits in areas of expansion.
Speaker 4: We have a proven history of realizing long-term benefits and areas of expansion.
Speaker 4: Today we're similarly connecting with our partners across markets to lay the groundwork for future growth.
They were similarly, connecting with our partners across markets to lay the groundwork for future growth.
Speaker 4: In July , we announced an agreement to form Geo BlackRock, a 5050 joint venture with Geo Financial Services. And then it he carved out a reliance industry. India has been an integral part of a global platform. And BlackRock is one of the largest international investors in India today.
In July we announced an agreement to form Geo Blackrock, a 50 50 joint venture with Geo financial services.
Martin Small: We continue to estimate that 25% is a reasonable projected tax run rate for the remainder of 2023. The actual effective tax rate may differ because of non-recurring or discrete items or potential changes in tax legislation. Non-operating results for the quarter included 127 million of net investment gains driven primarily by non-cash marked to market gains in the value of our private equity co-investment portfolio. Third quarter base fee and securities lending revenue of 3.7 billion increased 4% year over year, reflecting the positive impact of market data and foreign exchange movements on average AUM, positive organic base fee growth and higher securities lending revenue.
<unk> carved out of reliance industries, India has been a integral part of the global platform and Blackrock is one of the largest international investors in India today.
Speaker 4: And almost 15% of our colleagues are located across multiple offices in the country.
And almost 15% of our colleagues are located across multiple offices.
The country.
Speaker 4: India offers enormous opportunities. Geoblackrock represents a powerful new partnership in the fast growing markets, where we see the potential to revolutionize India's asset management industry. We look forward to expanding our footprint with the ambition to improve the financial futures for millions of investors in India.
India offers enormous opportunities Geo Blackrock represents a powerful new partnership is a fast growing market, where we see the potential to revolutionize India's asset management industry, we look forward to expanding our footprint with the ambition to improve the financial futures for millions of investors in India.
Martin Small: Sequentially, base fee and securities lending revenue was up 2%, on an equivalent day count basis, our annualized effective fee rate was approximately two tenths of one basis point lower compared to the second quarter. This was due to lower securities lending revenue under performance of non-US equity markets and changing client risk preferences favoring risk off lower fee exposure.
Speaker 4: Black Americans working in India and markets around the world the lower the barriers to investing through accessible, affordable and transparent solutions.
Blackrock is working in India and markets around the world the lower the barriers to investing through accessible affordable and transparent solutions.
Another example of the new growth opportunities as our partnership agreement, we announced last month.
Speaker 4: Another example of the new growth opportunities is our partnership in agreement we announced last month for BlackRock to be the Asset Manager partner of Monzo.
Blackrock to be the asset manager partner of Monzo.
Speaker 4: Monsos, the UK's leading digital bank, and we are launching a new investment offering for their 8 million customers. Since launch, more than 250,000 Monso clients have joined the waiting list for this new offer.
Mazo as the Uk's, leading digital bank and we are launching a new investment offering for their 8 million customers since launch more than 250000 miles of clients have joined the waiting list for this new offering.
Martin Small: Rogers. As a result of continued global equity and bond market depreciation toward the end of the third quarter, including the impact of FX-related dollar appreciation, we entered the fourth quarter with an estimated base fee run rate, approximately 3 percent lower than our total base fees for the third quarter. Performance fees of 70 million decreased from a year ago, primarily reflecting lower revenue from liquid alternatives. Quarterly technology services revenue was up 20 percent compared to a year ago, driven by sustained demand for our technology offerings.
Speaker 4: And just earlier this week, we announced our partnership with upvests to drive innovation in how Europeans access markets and make it cheaper and simpler to start investing.
And just earlier this week, we announced our partnership with <unk> to drive innovation.
How Europeans access markets and make it cheaper and simpler to start investing.
Speaker 4: What we have seen in the markets after markets is that we can make investing easier and more affordable and we could quickly attract new clients.
While we have seen in the market. After market is that we can make investing easier and more affordable and we can quickly attract new clients.
Martin Small: Current quarter technology services revenue also benefited from the impact of several large client renewals of their e-front on-premises licenses, for which accounting treatment recognizes a majority of the revenue at time of renewal. Approximately half of the year over year technology services revenue increase resulted from these e-front contract renewals. Annual contract value or ACV increased 10 percent year over year. We remain committed to low to mid-teens ACV growth over the long term, driven by demand for Aladdin's broadening technology capabilities, and the growing value proposition it presents for clients.
Speaker 4: For first time investors, the preferred way of investing is often through ETS and specifically I share.
For first time investors a preferred way of investing is often through Etfs is specifically ishares.
Speaker 4: Through investment and innovation, we've evolved our I-SHIRS E-CHAF franchise to many full increase access to Global Marks.
Through investment and innovation, we've evolved our Ishares ETF franchise to meaningful increase access to global markets. This includes access for tens of millions of new investors. It also includes access for our most seasoned clients to use our ETF technology to actively allocate across all types of markets.
Speaker 4: This includes access for tens of millions of new investors. It often includes access for our most seasoned clients to use our ETF technology to actively allocate across all types of markets.
Speaker 4: BlackRock's ETF platform delivers industry leading performance, choice and scale.
Blackrock ETF platform delivers industry, leading performance choice and scale.
With growing use cases diversification and customization Etfs and indexes are often.
Speaker 4: With growing use cases, diversification and customization, ETFs and indexes are often and increasingly an important component of active management.
Martin Small: Total expense was 4 percent higher year over year. Higher compensation and direct fund expenses were partially offset by lower distribution and servicing costs and GNA. At present, we expect full year 2023 core GNA to fall on the low end of our previously communicated guidance of a mid to high single digit percentage increase. In line with this outlook, we would also expect fourth quarter core GNA to reflect seasonal increases in marketing spend and execution of plan technology investments spent.
And increasingly an important component of active management.
Speaker 4: Across our ETS, BlackRock generated net inflows of 29 billion in the third quarter, nearly 100 billion year to date. Flows and core equity and fixing ETS were partially offset by redemption and precision ETS in August and September . Something we expect and have seen before in risk off environments as clients use our ETS to actively manage their portfolio.
Across our Etfs Blackrock generated net inflows of $29 billion in the third quarter and nearly $100 billion year to date flows and core equity and fixing Etfs were partially offset by redemptions in precision Etfs in August and September something we expected have seen before in risk off environment.
As clients use our ETF to actively manage their portfolios.
Speaker 4: The tactical allocation tools are unique to BlackRock and they are high utilization, reinforces the value proposition, associated with the ice-year strong secondary market liquidity. It's unique options and lending markets.
These tactical allocation tools are unique to Blackrock and they are a high utilization reinforces the value proposition associated with the Ishares strong secondary market liquidity, it's unique options and lending markets.
Martin Small: Our third quarter as adjusted operating margin of 42.3 percent was up 30 basis points from a year ago, benefiting in part from the favorable impact of market movements on quarterly revenue over the last year. Our platform strategy is delivered scale and operating leverage through time and we aim to be disciplined in driving profitable growth. We're prioritizing investments to propel our differentiated organic growth and drive operating leverage. We'll look to find more opportunities to variableize expenses, generate fixed cost scale through technology and automation, and align investment spend with organic revenue growth potential. Our capital management strategy remains consistent.
Speaker 4: BlackRock's market-driven long-duration fixed-dingham product were also an important tool for investors to rotate at a longer duration position.
Blackrock market driven long duration fixed income product. We're also an important tool for investors to rotate at a longer duration positions.
Martin Small: We invest first either to scale strategic growth initiatives or drive operational efficiency and then return excess cash to our shareholders through a combination of dividends and share repurchases.
Speaker 4: The breadth of our ETF platform enables us to capture changes in client demand, keeping investors within BlackRock. For example, I-Share Treasury funds were three of the top five grossing bond ETFs in the industry as investors shifted duration preferences in the quarter. Our market leading levels of performance and liquidity helped our clients nibbly repositioned as market conditions evolved.
The breadth of our ETF platform enables us to capture changes in client demand keeping investors within Blackrock for example, Ishares treasury funds.
Three of the top five grossing bond Etfs and the industry is as investors shifted duration preferences in the quarter.
Our market leading levels of performance and liquidity helped.
Helped our clients nimbly reposition as market conditions evolved.
Speaker 4: As we approach peak interest rates, we expect a resurgence in fixed income flows with client capitalizing on higher yield.
As we approach peak interest rates, we expect a resurgence in fixed income flows were client capitalizing at higher yields.
Martin Small: During the third quarter we closed our acquisition of Creos Capital, adding venture debt capabilities to our credit and private markets franchises. And earlier this week we announced a minority investment as part of a strategic partnership with upvests. Our M&A focus is on extending our capabilities in technology and private markets, capping into revenue pools of adjacent industries and building scale.
Speaker 4: BlackRock has well-positioned the benefit for this reallocation with our comprehensive $2.6 trillion fixed income platform. Going back to the periods immediately following the taper tantrum in 2013 or the Fed pause in early 2019, the industry saw a quick rebound in fixed income flows following rate stability. Both BlackRock ETFs and our active fixed income funds were large beneficiaries at that time.
Blackrock is well positioned to benefit from this reallocation with our comprehensive two six trillion fixed income platform going back to the periods immediately following the taper tantrum in 2013 or the fed pause in early 2019, the industry saw a quick rebound in fixed income flows following rate stability.
Martin Small: We repurchased 375 million worth of common shares in the third quarter. At present, based on our capital spending plans for the year and subject to market conditions, we still anticipate repurchasing at least 375 million of shares in the fourth quarter consistent with our previous guidance in January. BlackRock had 3 billion of total net inflows in the third quarter, which were impacted by 49 billion of low fee institutional index equity redemptions. BlackRock was not immune to an overall slowing of investor activity, but we once again outperformed in what has been a challenging industry environment.
<unk>, both Blackrock Etfs and our active fixed income funds were large beneficiaries at that time.
Speaker 4: Our conversations with clients aren't about just active and just index. We work with clients to understand their investment challenges.
Our conversations with clients about just active and just index, we work with clients to understand their investment challenges helping.
Speaker 4: Helping them shape and execute strategic portfolio construction
Helping them shape and execute strategic portfolio construction decisions.
Speaker 4: BlackRock is the only asset matters that can deliver outcomes in the context of clients whole portfolios across market classes, asset classes, investment styles, and in public and in private markets.
Blackrock is the only asset managers that can deliver outcomes in the context of clients all portfolios across market classes asset classes investment styles.
And in public and in private markets.
Martin Small: Momentum in our ETF business continued with 29 billion of net inflows in the third quarter, led by core equity in fixed income ETF net inflows of 34 billion and 12 billion respectively. Overall ETF flows were impacted by redemptions concentrated in certain market driven precision and fixed income products. The fourth quarter has historically been the strongest quarter of ETF flows for BlackRock when we've seen on average 35% of our annual ETF net inflows.
Speaker 4: Organizations are turning to the private markets with greater frequency for their capital and financing needs, leading to bigger and better investment opportunities for BlackRock and our clients. BlackRock's worldwide network of relationships with corporations and governments.
Organizations are turning to the private markets with greater frequency for their capital and financing needs, leading to bigger and better investment opportunities for Blackrock and our clients Blackrock worldwide network of relationships with corporations and governments.
Speaker 4: sourcing capabilities and a rigorous selection process helps us deliver unique solutions and drive performance for our clients across private market asset class.
Sourcing capabilities and a rigorous selection process helps us deliver unique solutions and drive performance for our clients across private market asset classes.
Speaker 4: In the third quarter, we announced that BlackRock is partnering with the New Zealand government to launch it and over $1 billion climate infrastructure strategy.
In the third quarter, we announced that Blackrock is partnering with the New Zealand government to launch it at over 1 billion climate infrastructure strategy.
Martin Small: BlackRock typically has been a large beneficiary of ETF industry seasonality related to year end rebalancing and tax planning. In line with these historical results, we'd expect to see an acceleration in ice years ETF flows as we get closer to the end of 2023. With safe haven cash providing positive returns, retail net outflows of 4 billion primarily reflected industry pressure in active equities and liquid alternatives, partially offset by continued strength in SMAs through a perio.
Speaker 4: BlackRock's decarbonization partners joined venture also reached one billion in committed capital for its first round and has now invested in five portfolio
<unk> Decarbonization partners joint venture also reached 1 billion in committed capital for its first round and is now invested in five portfolio companies.
Speaker 4: These initiatives are a real example of BlackRock's longstanding relationship with clients and how we deliver the entirety of our platform to pioneer solutions and meet our clients evolving needs. Turning A
These initiatives are a real example of Blackrock long standing relationship with clients and how we deliver the entirety of our platform to pioneer solutions and meet our clients' evolving needs.
Martin Small: Institutional index net outflows of 36 billion reflected the previously mentioned low fee index equity redemptions. Our institutional active franchise experienced 1 billion of net outflows primarily from active fixed income which was impacted by a handful of client-specific partial redemptions including reinsurance activity. These outflows were partially offset by continued demand for our target date, illiquid alternatives and outsourcing capabilities. We've built our private markets capabilities across multiple years and we continue to see strong demand for our illiquid alternative strategies.
We're also effectively.
Speaker 4: Galing successor funds in private markets, delivering larger funds to raises of subsequent fund advantages, called accomplice and destroys sellers, users, fund branding programs with
Scaling successor funds in private markets delivering larger funds raised.
Raises of subsequent fund vintages for example, where are the 10th vintage of our flagship U S private lending funds and where the market with a fourth vintage of our global diversified infrastructure equity funds series ever for already raised $4 5 billion in initial investor commitments at close at the first closed last year.
Speaker 4: For example, we're on the 10th vintage of our flagship US private lending fund. And we're in the market with a 4th vintage of our global diversified infrastructure equity fund series.
Speaker 4: In for four already raised four and a half billion and initial investor commitments at close at the first close last year, achieving over half its targeted size.
Shaving over half its targeted size. This is the next phase of successful scaling of the franchise in 2020, our third fund in the series raised a total of 5 billion, surpassing the total assets of vintages, one and two combined.
Speaker 4: This is the next phase of successful scaling of the franchise. In 2020, our third fund in the series raised a total of $5 billion surpassing the total assets of Vintage's one and two combined. Strong investment,
Martin Small: We generated nearly 3 billion of net inflows in the third quarter driven by infrastructure and private credit. We're only seeing bigger and better private markets opportunities for BlackRock and for our clients. BlackRock's relationships across the world drive our differentiated deal flow. Deal flow alongside great teams with great tech and great data, mean we can deliver differentiated investment performance and grow vintage over vintage. We're investing as we scale our private markets platform by using our financial strength to bridge success or funds, facilitate growing co-investments activity and seeding new fund launches. These investments can unlock future revenue and earnings potential for our shareholders.
Strong investment performance is critical to this momentum.
Speaker 4: Our flagship private equity fund currently stands at more than a 35% net IRR. We've seen double digit net returns this year in our flagship private credit strategy.
<unk> chip private equity fund currently stands at more than a 35% net IRR.
We've seen double digit net returns this year at our flagship private credit strategies.
Speaker 4: Black Rock's proprietary differentiated deal flow is what drives long-term investment performance and outcomes for clients.
Blackrock proprietary differentiated deal flow is what drives long term investment performance and outcomes for our clients black.
Speaker 4: BlackRock School, the network of relationships, data, and analytics, and flexible, adaptable capital means, we get source unique deals for our clients. And we are increasingly finding that opportunity to seek us as much as we seek opportunity.
Blackrock Global network of relationships data and analytics and flexible adaptable capital needs, we get sorts of unique deal for our clients and we are increasingly finding that opportunity seek us as much as we seek opportunities come.
Martin Small: Finally, cash management net inflows were 15 billion in the quarter. Money market funds have returned to earning yields not seen in nearly two decades. We're leveraging our scale and integrated cash offerings to engage with clients who are using cash not only to manage liquidity, but also to earn attractive returns. The current macro environments causing some clients to pause, slowing overall activity in the asset management industry. Nevertheless, BlackRock's delivered positive organic asset and base fee growth over the last 12 months.
Speaker 4: Companies want BlackRock as an investor and a partner, recognizing the uniqueness of our global reach, our brand, and our expertise across markets and industries.
Companies went Blackrock as an investor and a partner recognizes the uniqueness of our global reach our brand and our expertise across markets and industries.
Speaker 4: Our growing profile from investments around the world in the US, in Europe , in Asia, is leading to more and larger deal opportunities.
Our growing profile from investments around the world in the U S and Europe , and Asia is leading to more and larger deal opportunities.
Speaker 4: BlackRock's global relationships and expertise in sourcing and underwriting, portfolio and risk management and technology and analytics allow us to unlock unique deals for clients.
Blackrock global relationships and expertise in sourcing and underwriting portfolio and risk management and technology and analytics allow us to unlock unique deals for clients.
Martin Small: We see significant opportunity to deepen relationships and consolidate our share with clients as they resume actively allocating assets. We're staying connected with our clients and positioning for what we believe can be massive growth unlocks. Looking ahead, we believe our platform strategy will continue to deliver for both our clients and shareholders resulting in sustained market leading organic growth, differentiated operating leverage and earnings and multiple expansion over time.
Speaker 4: At the same time, our growing momentum in private markets is delivering value for our shareholders through organic growth and less beta-sensitive revenue.
At the same time, our growing momentum in private markets and delivering value for our shareholders through organic growth and less beta sensitive revenues.
Speaker 4: Years ago, we anticipated how clients would benefit from alternative investments being evaluated inside a portfolio level of risk management framework. This led to the combination of e-Front and Aladdin, which has set a new standard in investment and risk management technology.
Years ago, we anticipated how clients would benefit from alternative investments being evaluated inside a portfolio level risk management framework. This led to the combination of <unk> Friday, Aladdin, which has set a new standard in investment and risk management technology.
Larry Fink: With that, I'll turn it over to Larry. Thank you, Martin. Good morning and thank you all for joining the call.
Speaker 4: The acquisition of EFRIOT opened up a new segment of alternative GPs and asset servicers and most importantly, enabled us to help clients across their whole portfolio.
The acquisition of <unk> opened up a new segment of the alternative GPS and asset Servicers and most importantly enabled us to help clients across their whole portfolio.
Larry Fink: I'd like to begin saying that our thoughts are with everyone who has friends, family or loved ones impacted by terrorist acts in Israel. The violence and the loss of innocent lives has been shocking and truly heartbreaking. We at BlackRock will continue to do everything we can to support our colleagues and all our clients in the region. Turning to our results, clients have always been at the center of BlackRock's growth strategy. I believe that BlackRock is better positioned today than ever before to help our clients achieve the long-term outcomes they need.
Our acquisition and integration of <unk> continues to be transformational for clients and we're seeing strong demand both as a stand alone basis and for a whole portfolio of solutions across public and private assets.
Speaker 4: Our acquisition and integration at EFRIT continues to be transformational for clients. And we're seeing strong demand both as a standalone basis and for whole portfolio solutions across public and private apps.
We now have a data platform and business that cover 13000 funds and over 150000 assets.
Speaker 4: We now have a data platform and business that covers 13,000 funds in over 150,000 assets. A significant portion of the price.
A significant portion of the private market Fund universe.
Speaker 4: We're redefining the industry expectations of transparency and private mark.
We're redefining the industry expectations of transparency in private markets nearly half of Aladdin clients are leveraging our newer offerings, including E front, which is a true competitive advantage in the tech market and as Martin spoke to you saw <unk> contribution reflecting in this quarter's results.
Speaker 4: Nearly half of Aladdin's clients are leveraging our newer offerings, including EFRIEN, which is a true competitive advantage in the tech's market. And as Martin spoke to, you saw EFRIEN's contribution reflecting in this quarter's tech result.
Larry Fink: We are having comprehensive conversations with clients globally and how we can partner with them to navigate on a new market regime and capitalize on investment opportunities. BlackRock has uniquely positioned in this environment, to serve our clients with an integrated advisory, investment management and technology expertise, something no other asset manager can provide. To stay in organic growth and market appreciation has led to a 1.1 trillion increase in BlackRock's AUM alongside margin improvement and 14% growth in earnings per share over the last 12 months.
Speaker 4: Investors and advisors are increasingly choosing a small number of scale technology platforms that offer everything in their ecosystem in one place.
Investors and advisers are increasingly choosing a small number of scale technology platforms that offer everything in their ecosystem in one place.
Speaker 4: Aladdin works seamlessly alongside other aspects of client investment processes and tech stack serving as a foundation while enabling clients to create custom solutions meet their specific needs. To get here, we also have developed deep integration with custodial banks with fun accountants broker dealers and other leading ecosystem parts.
Aladdin works seamlessly alongside other aspects of client investment processes and tech stack, serving as a foundation, while enabling clients to create custom solutions to meet their specific needs to get here. We also have developed deep integration with custodial banks with fund accountants broker dealers and other leading ecosystem.
Larry Fink: Clients have entrusted us with over $300 billion in net inflows over the same time period. Technology service revenues increased 20% year over year, reflecting sustained demand for Latin and E-front renewals from several large clients. We remain committed to delivering differentiated organic growth in margin. We have invested ahead of major opportunities for BlackRock in private markets, technology and whole portfolio solutions. Through disciplined execution, we aim to both grow client assets and drive profitable growth, unleashing financial success for our clients alongside revenue and earnings power for our shareholders.
<unk>.
Speaker 4: Disflexibility and choice are just some of the reasons clients are trusting us with a growing numbers of their portfolio.
This flexibility and choice or just some other reasons clients are entrusting us with a growing numbers of their portfolios.
Going forward, we are confident that clients will continue to turn to Aladdin to unify their investment management process.
Speaker 4: Going forward, we are confident that clients will continue the term to Aladdin to unify their investment management process.
Blackrock willingness to re imagine our business, our ambition to partner comprehensively with our clients and our drive to innovate ahead of their needs.
Speaker 4: Black rocks willingness to reimagine our business, our ambition to partner comprehensively with our clients, and our drive to innovate ahead of their needs is...
Speaker 4: Translating into broader, into deeper relationships, and we see an incredible opportunity for us in front of us.
Translating into broader into deeper relationships and we see an incredible opportunity for us in front of us.
Speaker 4: We remain intensely focused on staying close to our clients, especially during periods of market volatility and rising uncertainty.
We remain intensely focused on staying close to our clients, especially during periods of market volatility and rising uncertainty.
Larry Fink: Structural and secular changes in business models, technology and most of all monetary and fiscal policy have made the last two years extremely challenging for traditional asset management with a majority of industry players seen outflows. BlackRock's differentiated business model has enabled us to grow consistently with our clients and maintain positive organic basic growth since 2022. Investors face continued uncertainty. The S&P saw its best start to July in 26 years, but retreated in August and September.
Speaker 4: Clients are coming to us for advice or solutions tailored to this macroeconomic environment, wanting to do more with BlackRock.
They are coming to us for advice, where solutions tailored to this macroeconomic environment wanting to do more with Blackrock.
Or is that all connectivity is critical and.
Speaker 4: horizontal connectivity is critical. And our leadership team and an entire organization are coming together to differentiate herself into delivering for clients today. And preparing to capture the money and motion we anticipate in the near future.
And our leadership team and an entire organization are coming together to differentiate yourself and delivering for clients today and preparing to capture the money in motion, we anticipate in the near future.
Speaker 4: As I've always done, I'm challenging our teams to continue to innovate and stay perpetually neurotic about staying in front of our clients.
As I have always done.
<unk> our teams to continue to innovate and stay perpetually neurotic about staying in front of our clients.
Speaker 4: BlackRock will continue to lead in creating more access and connections between long-term investors, capital markets and the real economy.
Blackrock will continue to lead and creating more access and connections between long term investors capital markets and the real economy.
Larry Fink: Central banks are being forced to keep policies tight as they lean against inflationary pressures. Two and 10 year treasuries climbed to 16 year highs as investors anticipated rates remaining higher for longer. Rapid advancements in technology and artificial intelligence, the rewiring of globalization, the transition to a low carbon economy, aging populations, and a fast evolving financial system are all macro-trans clients who are evaluating. As market dynamics shift and uncertainty increases, clients are pausing to think about the future, assessing their options.
Speaker 4: I'm incredibly excited about the opportunity that I see for our clients, and especially for BlackRock, which will then lead, especially for you, our stakeholders. Let us now open it up for questions.
I'm incredibly excited about the opportunities I see for our clients and especially for Blackrock, which will then lead especially for you our stakeholders, let us now open it up for questions.
Speaker 1: At this time, I would like to remind everyone in order to ask a question, please press star and then the number one on your telephone keypad. If you do ask a question, please take your phone off of its speaker setting and use your handset to avoid any potential feedback. Please limit yourselves to one question. If you have a follow-up, please re-enter the queue. We'll pause for just a moment to compile the Q&A roster.
At this time I would like to remind everyone in order to ask a question. Please press Star then the number one on your telephone keypad. If you do ask a question. Please take your phone off of its speaker setting and use your handset to avoid any potential feedback. Please limit yourselves to one question. If you have a follow up please.
Larry Fink: Questions, and seeking out BlackRock to take action. BlackRock's quarterly net inflows were not immune to an overall industry slowdown as Martin discussed. Of course, I'm disappointed when we have softer flow quarters, but the long-term trends of clients consolidating more of their portfolio of BlackRock is only accelerating. Rate hikes over the past year and a half, the fastest in the U.S, since the early 1980s have made cash, not just a safe place, but now a very profitable place for investors to wait for the time being.
We entered the queue, we'll pause for just a moment to compile the Q&A roster.
Your first question comes from Craig Siegenthaler with Bank of America. Please go ahead.
Speaker 3: Your first question comes from Craig Seagunthaller with Bank of America. Please go ahead. Hello Craig. Hey, good morning Larry. Hope everyone's doing.
Craig.
Hey, good morning, Larry I hope everyone's doing well.
Absolutely.
Speaker 3: So my question is on the organic growth outlook. There are several low-fee redemptions in the quarter. And also given that we're in year three of a bond bear market, your flows are already depressed versus a longer-term run rate. So how do you think about the four organic growth trajectory in the potential money in motion? And specifically, do you expect to see a pickup and fix income close once the Fed is done raising, which could be very soon here?
So my question is on the organic growth outlook. There were several low see redemptions in the quarter and also given that we're in year three of a bond bear market.
Larry Fink: In short, investors are being paid to wait, something we haven't seen to this degree in years. Investors can earn 5 to 7 percent from conservative cash and bond portfolios. This dynamic reduces the near-term incentive to implement portfolio changes, resulting in temporarily slower client activity and inflows. The degree to which investors have hunkered down in cash is shown by nearly $7 trillion in money market funds AUM across the industry. Investors will eventually put that money to work.
Flows are arguably depressed versus a longer term run rate. So how do you think about the Florida organic growth trajectory and the potential money in motion and specifically do you expect to see a pickup in fixed income closed once the fed is done raising which could be very soon here.
Thanks, Craig It's Martin let me just say a few things about organic growth and the outlook.
Speaker 3: Thanks, Craig. It's Martin. Let me just say a few things about organic growth and the outlook. So just last 12 months, we've delivered positive organic asset and revenue growth 300 billion in flows over the last year, 193 billion year to date. We, as I mentioned, have conviction in our 5% base fee target over the long term. We've reached it on average over the last five years and met or exceeded it and seven out of the last 10.
So just last 12 months, we have delivered positive organic asset and revenue growth $300 billion in flows over the last year $193 billion year to date, we as I mentioned have conviction in our 5% base fee target over the long term we've reached it on average over the last five years and met or exceeded it in seven out of the last 10.
Larry Fink: We've seen this dynamic before, as recently as 2016 and 2018, when policy uncertainty and the ability to earn yields and cash resulted in temporarily slowing in activity. Through these times, BlackRock stayed connected with our clients, connected across our businesses, and what immediately followed those periods in the past were new records for BlackRock client flows and organic basic growth at or above 5 percent target. We expect that investors will begin redeploying assets once there's a conviction in a terminal rate and the shape of the yield curve.
Our 5% organic growth targets, it's better than 3% industry estimates and we still feel we underwrite that number all the time together, we feel it's reasonable it's attainable based on our product breadth our solutions orientation of our technology capabilities and when the management team looks at our client engagement and sales measures, we really do good.
Speaker 3: Our 5% organic growth targets is better than 3% industry estimates. And we still feel we underwrite that number all the time together. We feel it's reasonable, it's attainable based on our product breath, our solutions orientation, our technology capabilities. And when the management team looks at our client engagement and sales measures, we really do good, we see good momentum. As I mentioned in my comments, our Q3 growth fund sales were at 95% at average levels over the last 12 months.
Larry Fink: We've seen that effect play out at prior cycles, most recently following the Fed pause in 2019, when flows rebounded, particularly in fixed income. BlackRock's integrated platform and deep, long-standing relationships with clients position us to be a major beneficiary once flows return. We are the only asset manager delivering our platform as a service. Clients and trust us with 9.1 trillion in assets, and we are serving them with excellence. We lead our industry in delivering accessibility, affordability, and innovation.
We see good momentum as I mentioned in my comments, our Q3 gross fund sales were at 95% of average levels over the last 12 months.
Speaker 3: So we see those as good measures of engagement and our activity with clients.
So we see those as good measures of engagement and and our activity with clients.
Speaker 3: On the flows, we see them as just marked by this offsetting activity across our platform with some very specific client moves. The way I look at a Craig is on the one hand, we had a combined 60 billion in net inflows. That's 29 billion from ETFs. It's over 13 billion in institutional multi asset and target date knows CIO and it's 50 billion a cash. That right there I think is sort of right at a lot of the consensus or higher numbers.
On the flows.
We see them as just marked by this offsetting activity across our platform with some very specific client moves.
I look at the way I look at it Craig is on the one hand, we had a combined $60 billion in net inflows that's $29 billion from Etfs, it's over $13 billion in institutional multi asset and target date, no CIO and it's $50 billion in cash.
Larry Fink: Times of uncertainty are often when transformational opportunities emerge. Moments in our history like this have led to new ideas, led to new partnerships and acquisitions. BlackRock has a strong track record, a successful transformational M&A. Most people think of BGI and M&LIM when I say that, but I also think of acquisitions like e-front and a period. They have been smaller in size, but we're also transformational in their own way. In both we anticipated and delivered on our clients needs.
That right. There I think is sort of right at a lot of the consensus or higher numbers on the other hand. This was offset by the $50 billion of institutional index equity redemptions with 19 billion from one non U S client. So just in assessing how we're doing the conversations with our clients the momentum we have.
Speaker 3: On the other hand, this was offset by the 50 billion of institutional index equity redemptions with 19 billion from one non-US client.
Speaker 3: So just in assessing how we're doing, the conversations with our clients, the momentum we have, we think the flows would have obviously been very positive, but for these rebalancing.
We think the flows would have obviously been very positive but for these rebalancing.
Speaker 3: As Larry mentioned, they happen from time to time and they have very little impact to base fees. It's a low single digit point basis business. It's sub three percent of our revenue.
As Larry mentioned, they happen from time to time.
Larry Fink: We scaled strong existing technologies and built new revenue streams for our shareholders. Organic growth in a period has been over 20 percent since our acquisition and e-front revenues have grown nearly 50 percent, while also strengthening our value proposition and positioning in Aladdin and private markets. BlackRock has been a successful acquireer and today, advancements in tech and AI, scaling a private market and more attractive valuations means BlackRock has, once again, become increasingly engaged in M&A trend discussion.
And they have very little impact to base fees.
Low single digit point basis business at sub 3% of our revenue.
Speaker 3: But what I'd say is we manage close to two trillion of institutional index equity. We think it's a good business. These large AUM index relationships, they have meaningful franchise value for us beyond fee rates.
But what I'd say is we manage at close to two trillion of institutional index equity. We think it's a good business. These large AUM index relationships they have meaningful franchise value for us beyond fee rates, a large mandate of index assets. Larry mentioned, it's typically only part of our overall relationship with the client.
Speaker 3: A large mandate of index assets Larry mentioned it's typically only part of our overall relationship with a client which has active alternatives ETFs or advisory. And you've got to be a scaled player to be in this large index market. So this is the business we're in and from time to time. It can impact the flow number. And that's something that we don't manage quarter to quarter. We look at over the long term.
Which has active alternatives etfs or advisory and you've got to be a scaled player to be in this large index markets. So this is the business we're in and from time to time it can impact the flow number and thats something that we don't manage quarter to quarter, we look at over the long term.
Larry Fink: Questions. What made our acquisitions so successful was our enduring commitment to fuse the best of the acquired companies into a stronger and faster growing one, BlackRock, fully connecting all parts of the firm to our clients. We have a proven history of realizing long-term benefits and areas of expansion.
Speaker 3: On organic base-feed growth, I also think it's good to simplify this, Craig. You know, Q3 base-feed were impacted by mix.
On organic base fee growth I also think it is good to simplify this Greg Q.
Q3 base fees were impacted by mix and I think those really come from two areas. We had $13 billion of redemptions from precision Etfs, which Larry mentioned are unique to Blackrock and important vehicles for clients and also part of our platform strategy in terms of how clients stay with ice shares and moved from <unk>.
Larry Fink: Today we're similarly connecting with our partners across markets to lay the groundwork for future growth. In July we announced an agreement to form Geo BlackRock a 50-50 joint venture with Geo Financial Services and then it e-carved out our alliance industries. India has been an integral part of the global platform and BlackRock is one of the largest international investors in India today and almost 15% of our colleagues are located across multiple offices in the country.
Speaker 3: And I think those really come from two areas. We had 13 billion of redemption from precision ETFs, which Larry mentioned are unique to BlackRock and important vehicles for clients. And also part of our platform strategy in terms of how clients stay with eye shares and move from EM to DM to high yield to treasuries. And we had two and a half billion of outflows from retail liquid alternatives.
M to DM to high yields to treasuries, and we had $2 5 billion of outflows from retail liquid alternatives and.
Speaker 3: And you'll remember Craig, if I know you loved the page, from our investor day that we showed the average fee rates across different segments of our products and services.
And Youll remember Craig because I know you loved a page from our Investor day that we showed the average fee rates across different segments of our products and services.
Larry Fink: India offers enormous opportunities. Geo BlackRock represents a powerful new partnership in the fast growing markets where we see the potential to revolutionize India's asset management industry. We look forward to expanding our footprint with the ambition to improve the financial futures for millions of investors in India. BlackRock is working in India and markets around the world to lower the barriers to investing through accessible, affordable and transparent solutions.
Speaker 3: And if you were to take those average fee rates and the fee rates available on our public website for 40 act alternatives, just for illustration purposes.
And if you were to take those average fee rates and the fee rates available on our public website for 40 Act alternatives just for illustration purposes. The order of magnitude of base fee decay would be 60 plus million. So I hope that gives you a sense of what weighed on base fee growth. This quarter, it's largely in those things that we know have long term franchise value.
Speaker 3: The order of magnitude of base B decay would be 60 plus million. So I hope that gives you a sense of what weighed on base B growth this quarter. It's largely in those things that we know have long term franchise value have grown over time and added to earnings. But in any quarter to quarter, they may weigh on the fee rate and on the base B growth.
You have grown over time, an added to earnings but in any quarter to quarter. They may they may weigh on the fee rate and on the base fee growth over a cycle, Craig we still see a really clear path to 5% organic base fee growth with our platform strategy will keep growing and scaling private markets. The re risking of global <unk>.
Larry Fink: Another example of the new growth opportunities is our partnership and agreement we announced last month for BlackRock to be the asset manager partner of Monzo. Monzo is the UK's leading digital bank and we are launching a new investment offering for their 8 million customers since launch more than 250,000 Monzo clients have joined the waiting list for this new offering. Just earlier this week we announced our partnership of upvests to drive innovation in how Europeans access markets and make it cheaper and simpler to start investing.
Speaker 3: Over a cyclecreg, we still see a really clear path to 5% organic base fee growth with our platform strategy. Keep growing and scaling private markets.
Speaker 3: that re-rasking a global investment portfolio, we're continuing to see high-teens growth and tax managed direct indexing with a period. Rob will talk a little bit, hopefully, what I'm done about, the generational opportunity and active fixed income and bond ETFs.
<unk> portfolios were continuing to see high teens growth in tax managed direct indexing with the <unk>.
Rob will talk a little bit hopefully when I'm done about the generational opportunity in active fixed income and bond Etfs model portfolios and Ishares, where we think half of our ETF growth would come through models. So we still see big opportunities to continue to hit those targets and beyond.
Speaker 3: Model portfolios and I shares where we think half our ETF growth would come through models. You know, so we still see big opportunities to continue to hit those targets and beyond.
Larry Fink: What we have seen in the markets after markets is that we can make investing easier and more affordable and we could quickly attract new clients. For first time investors the preferred way of investing is often through ETS and specifically I shares. Through investment and innovation we have evolved our I shares ETS franchise to meaningful increase access to global markets. This includes access for tens of millions of new investors. It often includes access for our most seasoned clients to use our ETF technology to actively allocate across all types of markets.
Rob do you want to say a couple of things about fixed income.
Speaker 5: So I think most of the questions, are going to concern the why, the where, and the way.
So I think most of the questions are going to concern.
Why the where and the and the web.
Speaker 5: And so the yield curve is the most inverted it has been since the 1980s. So maybe Larry and I can add a little value since we were there at that time.
And so the yield curve.
Is the most inverted as it has been since the 19 eighties.
So maybe Larry and I can add a little value since we were there at that time.
Speaker 5: and investors are really getting paid to wait.
And investors are really getting paid to.
Wait.
Speaker 5: and money market funds have nearly 7 trillion in assets under management. So that's 7 trillion. And...
And money market funds have nearly seven trillion in assets under management, So thats seven trillion.
Larry Fink: BlackRock's ETS platform delivers industry leading performance, choice and scale. With growing use cases, diversification and customization, ETFs and indexes are often and increasingly an important component of active management. Across our ETS BlackRock generated net inflows of 29 billion in the third quarter and nearly 100 billion year-to-date. Flows and core equity and fixing ETS were partially offset by redemptions in precision ETS in August and September. Something we expect that have seen before in risk off environments as clients use our ETS to actively manage their portfolio.
And as we approach the.
Speaker 5: The peak in interest rates, worry we expect that there are gonna be some very, very large allocations to fixed in.
The peak in interest rates, we expect that they're going to be some very very large allocations to fixed income.
Speaker 5: and I'm sure someone will call it the great reallocation.
And I'm sure Simon will call it the great reallocation.
Speaker 5: And the reason is today there are better opportunities to invest in bonds than have been in the years. Over 80% of the bond market is yielding over 40%. Enabling and
And the reason is today, there are better opportunities to invest in bonds that have been in the years.
Over 80%.
The bond market is yielding over 40%.
Enabling investors to.
Speaker 5: arrive a large part of their liability needs from owning bonds and access returns with less risk.
Derive a large part of their liability needs from owning bonds.
Larry Fink: The tactical allocation tools are unique to BlackRock and they are high utilization, reinforces the value proposition associated with the ice-year strong secondary market liquidity, its unique options and lending markets. BlackRock's market-driven long-duration fixed-income product were also an important tool for investors to rotate at a longer-duration positions. The breadth of our ETF platform enables us to capture changes in client demand, keeping investors within BlackRock. For example, ice-year treasury funds were three of the top five grossing bond ETFs and industries as investors shifted duration preferences in the quarter.
And access returns with less risk.
Speaker 5: So as Martin just said, we are so well positioned to benefit from this reallocation with our comprehensive $2.6 trillion fixed income platform which spans unconstraint total return, municipals, and actually the entire yield.
So as Martin just said, we are so well positioned to benefit from this reallocation with our comprehensive two six trillion dollar fixed income platform, which spans unconstrained total return municipals and actually the entire yield curve. So.
Speaker 5: So with more money in motion and it will be in motion, BlackRock will benefit as clients build fixed income allocations with higher performing active.
With more money in motion and it will be in motion Blackrock will benefit as clients built fixed income allocations with higher performing active.
Speaker 5: Alongside of ETFs and private market strategies, in particular, right now clients are focusing their opportunity in the short end of the curve and of course in private credit. So when?
Alongside of Etfs, and private market strategies in particular.
Larry Fink: Our market leading levels of performance and liquidity help their clients nibbly reposition as market conditions evolve. As we approach peak interest rates, we expect a resurgence in fixed-income flows with client capitalizing on higher yields. BlackRock has well-positioned the benefit for this reallocation with our comprehensive $2.6 trillion fixed-income platform. Going back to the periods immediately following the taper tantrum in 2013 or the Fed pause in early 2019, the industry saw a quick rebound in fixed-income flows following rate stability. Both BlackRock ETFs and our active fixed-income funds were large beneficiaries at that time.
Now clients are focusing their opportunity in the short end of the curve and of course in private credit so when.
Speaker 5: Well, we have historically seen a rebound in fixed income following rates stability. This year's yield spikes have been mostly from market repricing and policy rate expectations.
Well, we have historically seen a rebound in fixed income following rate stability.
And this year's yield spikes have been mostly from market repricing and policy rate expectations.
Speaker 5: There's a lot of concern over US debt levels and large treasury issuance and investors are demanding a higher premium.
There is a lot of concern over U S debt levels and large treasury issuance.
Investors are demanding a higher premium.
Speaker 5: So if we go back to the periods immediately following the taper tension in 2013 that Barry mentioned, or the Fed pause in early 2019, the industry saw a very quick rebound and fixed income close. Both ETFs and active fixed income funds were the benefic-
So if we go back to the periods immediately following the taper tantrum in 2013 that Larry mentioned or the fed pause in early 2019 the.
Larry Fink: Our conversations with clients aren't about just active and just index. We work with clients to understand their investment challenges, helping them shape and execute strategic portfolio construction decisions. BlackRock is the only asset matters that can deliver outcomes in the context of clients' whole portfolios across market classes, asset classes, investment styles, and in public and in private markets. Organizations are turning to the private markets with greater frequency for their capital and financing needs, leading to bigger and better investment opportunities for BlackRock and our clients.
The industry saw a very quick rebound in fixed income flows both etfs and active fixed income funds were the beneficiaries Selwyn.
Speaker 5: So when well, once there's more certainty on a terminal rate and the shape of the yield curve, then we expect more deployment into fixed in.
Once there's more certainty on a on a terminal rate.
And the shape of the yield curve than we expect more of deployment into fixed income and I'll recap. It a slowdown in short term issuance and more balanced term structure of interest rates are the indicators, we're looking for in anticipation of accelerating demand for.
Speaker 5: And we cap it a slowdown in short term issuance and more balanced term structure of interest rates are the indicators we're looking for in anticipation of accelerating demand for immediate and longer duration six income.
Larry Fink: BlackRock's worldwide network of relationships with corporations and governments, sourcing capabilities, and a rigorous selection process helps us deliver unique solutions and drive performance for our clients across private market asset classes. In the third quarter, we announced that BlackRock is partnering with the New Zealand government to launch an over $1 billion climate infrastructure strategy. BlackRock's decarbonization partners joined venture, also reached $1 billion in committed capital for its first round, and has now invested in five portfolio companies.
Our immediate and longer duration fixed income.
Yeah.
Speaker 1: Your next question comes from Michael Fypress with Morgan Stanley . Please go ahead. Good morning, Michael.
Your next question comes from Michael Cyprus with Morgan Stanley . Please go ahead.
Good morning, Michael.
Speaker 3: Hey, good morning. Question on M&A. Larry, you've suggested that you're open to large transformational M&A. I was just hoping you can articulate why that is the case. What's changed versus a couple of years ago, as they don't recall you mentioning large transfer on M&A a couple of years ago, maybe you could talk about some of your objectives and aspirations there, and if you could help clarify, what might be the focus area versus maybe what's off the list completely?
Hey, good morning question on M&A.
Larry you've suggested that you're open to large transformational M&A I was just hoping you can articulate why that is the case.
What's changed versus a couple years ago was I don't recall you mentioning large transfer all M&A a couple of years ago, maybe you could talk about some of your objectives and aspirations there and if you could help clarify what might be the focus area versus maybe what's off the list completely.
Larry Fink: These initiatives are a real example of BlackRock's long-standing relationship with clients and how we deliver the entirety of our platform to pioneer solutions and meet our clients evolving needs. We're also effectively scaling successor funds in private markets, delivering larger funds to raises of subsequent fund ventages. For example, we're on the 10th vintage of our flagship US private lending fund, and we're in the market with a fourth vintage of our global diversified infrastructure equity fund series, and for four already raised $4.5 billion in initial investor commitments and close at the first close last year, achieving over half its targeted size.
Hum.
So obviously the foundation of the firm.
Speaker 4: So obviously the foundation of the firm and the was Malim and the PGI transaction, but we've been quite active in deals and partnerships, whether it's a GEO BlackRock partnership that we're working on, which I think will be transformation. That's not an M&A deal, but our period deal, our e-front deal, are great examples of execution precision.
With milliman.
Pgi transaction, but we've been quite active in deals and partnerships whether it's.
Q Blackrock partnership that we're working on which I think will be transformational lifts that M&A deal but.
But our <unk> deal or <unk> deal.
Are great examples of execution precision.
Speaker 4: with 20 and 50% respectively increase in revenues in both of those businesses.
20% and 50% respectively increase in revenues in both of those businesses.
Larry Fink: This is the next phase of successful scaling of the franchise. In 2020, our third fund in the series raised a total of $5 billion, surpassing the total assets of ventages 1 and 2 combined. Strong Investment Performance is critical to this momentum. Our flagship private equity fund currently stands at more than a 35% net IRR. We've seen double-digit net returns this year in our flagship private credit strategies. BlackRock's proprietary differentiated deal flow is what drives long-term investment performance and outcomes for clients.
Speaker 4: I would look back and say we spent about $4 billion on M&A over the last five years.
I would look back and say, we spent about $4 billion.
On M&A over the last five years.
And I am now challenging all of us, including myself about what are the what are the ecosystem changes that.
Speaker 4: And I'm now challenging all of us, including myself, about what are the ecosystem changes that are around today. And if I look back when we did the big transactions, there was a lot of market unsettlement. And I think there is quite a bit going on now, big shifts. And so we are looking at different opportunities related to technology, private markets. We are...
That around today.
If you look back when we did the big transactions. There was a lot of market on settlement and I think there is quite a bit going on now big shifts.
And so we are looking at different opportunities related to technology private markets.
We are.
Speaker 4: We're always engaged in conversations, but I'm challenging the team and myself to really to think more broadly and more openly about the opportunities we have.
We're always engaged in conversations, but I am challenging the team and myself to really.
Larry Fink: BlackRock's global network of relationships, data, and analytics, and flexible, adaptable capital means, we get sourced unique deals for our clients, and we are increasingly finding that opportunities seek us as much as we seek opportunities. Companies want BlackRock as an investor and a partner, recognize the uniqueness of our global reach, our brand, and our expertise across markets and industries. Our growing profile from investments around the world in the US and Europe and Asia is leading to more and larger deal opportunities.
To think more broadly and more openly about the opportunities we have.
Speaker 4: And we're engaged, we're engaged in a large way across the...
And we're engaged we're engaged in a large way.
Across the world across the opportunities that is not going to be displacing the opportunities of partnerships like the partnership with Mazda the partnership with reliance industries and Geo financial.
Speaker 4: across the opportunities. That is not going to be displacing the opportunities of partnerships like the partnership with Monzo, the partnership with Reliance Industries and Geofonential.
Speaker 4: We see those going to be added as they inform us, they help us be more connected. We see different opportunities. And so we're challenging ourselves. We are engaged in a lot of conversations right now, probably more than we have in many, many years. And we'll see how this all plays out.
We see those going to be added as they informed us they help us be more connected we see different opportunities and so we're challenging ourselves. We are engaged in a lot of conversations right now probably more than we have been in many many years.
Larry Fink: BlackRock's global relationships and expertise in sourcing and underwriting portfolio and risk management and technology and analytics allow us to unlock unique deals for clients. At the same time, our growing momentum in private markets is delivering value for our shareholders through organic growth and less beta-sensitive revenues. Years ago, we anticipated how clients would benefit from alternative investments being evaluated inside a portfolio level of risk management framework. This led to the combination of eFried and Aladdin, which has set a new standard in investment and risk management technology.
We'll see how this all plays out.
Okay.
Speaker 1: Your next question comes from Alex Blasking with Goldman Sachs. Please go ahead. Good morning.
Your next question comes from Alex <unk> with Goldman Sachs. Please go ahead.
Good morning.
Speaker 6: Hey, good morning, Larry. Appreciate the comments earlier. Maybe just another one around him and Aisha sounds like you have a pretty white lens through which you're considering different targets or partnerships. Can you remind us about financial targets for potential deals for BlackRock from an EPS accretion? And any other kind of framework you could put around what a potential deal could look like. Thanks. I'm gonna head that off to Martin. Hi Alex, Martin.
Hey, good morning, Larry I appreciate the commentary earlier.
Maybe just another one around M&A. So it sounds like you have a pretty wide lens through which you're considering different targets. Our partnerships can you remind us about the financial targets for potential deal for Blackrock from an EPS accretion.
Larry Fink: The acquisition of eFried opened up a new segment of alternative GPs and asset servicers, and most importantly, enabled us to help clients across their whole portfolio. Our acquisition and integration of eFried continues to be transformational for clients, and we're seeing strong demand both as a standalone basis and for whole portfolio solutions across public and private assets. We now have a data platform and business that covers 13,000 funds in over 150,000 assets, a significant portion of the private market fund universe.
Any other kind of framework you could put around what it could look like thanks.
I'm going to hand, it off to Martin.
Yes.
Hi, Alex Martin how are you.
Speaker 3: The centerpiece in hallmark of the M&A strategy here has always been about accelerating organic growth. It's been about developing capabilities that we don't have and or de-risking capabilities that we're building. And I'd say when you look at EFRION, when you look at a period, when you look at many of the transactions Larry has talked about, that that's really been the center of the strategy. It's about accelerating organic growth and delivering for clients.
So.
The centerpiece in hallmark of the M&A strategy here has always been about accelerating organic growth.
Been about developing capabilities that we don't have an <unk> or de risking capabilities that we're building.
And I'd say when you look at E front when you look at it periodically when you look at many of the transactions Larry has talked about that's really been the center of the strategy, it's about accelerating organic growth and delivering for clients and as Larry said.
Larry Fink: We're redefining industry expectations and transparency in private markets. Nearly half of Aladdin's clients are leveraging our newer offerings, including eFried, which is a true competitive advantage in the tech market. And as Martin spoke to, you saw eFried's contribution reflecting in this quarter's tech results.
Speaker 3: As Larry said, you know, in the last five years, we've spent about $4 billion on M&A. We're not capital constrained. We have ample debt capacity. And so our goal is to be able to drive earnings acceleration and also deliver more for our clients through M&A. How would you-
In the last five years, we've spent about $4 billion on M&A, we're not capital constrained we have ample debt capacity and so our goal is to be able to drive earnings acceleration and also deliver more for our clients through M&A.
Larry Fink: Investors and advisors are increasingly choosing a small number of scale technology platforms that offer everything in their ecosystem in one place. Aladdin works seamlessly alongside other aspects of client investment processes and tech stack, serving as a foundation, while enabling clients to create custom solutions to meet their specific needs. To get here, we also have developed deep integration with custodial banks, with fund accountants, broker dealers, and other leading ecosystem partners. This flexibility and choice are just some of the reasons clients are trusting us with a growing number of their portfolios.
I would just add one more thing related to that.
Speaker 4: Martin, I just want to double down. We have a lot of debt capacity. We have a lot of opportunities.
Martin I just wanted to double down we have a lot of debt capacity.
We have a lot of opportunities.
And we're we're really.
Speaker 4: We focusing on, you know, where can we be additive? The one thing that I could tell you, when we do integrations of firms, we are not gonna be a boutique.
Refocusing on.
Where can we be additive the one thing that I could tell you.
When we do integrations.
Firms, we are not going to be a boutique.
Speaker 4: We are going to be organizing and building it out. We love the opportunity to have a period, but it's a part of a big organized firm. We love E-Front. It's organized around the whole Aladdin ecosystem. You know, we're not building a boutique of different fragments. We are building a unified organization, as Martin said, to be additive in revenues.
We are going to be organizing and building it out.
Larry Fink: So on and forward, we are confident that clients will continue the term to Aladdin to unify their investment management process. BlackRock's willingness to reimagine our business, our ambition to partner comprehensively with our clients, and our drive to innovate ahead of their needs. Translating into broader, into deeper relationships, and we see an incredible opportunity for us in front of us. We remain intensely focused on staying close to our clients, especially during periods of market volatility and rising uncertainty.
We love the opportunity to having a period, but it is a part of a big organized firm, we love E. Fridays organized that route.
Around the whole added ecosystem.
But it is not.
We're not building a boutique of different frac, but we are building a unified organization as Martin said to be additive and revenues.
Speaker 4: additive and client connectivity and additive in reach, reach technology and reach in product.
Added dividend client connectivity and additive in reach reach and technology and reach and product.
Larry Fink: Clients are coming to us for advice or solutions tailored to this macroeconomic environment wanting to do more with BlackRock, horizontal connectivity is critical, and our leadership team and an entire organization are coming together to differentiate herself into delivering for clients today and preparing to capture the money and motion we anticipate in the near future. As I've always done, I'm challenging our teams to continue to innovate and stay perpetually neurotic about staying in front of our clients.
Yeah.
Okay.
Speaker 1: Your next question comes from Daniel Fannen with Jeffries. Please go ahead.
Your next question comes from Daniel Fannon with Jefferies. Please go ahead.
Speaker 7: Thanks, good morning. Hi. Another question on flows, active equities and alternatives, both higher fee statements, and I think he contributors to you hitting your long-term base fee target. Can you talk about the trends in those businesses outside of maybe just the seasonal stuff for 3Q, but really as we think about the next 12, 24 months, the kind of funds and growth outlook you think for both obviously alternatives, but then also the active equity segment.
Hi, Thanks, Good morning, Hi.
Another question on flows active equities and alternatives both higher fee segments.
I think key contributors to you hitting your long term base fee targets can you talk about the trends in those businesses outside of maybe just the seasonal stuff for <unk>, but really as we think about the next 12 to 24 months the kind of funds and growth outlook, you think for both obviously alternatives, but then also it would be accurate equity segment.
Larry Fink: BlackRock will continue to lead in creating more access and connections between long-term investors, capital markets, and the real economy. I'm incredibly excited about the opportunity I see for our clients, and especially for BlackRock, which will then lead especially for you, our stakeholders.
Speaker 3: Thanks very much for the question. So when I think about the active equities business at BlackRock, we had a continue to see a very strong active equity business over the last three years. We've generated over $30 billion in active equity net inflows while our average AUM has grown by 34%.
Thanks very much for the question.
So when I think about the active equities business at Blackrock.
Unknown Executive: Let us now open it up for questions. At this time, I would like to remind everyone in order to ask a question, please press star in the number one on your telephone keypad. If you do ask a question, please take your phone off of its speaker setting and use your handset to avoid any potential feedback.
We had.
Unknown Executive: Please limit yourselves to one question. If you have a follow-up, please re-enter the queue.
Continue to see.
A very strong active equity business over the last three years, we've generated over $30 billion in active equity net inflows, while our average AUM has grown by 34%.
Speaker 3: And so, while, again, quarter to quarter and year and year, we'd fully expect to see, particularly in this environment, some rotations out of equities and into cash, which has been the main theme I think of this call and a Merry Others. We still see really strong growth in the business.
And so while again quarter to quarter and year on year, we'd fully expect to see particularly in this environment. Some rotations out of equities and into cash which has been the main theme I think of this call and a mere others.
Unknown Executive: We'll pause for just a moment to compile the Q&A roster.
Craig Siegenthaler: Your first question comes from Craig Siegen-Faller with Bank of America. Please go ahead. Hello Craig. Hey, good morning Larry. Hope everyone's doing well. Absolutely.
Still see really strong growth in the business and we think it's fundamentally a big part of client portfolios I do think over time and our product strategy you've seen we've been adding for example, transparent active etfs.
Speaker 3: And we think it's fundamentally a big part of client portfolio.
Speaker 3: I do think over time in our product strategy you've seen, we've been adding, for example, transparent active ETFs, through which we'll be growing our activity business and our other active businesses. And so we think about these over time as being delivered through multiple wrappers and an integral part of our base fee growth stress.
Martin Small: My question is on the organic growth outlook. There are several low-fee redemptions in the quarter, and also given that we're in your three of a bond bear market, your flows are already depressed versus a longer-term run rate. So, how do you think about the four organic growth trajectory and the potential money in motion? And specifically, do you expect to see a pickup in fixed income flows once the Fed is done raising, which could be very soon here?
Through which we will be growing our active equity business and our other active businesses and so we think about these over time is being delivered through multiple wrappers and an integral part of our base fee growth strategy.
Speaker 5: And let me just add to that because we have to be a little bit careful about what we call a touch, that…
And let me just add to that.
So we have to be a little bit careful about what we call active because people are active with both their index in their etfs through models and I would prefer to say it's active as we originally knew the definition along side of all of.
Speaker 5: because people are active with both their index and their ETF.
Speaker 5: through models, and I would prefer to say it's active as we originally knew the definition alongside of all of our ETF products. And when is active going to continue to have more flows, when you can add out?
Martin Small: Thanks Craig. It's Martin. Let me just say a few things about organic growth and the outlook. So, just last 12 months, we've delivered positive organic asset and revenue growth, 300 billion in flows over the last year, 193 billion year-to-date. We, as I mentioned, have conviction in our 5% base feed target over the long term. We've reached it on average over the last five years and met or exceeded it and seven out of the last 10.
Martin Small: Our 5% organic growth target is better than 3% industry estimates, and we still feel we underwrite that number all the time together. We feel it's reasonable, attainable based on our product graph, our solutions orientation, our technology capabilities. And when the management team looks at our client engagement and sales measures, we really do, we see good momentum. As I mentioned in my comments, our Q3 growth fund sales were at 95% at average levels over the last 12 months.
Our ETF products and when is active is going to continue to have more flows. When you can add alpha and we're going into an environment, where I believe active flows will be greater because there are now more opportunities to add alpha than there has been before so we've seen.
Speaker 5: And we're going into an environment where I believe active flows will be greater because there are now more opportunities to add alpha than there has been before.
Speaker 5: So we've seen 65 billion of active net inflows in 2023 year to date, which compares to industry outflows. And part of that is coming from some of the different pockets that we have created that require more active than passive management.
65 billion of active net inflows in 2023 year to date, which compares to industry outflows and part of that is coming from some of the different pockets that we have created that require more active.
Then passive management. So we continue to see strong demand in the private markets life past the use of the strength in income oriented.
Speaker 5: So we continue to see strong demand in the private markets and life path. These are the strength and income oriented equities, total return and core bond strategy.
Martin Small: So, we see those as good measures of engagement and our activity with clients. Williams. On the flows, we see them as just marked by this offsetting activity across our platform with some very specific client moves. The way I look at it, Craig, is on the one hand, we had a combined 60 billion in net inflows. That's 29 billion from ETFs. It's over 13 billion in institutional multi-asset and target date knows CIO and it's 50 billion in a cash.
Equities total return and core bond strategies.
Strategies.
Speaker 4: So just to give you an idea since 2019, positive active flows have been in 16 out of the 19 quarters. And a lot of that also depends upon performance. And that's what we've been able to keep our promise to with our clients and we'll drive active inflows going both. One more last thing on this stand, I would just say.
So just to give you an idea since 2019 positive active flows have been in 16 out of the 19 quarters and a lot of that also depends upon performance and that's what we've been able to keep our promise to with our clients and will drive active inflow.
Roes going forward one more last thing on this Dan.
Say.
Martin Small: That right there, I think, is sort of right at a lot of the consensus or higher numbers. On the other hand, this was offset by the 50 billion of institutional index equity redemptions with 19 billion from one non-US client. So just in assessing how we're doing, the conversations with our clients, the momentum we have, we think the flows would have obviously been very positive, but for these rebalancing. As Larry mentioned, they happened from time to time and they have very little impact to base fees.
Speaker 4: We have committed in enlarging our eye shares platform globally. That's going to be an integral part of what we're doing in India.
We have committed in enlarging our ishares platform globally.
That's going to be an integral part of what we're doing in India.
Speaker 4: But if you look at the trends of ETS in the year to date.
But if you look at the trends of Etfs in the year to date.
In Europe .
ETF flows were up 70%.
Speaker 4: In the US, the ETF flows are actually a little lower than they were last year.
In the U S. ETF flows were actually a little lower than they were last year.
Speaker 4: But as we continue to build out our platform globally, we become a very large beneficiary. And what is happening in Europe ? The rise of its capital markets and the utilization of ETS as an instrument of active and an instrument of exposures and an instrument of passive, we're winning big markets.
But as we continue to build out our platform globally.
Martin Small: It's a low single-digit point basis business. It's sub three percent of our revenue. But what I'd say is, we manage close to two trillion of institutional index equity. We think it's a good business. These large AUM index relationships, they have meaningful franchise value for us beyond fee rates. A large mandate of index assets, Larry mentioned it's typically only part of our overall relationship with a client, which has active alternatives, ETFs or advisory.
Become a very large beneficiary and what is happening in Europe . The raw the rise of its capital markets and the utilization of Etfs.
As up as an instrument of active an instrument of exposures and instrument passive.
We're winning big market share in that business.
Okay.
Yeah.
Speaker 1: Your next question comes from Brian Badell with Deutsche Bank. Please go ahead.
Your next question comes from Brian Bedell with Deutsche Bank. Please go ahead.
Martin Small: You've got to be a scaled player to be in this large index market. So this is the business we're in and from time to time, it can impact the flow number. That's something that we don't manage quarter to quarter. We look at over the long term.
Speaker 8: Good morning, Brian . Great, thanks. Good morning, good morning. Maybe Rob, if you could just go back to institutional fixed income at different angle of this, being the prospect of pension plans immunizing their portfolios.
Good morning, Brian Great. Thanks, Good morning, good morning.
Maybe Rob if I could just go back to the institutional fixed income a different angle of this being the the prospect of pension plans.
Martin Small: On organic base fee growth, I also think it's good to simplify this, Craig. Q3 base fees were impacted by MIX. I think those really come from two areas. We had 13 billion of redemptions from Precision ETFs, which Larry mentioned are unique to BlackRock and important vehicles for clients and also part of our platform strategy in terms of how clients stay with eye shares and move from EM to DM to high yield to treasuries.
Immunizing their portfolios given.
Speaker 8: you know given how much longer term ban you'll have improved
Given how much longer term bond yields have improved.
Speaker 8: What do you sense as sort of, I guess, first of all, that the potential magnitude of that?
What do you sense is sort of I guess first of all that.
<unk> magnitude of that.
Speaker 8: of that switch, of that reallocation, to immunizing the plans as you talk with your clients. And then sort of the timing of that, are they also waiting for, you know, you'll have to peak to do that, or is it more seasonal or something they might actually do by your end?
Of that switch of that reallocation.
Two immunizing plans.
As you as you talk with your clients and then sort of the timing of that or are they also waiting for you'll speak to do that or is it more seasonal or something they might actually do buy by year end.
Martin Small: We had two and a half billion of outflows from retail liquid alternatives. You'll remember, Craig, if I know you love the page, from our investor day that we showed the average fee rates across different segments of our products and services. And if you were to take those average fee rates and the fee rates available on our public website for 40 act alternatives, just for illustration purposes, the order of magnitude of base fee decay would be 60 plus million.
Speaker 4: Great question. I mean, we've consistently large scale immunization in the UK pension fund world. A major component of the entire UK market, you know, defined benefit plans have been immunized already. Over the last five years about another four to six billion dollars, I have moved out and been more and more immunized. I don't see that happening yet at a 5% or a 4 and a half percent environment yet. But if we if we peak on.
Great question.
With consistency large scale immunization in the UK pension Hutton world.
A major component of the entire U K market.
Defined benefit plans have been immunized already.
Over the last five years about another 4% to $6 billion that have moved out and more and more immunized.
Martin Small: So I hope that gives you a sense of what weighed on base fee growth this quarter. It's largely in those things that we know have long-term franchise value, have grown over time and added to earnings, but in any quarter to quarter, they may weigh on the fee rate and on the base fee growth. Over a cycle, Craig, we still see a really clear path to 5 plus percent organic base fee growth with our platform strategy.
I don't see that happening yet at a 5% or four 5% environment, yet, but if we if we peak long rates at 556.
Speaker 9: Five and a half sick...
Speaker 4: The yield curve becomes more steep instead of flat or inverted. That's when you're going to see it. I think it's more the shape of the yield curve, where you're going to start seeing more and more people thinking about immunization. Unquestionably, on the margin, you're going to see some pension funds in me nice. And it will, depending on that type of flow, it is going to put some pressure on the equity market as money moves out of equities and permanently go into long-dated bonds.
If the yield curve becomes more steep instead of flat or inverted that's when you're going to see it I think it's more of the shape of the yield curve, where youre going to start seeing more and more people thinking about immunization.
Martin Small: Keep growing and scaling private markets, the re-risking of global investment portfolios. We're continuing to see high-teens growth and tax managed direct indexing with a period. Rob will talk a little bit, hopefully, when I'm done about the generational opportunity and active fixed income and bond ETFs, model portfolios and ice shares where we think half our ETF growth would come through models. So we still see big opportunities to continue to hit those targets and beyond.
<unk> on the margin you're going to see some pension funds immunize.
And it will depending on that type of flow. It is going to put some pressure on the equity market as money moves out of equities and permanently go into long dated bonds.
We are having conversations with a lot of organizations that.
And so I can tell you there are a lot of.
There are quite a few pension funds now because they are liability rate has been reset at a higher rate. They are getting closer to two there two matching this is more corporate plans not not not state plans.
Rob Kapito: Rob, do you want to say a couple things about fixed income? So I think most of the questions are going to concern the why, the where, and the when. And so the yield curve is the most inverted spin since the 1980s. So maybe Larry and I can add a little value since we were there at that time. And investors are really getting paid to wait and money market funds have nearly seven trillion and assets on the management.
And that occurs you're going to see a significant derisking.
Speaker 4: Instead of that, we are actually seeing more and more companies looking to earn higher returns.
Instead of that we are actually seeing more and more companies looking to earn higher returns in credit and infrastructure right now they're trying to lock at higher returns that way, but we haven't seen a major shift of duration extension.
Speaker 9: In credit and infrastructure right now, they're trying to lock it higher, returns that way. But we haven't seen a major shift of duration extension in the Treasury market. And I think that's very evident right now. And that's why I think the old curve is flattening out right now. But we are seeing significant interest level, a lot of pension funds could take, bring down there, I would say their exposure inequities.
Yes.
And the Treasury market and I think that's very evident right now.
Rob Kapito: So that's seven trillion. And as we approach the peak and interest rates, we expect that there are going to be some very, very large allocations to fixed income. And I'm sure someone will call it the great reallocation. And the reason is today there are better opportunities to invest in bonds than have been in the years over 80% of the bond market is yielding over 40%. Enabling investors to derive a large part of their liability needs from owning bonds and access returns with less risk.
Rob Kapito: So as Martin just said, we are so well positioned to benefit from this reallocation with our comprehensive 2.6 trillion dollar fixed income platform, which spans unconstrained total return. Municipals and actually the entire yield curve. So with more money in motion and it will be in motion, BlackRock will benefit is clients build fixed income allocations with higher performing active alongside of ETFs and private market strategies in particular right now clients are focusing their opportunity in the short end of the curve.
And that's why I think the yield curve is flattening out right now, but we are seeing significant interest there's a lot of pension funds to take the break down there I would say their exposure in equities to bring down their exposure in some components of alternatives and focus on income oriented alternatives to really get.
Speaker 5: to bring down their exposure in some components of alternatives and focus on income oriented alternatives to really get an 8, 9, 10% type of coupon returned. Rob, do you want to just ask a couple things? That's a really great question because I think I speak to Larry. We haven't heard the word immunization for a very, very long time. And we've been visited by several pension plans.
Eight 910% type of coupon return, Rob you want to follow up Yeah, I would just add a couple of things. That's a really great question, because I think I speak for Larry We haven't heard the word immunization for a very very long time, and we've been visited by several pension plans to talk about that obviously it's rate driven.
Speaker 5: to talk about that. Obviously it's rate-driven. I think the number is going to be seven plus that they're going to have to get. And if you want to do a little history in 1995, you can have a portfolio of all bonds and get a seven and a half percent return.
I think the number is going to be seven plus that theyre going to have to get and if you want to do a little history of $19 95, you can have a portfolio of all bonds and get a seven 5% return. So when you add that together with the environment I described before that might be coming now.
Speaker 5: So when you add that together with the environment, I describe before that might be coming. Now there's a step before that. And we have been the beneficiary of a lot of these plans. Finding that it's too complicated, they were very barbelled. They're not sure of what the reallocation could be. It's hard to find the people to do this in the locations that they are and they don't have the technology.
Step before that and we have been the beneficiary of a lot of these plans finding that it's too complicated they were very barbell, they're not sure of what the reallocation could be it's hard to find the people to do this in the locations that they are and they don't have the technology. So we've been the.
Speaker 5: So we've been the beneficiaries for what we call the OCIOBIS.
Fishery through what we call the OCI O business and we have had a significant amount of large wins in that business to help them with the appropriate reallocation I think the next stage of that in the future might be more institutions, maybe going into immunizing the portfolio, but it is.
Speaker 5: and we have had a significant amount of large wins in that business.
Rob Kapito: And of course in private credit. So when well, we have historically seen a rebound in fixed income following rates stability. And this year's yield spikes have been mostly from market repricing and policy rate expectations. There's a lot of concern over US debt levels and large treasury issuance and investors are demanding a higher premium. So if we go back to the periods immediately following the paper tension in 2013 that Barry mentioned or the Fed pause in early 2019, the industry saw a very quick rebound and fixed income close both ETFs and active fixed income funds were the beneficiaries.
Speaker 5: to help them with the appropriate reallocation. I think the next stage of that in the future might be more institutions may be going into immunizing the portfolio, but as Larry said, it's really rate driven when not that far away.
As Larry said, it's really rate driven.
That far away.
Speaker 5: But a lot of things have to happen before then. And a lot of that, of course, will be done in the bond market, which my previous answers really has fueled to the fire where we could be a very big participant in that.
But a lot of things have to happen before then and a lot of that of course will be done in the bond market, which when my previous answers really adds fuel to the fire, where we could be a very big participant in that.
Okay.
Your next question comes from Brennan Hawken with UBS. Please go ahead.
Speaker 1: Your next question comes from Brennan Hawking with UBS. Please go ahead. What? How are you?
How are you.
Speaker 8: Hey, good morning. Thanks for taking my question. Just kind of curious about thinking about expenses here. Martin, you know, you're supposed to come into the low end of the range on the, on the Chiquor GNA, which is certainly encouraging, but right now is probably a time when you all are beginning to sharpen your pencils on the budget.
Hey, good morning, Thanks for taking my question.
Just kind of curious about thinking about expenses here.
Rob Kapito: So when well, once there's more certainty on a on a terminal rate and the shape of the yield curve, then we expect more deployment into fixed income. And I'll we cap it a slow down and short term issuance and more balanced term structure of interest rates are the indicators we're looking for in anticipation of accelerating demand for immediate and longer duration fixed income.
Martin you spoke to coming into the low end of the range on the.
On the core G&A, which is certainly encouraging but right now is probably a time when you all are beginning to sharpen your pencils on the budgets here into next year the.
Speaker 10: Here in the next year, the environment, you know, Black Rock is incredibly well positioned as you all have hit on several times here today, but the environment's challenging. And so how are you thinking about 2024 and how should we be thinking about that as we refine our models today? Thanks.
The environment Blackrock is incredibly well positioned as you all have have hit on several times here.
Today.
But the.
The environment is challenging and so how are you thinking about 2024, and how should we be thinking about that as we refine our models today. Thanks.
Michael Cyprys: Your next question comes from Michael Cyprys with Morgan Stanley. Please go ahead. Good morning, Michael. Hey, good morning. Question on M&A. Larry, you've suggested that you're open to large transformational M&A. I was just hoping you can articulate why that is the case. What's the change versus a couple of years ago as they don't recall you mentioning large transformational M&A a couple of years ago. Maybe you could talk about some of your objectives and aspirations there and if you could help clarify what might be the focus area versus maybe what's off the list completely.
Speaker 3: Thanks, friend. Just, I will reiterate, we expect full year GNA to fall on the low end of our previously committed guidance of mid to high single digit percentage increase, still accept to keep our head count broadly flat for this year as we've said to the last two quarters.
Thanks, Brian .
Just I will reiterate.
We expect full year G&A to fall on the low end of our previously communicated committed guidance of mid to high single digit percentage increase still accept to keep our head count broadly flat for this year as we've said for the last two quarters.
Speaker 3: And just on outlook for expense and I suppose margin, you know, again, our strategy for driving values to deliver organic growth, differentiated premium operating margin, and consistent capital management policy. We're focused on investing for profitable growth.
And just on outlook for expense and I suppose margin.
Again, our strategy for driving values to deliver organic growth differentiated and premium operating margin and consistent capital management policy.
We're focused on investing for profitable growth when I think about operating leverage in a higher for longer rate environment. You've heard on our last few calls that we're looking to make more concentrated investments in places that can drive higher organic growth deliver more operating efficiency, but we're also looking to add flexibility to the cost base, but most.
Speaker 3: When I think about operating leverage in a higher for longer rate environment, you've heard on our last few calls that we're looking to make more concentrated investments in places that can drive higher organic growth, deliver more operating efficiency, but we're also looking to add flexibility to the cost base.
Michael Cyprys: So obviously the foundation of the firm and the was Malim and the BGI transaction. But you know, we've been quite active in deals and partnerships, whether it's a Jew, BlackRock, partnership that we're working on, which I think will be transformational. That's not an M&A deal. But our period deal, our e-front deal, our great examples of execution precision with 20 and 50% respectively increase in revenues in both of those businesses. I would look back and say we spent about $4 billion on M&A over the last five years.
Speaker 3: But most importantly, Brennan, we're looking to drive more fixed-cost scale that comes through technology, automation, organizational design and footprinting. There's so many exciting things happening at BlackRock on that front. We launched our BlackRock AI Lab back in 2018. We've been using artificial intelligence, machine learning, natural language processing in our systematic business going back 20 years. And we have teams all over these things for how we can scale trading pricing. Company Lacing operations.
Importantly, Brennan, we're looking to drive more fixed cost scale that comes through technology automation organizational design and footprint ing.
There are so many exciting things happening at Blackrock on that front, we launched our Blackrock AI lab back in 2018, we've been using artificial intelligence machine learning natural language processing in our systematic business going back 20 years and we have teams.
Michael Cyprys: And I'm now challenging all of us, including myself, about what are the ecosystem changes that are around today. And if I look back when we did the big transactions, there was a lot of market unsettlement. And I think there is quite a bit going on now, big shifts. And so we are looking at different opportunities related to technology, private markets. We are, we're always engaged in conversations, but I'm challenging the team and myself to really to think more broadly and more openly about the opportunities we have.
All over these things for how we can scale trading pricing operations client service and even automation to make our software engineers. Most productive. So if you ask me where are we going to focus investments going forward with a particular sharp eye I look at our total annual operating expense of about $11 billion and our largest <unk>.
Speaker 3: and even automation to make our software engineers most productive. So if you ask me where are we going to focus investments going forward with a particular
Speaker 3: I look at our total annual operating expense of about 11 billion and our largest fixed investments by dollars and importance. That's our really talented BlackRock employees. So giving them more tools to enhance productivity.
Investments by dollars and importance, that's our really talented blackrock employees, so giving them more tools to enhance productivity from large language models to better CRM tools that help clients customize and self service like our Blackrock Advisor center those are going to be some of our best opportunities to deliver I think long term profitable growth.
Speaker 3: from large language models to better CRM, tools that help clients customize and self-service, like our BlackRock Advisor Center, those are gonna be some of our best opportunities to deliver, I think, long-term profitable growth, and where we'd be looking towards our expenses. But also, we've got great investments, that I think Larry alluded to, that are in commercial partnerships.
Michael Cyprys: And we're engaged, we're engaged in a large way across the world, across the opportunities. That is not going to be displacing the opportunities of partnerships like the partnership with Monzo, the partnership with Reliance Industries and Geo Financial. We see those going to be added as they inform us, they help us be more connected. We see different opportunities. And so we're challenging ourselves.
And where we'd be looking towards our expenses, but also we've got great investments that I think Larry alluded to you that are in commercial partnerships. Those are with tamps Neo brokers digital wealth platforms. Other distribution venues. So we'd invest some of that it'll be fixed MMP. Some of it will be variable distribution and servicing which gives.
Speaker 3: Those are with camps, neobrokers, digital wealth platforms, other distribution venues. So we'd invest some of that. It'll be fixed M&P. Some of it will be variable distribution and servicing, which gives us some more resilience. That's some of the variableizing of expenses that I've talked about.
Some more resilience that's some of the variable lighting of expenses that I've talked about but they all have the potential to accelerate outsized growth for ishares and other Blackrock investments and our budget for 2024 is going to look to optimize organic growth in the most efficient way possible and expanding our premium margin over time.
Larry Fink: We are engaged in a lot of conversations right now, probably more than we happen in many, many years. And we'll see how this all plays out.
Speaker 3: But they all have the potential to accelerate outside growth for eye shares and other black rock investments. And our budget for 2024 is going to look to optimize organic growth in the most efficient way possible and expanding our premium margin over time.
Alexander Blostein: Your next question comes from Alex Blasking with Goldman Sachs. Please go ahead. Good morning, Alex. Good morning, Larry. Appreciate the comments earlier. Maybe just another one around him. And it sounds like you have a pretty white lens through which you're considering different targets or partnerships.
Speaker 1: Ladies and gentlemen, we have reached the allotted time for questions. Mr. Fink, do you have any closing remarks?
Ladies and gentlemen, we have reached the allotted time for questions. Mr. Fink do you have any closing remarks.
Speaker 4: Thank you, operator. Thank you, everyone, for joining us today and it continued interest in the organization.
Thank you operator, thank you everyone for joining us today and your continued interest in the organization.
Speaker 4: A BlackRock Thunderline business momentum remains incredibly strong.
Martin Small: Can you remind us about financial targets for potential deals for BlackRock from an EPS accretion and any other kind of framework you could put around what a potential deal could look like. Thanks. I'm going to head out to Martin. Hi, Alex. Martin, how are you? So the centerpiece and hallmark of the M&A strategy here has always been about accelerating organic growth. It's been about developing capabilities that we don't have and or de-risking capabilities that we're building.
Blackrock underlying business momentum remains incredibly strong.
Speaker 4: And we believe there are more money being put to work as investors' gling clarity on the path, the path of rate movements related to geopolitical issues and more people are seeking opportunities with BlackRock. I do see great opportunities ahead for our clients and look forward to delivering more opportunities for you or shareholders or investors. And I want to thank you for your continued interest. Have a good...
And we believe there are more money being put to work as investors claim clarity on the path the path of rate movements.
Related to geopolitical issues and more people are seeking opportunities with Blackrock I do see great opportunities ahead for our clients and look forward to delivering more opportunities for you our shareholders.
Martin Small: And I'd say when you look at EFront, when you look at a period, when you look at many of the transactions, Larry's talked about that that's really been the center of the strategy. It's about accelerating organic growth and delivering for clients. As Larry said, you know, in the last five years, we've spent about $4 billion on M&A. We're not capital constrained. We have ample debt capacity. And so our goal is to be able to drive earnings acceleration and also deliver more for our clients through M&A.
Investors and I want to thank you for your continued interest.
Good quarter.
Yeah.
Speaker 1: This concludes today's teleconference. You may now disconnect.
This concludes today's teleconference. You may now disconnect.
Speaker 11: ' Now
[music].
Martin Small: I would just add one more thing related to that, Martin, I just want to double down, we have a lot of debt capacity, we have a lot of opportunities, and we're really refocusing on, you know, where can we be additive?
Larry Fink: The one thing that I could tell you when we do integrations of firms, we are not going to be a boutique. We are going to be organizing and building it out, we love the opportunity that having a period, but it's a part of a big organized firm, we love e-front, it's organized around, around the whole Aladdin ecosystem, but it is not, you know, we're not building a boutique of different fragments, we are building a unified organization, as Martin said, to be additive in revenues, additive in client connectivity, and additive in reach, reach in technology and reach in product.
Daniel Fannon: Your next question comes from Daniel Fannen with Jeffries, please go ahead. Thanks, good morning.
Martin Small: Another question on flows, active equities and alternatives, both higher fee statements, and I think he contributors to you hitting your long-term base fee target, can you talk about the trends in those businesses outside of maybe just the seasonal stuff for 3Q, but really as we think about the next 12, 24 months, the kind of funds and growth outlook you think for both obviously alternatives, but then also the active equity segment. Thanks very much for the question.
Martin Small: So when I think about the active equities business at BlackRock, we had continue to see a very strong active equity business over the last three years. We've generated over $30 billion in active equity net inflows while our average AUM has grown by 34%. And so, while again, quarter to quarter and year and year, we'd fully expect to see particularly in this environment, some rotations out of equities and into cash, which has been the main theme I think of this call and a merry others.
Martin Small: We still see really strong growth in the business, and we think it's fundamentally a big part of client portfolios. I do think over time in our product strategy, you've seen we've been adding, for example, transparent active ETFs through which will be growing our active equity business and our other active businesses. And so we think about these over time as being delivered through multiple wrappers and an integral part of our base fee growth strategy.
Martin Small: And let me just add to that because we have to be a little bit careful about what we call active because people are active with both their index and their ETFs through models. And I would prefer to say it's active as we originally knew the definition alongside of all of our ETF products. And when is active going to continue to have more flows when you can add alpha and we're going into an environment where I believe active flows will be greater because there are now more opportunities to add alpha than there has been before.
Martin Small: So we've seen 65 billion of active net inflows in 2023 year to date, which compares to industry outflows. And part of that is coming from some of the different pockets that we have created that require more active than passive management. So we continue to see strong demand in the private markets and in life path, these are the strength and income oriented equities, total return and core bond strategy.
Larry Fink: Chiefs. So just to give you an idea since 2019, positive active flows have been in 16 out of the 19 quarters. And a lot of that also depends upon performance. And that's what we've been able to keep our promise to with our clients and will drive active inflows going forward. We're encouraging our eye shares platform globally. If that's going to be an integral part of what we're doing in India. But if you look at the trends of ETS in the year to date, in Europe, ETF flows are up 70%.
Larry Fink: In the US ETF flows are actually a little lower than they were last year. But as we continue to build out our platform globally, we become a very large beneficiary. And what is happening in Europe, the rise of its capital markets and the utilization of ETS as an instrument of active and an instrument of exposures and an instrument of passive. We're winning big market share in that business. Your next question comes from Brian Badell with Deutsche Bank. Please go ahead. Good morning, Brian.
Brian Bedell: Given how much longer-term bond yields have improved, what do you sense is sort of, I guess, first of all, the potential magnitude of that switch or that reallocation to immunizing the plans as you talk with your clients. And then sort of the timing of that, are they also waiting for, you know, you'll speak to do that or is it more seasonal or something they might actually do by your end? Great question.
Brian Bedell: I mean, with consistency, large scale immunization in the UK pension fund world, a major component of the entire UK market to find benefit plans have been immunized already over the last five years about another four to six billion dollars. I have moved out and been more and more immunized. I don't see that happening yet at a five percent or four and a half percent environment yet. But if we if we peak long rates at five and a half six, the yield curve becomes more steep instead of flat or inverted.
Brian Bedell: That's when you're going to see it. I think it's more the shape of the yield curve where you're going to start seeing more and more people thinking about immunization. Unquestionably on the margin, you're going to see some pension funds immunize. And it will depending on that type of flow, it is going to put some pressure on the equity market as money moves out of equities and permanently go into long dated bonds.
Brian Bedell: We are having conversations with a lot of organizations on that. And so I can tell you there are a lot of, there are quite a few pension funds now because their liability rate has been reset at a higher rate. They are getting closer to their to matching. This is more corporate plans not not not state plans. And that occurs, you're going to see a significant be risk. Sching. Instead of that, we are actually seeing more and more companies looking to earn higher returns in credit and infrastructure right now.
Brian Bedell: They're trying to lock it higher returns that way. But we haven't seen a major shift of duration extension in the Treasury market. And I think that's very evident right now. And that's why I think the old curve is flattening out right now. But we are seeing significant interest levels. A lot of pension funds could take, bring down their, I would say their exposure inequities, to bring down their exposure in some components of alternatives and focus on income oriented alternatives to really get, you know, an eight, nine, 10% type of coupon returns.
Larry Fink: Rob, do you want to? Oh, I'll just ask a couple things. That's a really great question because I think I speak for Larry. We haven't heard the word immunization for a very, very long time. And we've been visited by several pension plans to talk about that. Obviously, it's rate driven. I think the number is going to be seven plus that they're going to have to get. And if you want to do a little history in 1995, you can have a portfolio of all bonds and get a seven and a half percent return.
Larry Fink: So when you add that together with the environment I described before, that might be coming. Now, there's a step before that. And we have been the beneficiary of a lot of these plans finding that it's too complicated. They were very barbelled. They're not sure what the reallocation could be. It's hard to find the people to do this in the locations that they are. And they don't have the technology. So we've been the beneficiary through what we call the OCIO business.
Larry Fink: And we have had a significant amount of large wins in that business to help them with the appropriate reallocation. I think the next stage of that in the future might be more institutions may be going into immunizing the portfolio. But as Larry said, it's really rate driven. We're not that far away. But a lot of things have to happen before then. And a lot of that, of course, will be done in the bond market, which my previous answer is really as fuel to the fire, where we could be a very big participant in that.
Brennan Hawken: Your next question comes from Brennan Hawking with UBS. Please go ahead. Good morning. Thanks for taking my question. I'm just kind of curious about thinking about expenses here. Martin, you know, you spoke to coming into the low end of the range on the on the Georgia NA, which is certainly encouraging. But right now is probably time when you all are beginning to sharpen your pencils on the budget here in the next year.
Brennan Hawken: The environment, you know, Black Rock is incredibly well positioned as you all have hit on several times here today. But the environment's challenging. And so how are you thinking about 2024? And how should we be thinking about that as we refine our models today? Thanks. Thanks, Brennan.
Martin Small: Just, I will reiterate, we expect full-year GNA to fall on the low end of our previously communicated, you know, committed guidance, mid to high single-digit percentage increase, still accept to keep our head count broadly flat for this year, as we've said to the last two quarters. And just on outlook for expense, and I suppose margin, you know, again, our strategy for driving values to deliver organic growth, differentiated premium operating margin, and consistent capital management policy, we're focused on investing for profitable growth.
Martin Small: When I think about operating leverage in a higher for longer rate environment, you've heard on our last few calls that we're looking to make more concentrated investments in places that can drive higher organic growth, deliver more operating efficiency, but we're also looking to add flexibility to the cost-base. But most importantly, Brennan, we're looking to drive more fixed cost scale that comes through technology, automation, organizational design, and footprinting. There are so many exciting things happening at BlackRock on that front.
Martin Small: We launched our BlackRock AI lab back in 2018. We've been using artificial intelligence, machine learning, natural language processing, and our systematic business going back 20 years. And we have teams all over these things for how we can scale trading, pricing, operations, client service, and even automation to make our software engineers most productive. So if you ask me, where are we going to focus investments going forward with a particular sharp eye? I look at our total annual operating expense of about 11 billion, and our largest fixed investments by dollars and importance.
Martin Small: That's our really talented BlackRock employees. So giving them more tools to enhance productivity from large language models to better CRM, tools that help clients customize and self-service, like our BlackRock Advisor Center. Those are going to be some of our best opportunities to deliver, I think, long-term profitable growth and where we'd be looking towards our expenses. But also, we've got great investments that I think Larry alluded to that are in commercial partnerships.
Martin Small: Those are with camps, neo-brokers, digital wealth platforms, other distribution venues. So we'd invest some of that. It'll be fixed MNP. Some of it will be variable distribution and servicing, which gives us some more resilience. That's some of the variableizing of expenses that I've talked about. But they all have the potential to accelerate outsize growth for eye shares and other BlackRock investments. And our budget for 2024 is going to look to optimize organic growth in the most efficient way possible and expanding our premium margin over time.
Unknown Executive: Ladies and gentlemen, we have reached the allotted time for questions.
Larry Fink: Mr. Fink, do you have any closing remarks? Thank you, operator. Thank you, everyone, for joining us today and your continued interest in the organization. BlackRock's underlying business momentum remains incredibly strong. And we believe there are more money being put to work as investors, including charity on the path of rate movements related to geopolitical issues and more people are seeking opportunities with BlackRock. I do see great opportunities ahead for our clients and look forward to delivering more opportunities for you or shareholders or investors. And I want to thank you for your continued interest.
Unknown Executive: Christ, have a good quarter.
Unknown Executive: This concludes today's teleconference.
Unknown Executive: You may now disconnect.