FORWARD-LOOKING STATEMENTS
This report, and other statements that BlackRock may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to BlackRock's future financial or business performance, strategies or expectations. Forward-looking statements are typically identified by words or phrases such as "trend," "potential," "opportunity," "pipeline," "believe," "comfortable," "expect," "anticipate," "current," "intention," "estimate," "position," "assume," "outlook," "continue," "remain," "maintain," "sustain," "seek," "achieve," and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "may" and similar expressions. BlackRock cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and BlackRock assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance. BlackRock has previously disclosed risk factors in itsSecurities and Exchange Commission reports. These risk factors and those identified elsewhere in this report, among others, could cause actual results to differ materially from forward-looking statements or historical performance and include: (1) a pandemic or health crisis, including the COVID-19 pandemic, and its continued impact on financial institutions, the global economy or capital markets, as well as BlackRock's products, clients, vendors and employees, and BlackRock's results of operations, the full extent of which may be unknown; (2) the introduction, withdrawal, success and timing of business initiatives and strategies; (3) changes and volatility in political, economic or industry conditions, the interest rate environment, foreign exchange rates or financial and capital markets, which could result in changes in demand for products or services or in the value of assets under management ("AUM"); (4) the relative and absolute investment performance of BlackRock's investment products; (5) BlackRock's ability to develop new products and services that address client preferences; (6) the impact of increased competition; (7) the impact of future acquisitions or divestitures; (8) BlackRock's ability to integrate acquired businesses successfully; (9) the unfavorable resolution of legal proceedings; (10) the extent and timing of any share repurchases; (11) the impact, extent and timing of technological changes and the adequacy of intellectual property, data, information and cybersecurity protection; (12) attempts to circumvent BlackRock's operational control environment or the potential for human error in connection with BlackRock's operational systems; (13) the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to BlackRock; (14) changes in law and policy and uncertainty pending any such changes; (15) any failure to effectively manage conflicts of interest; (16) damage to BlackRock's reputation; (17) geopolitical unrest, terrorist activities, civil or international hostilities, including the military conflict betweenRussia andUkraine , and natural disasters, which may adversely affect the general economy, domestic and local financial and capital markets, specific industries or BlackRock; (18) climate change-related risks to BlackRock's business, products, operations and clients; (19) the ability to attract and retain highly talented professionals; (20) fluctuations in the carrying value of BlackRock's economic investments; (21) the impact of changes to tax legislation, including income, payroll and transaction taxes, and taxation on products or transactions, which could affect the value proposition to clients and, generally, the tax position of the Company; (22) BlackRock's success in negotiating distribution arrangements and maintaining distribution channels for its products; (23) the failure by key third-party providers of BlackRock to fulfill their obligations to the Company; (24) operational, technological and regulatory risks associated with BlackRock's major technology partnerships; (25) any disruption to the operations of third parties whose functions are integral to BlackRock's exchange-traded funds ("ETF") platform; (26) the impact of BlackRock electing to provide support to its products from time to time and any potential liabilities related to securities lending or other indemnification obligations; and (27) the impact of problems at other financial institutions or the failure or negative performance of products at other financial institutions. 34 --------------------------------------------------------------------------------
OVERVIEW
BlackRock, Inc. (together, with its subsidiaries, unless the context otherwise indicates, "BlackRock" or the "Company") is a leading publicly traded investment management firm with$9.6 trillion of AUM atMarch 31, 2022 . With approximately 18,700 employees in more than 30 countries who serve clients in over 100 countries across the globe, BlackRock provides a broad range of investment management and technology services to institutional and retail clients worldwide. BlackRock's diverse platform of alpha-seeking active, index and cash management investment strategies across asset classes enables the Company to tailor investment outcomes and asset allocation solutions for clients. Product offerings include single- and multi-asset portfolios investing in equities, fixed income, alternatives and money market instruments. Products are offered directly and through intermediaries in a variety of vehicles, including open-end and closed-end mutual funds, ETFs, separate accounts, collective trust funds and other pooled investment vehicles. BlackRock also offers technology services, including the investment and risk management technology platform, Aladdin, Aladdin Wealth, eFront, andCachematrix , as well as advisory services and solutions to a broad base of institutional and wealth management clients. BlackRock serves a diverse mix of institutional and retail clients across the globe. Clients include tax-exempt institutions, such as defined benefit and defined contribution pension plans, charities, foundations and endowments; official institutions, such as central banks, sovereign wealth funds, supranationals and other government entities; taxable institutions, including insurance companies, financial institutions, corporations and third-party fund sponsors, and retail intermediaries. BlackRock maintains a significant global sales and marketing presence that is focused on establishing and maintaining retail and institutional investment management and technology service relationships by marketing its services to investors directly and through third-party distribution relationships, including financial professionals and pension consultants.
Certain prior period presentations and disclosures, while not required to be recast, were reclassified to ensure comparability with current period classifications.
COVID-19 Impact
BlackRock continues to actively monitor COVID-19 developments and their potential impact on the Company's employees, business and operations, particularly in jurisdictions where BlackRock has significant employee populations and/or business activity. The aggregate extent to which COVID-19, including existing and new variants and its continued related impact on the global economy, affects BlackRock's business, results of operations and financial condition, will depend on future developments that are highly uncertain and cannot be predicted, including the scope and further duration of the pandemic and recovery period, the emergence and spread of additional variants of the COVID-19 virus, the continuing prevalence of severe, unconstrained and/or escalating rates of infection in certain countries and regions, and the availability, adoption and efficacy of treatments and vaccines and future actions taken by governmental authorities, central banks, and other third parties in response to the pandemic. See Part I, Item 1A - Risk Factors, of the Company's Annual Report on Form 10-K for the year endedDecember 31, 2021 , which was filed with theSecurities and Exchange Commission onFebruary 25, 2022 ("2021 Form 10-K"), for further information on the possible future impact of the COVID-19 pandemic on BlackRock's business, results of operations and financial condition. 35
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EXECUTIVE SUMMARY Three Months Ended March 31, (in millions, except shares and per share data) 2022 2021 GAAP basis: Total revenue$ 4,699 $ 4,398 Total expense 2,935 2,853 Operating income$ 1,764 $ 1,545 Operating margin 37.5 % 35.1 % Nonoperating income (expense), less net income (loss) attributable to noncontrolling interests (65 ) (28 ) Income tax expense 263
318
Net income attributable to BlackRock$ 1,436 $
1,199
Diluted earnings per common share$ 9.35 $ 7.77 Effective tax rate 15.5 % 20.9 % As adjusted(1): Operating income$ 1,822 $ 1,599 Operating margin 44.2 % 45.8 % Nonoperating income (expense), less net income (loss) attributable to noncontrolling interests $ (65 ) $ (28 ) Net income attributable to BlackRock$ 1,462 $
1,240
Diluted earnings per common share$ 9.52 $
8.04
Effective tax rate 16.8 % 20.9 % Other: Assets under management (end of period)$ 9,569,513 $
9,007,411
Diluted weighted-average common shares outstanding 153,530,395 154,301,812 Shares outstanding (end of period)
151,725,643
152,635,930
Book value per share(2)$ 247.08 $
231.79
Cash dividends declared and paid per share$ 4.88 $ 4.13
(1) As adjusted items are described in more detail in Non-GAAP Financial
Measures. Beginning in the first quarter of 2022, BlackRock updated the
definitions of operating income, as adjusted, operating margin, as adjusted,
and net income attributable to
adjustments. Such measures have been recast for 2021 to reflect the inclusion of such new adjustments. For further information, refer to the Current Report on Form 8-K furnished onApril 13, 2022 .
(2) Total BlackRock stockholders' equity divided by total shares outstanding at
March 31 of the respective period-end. 36
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THREE MONTHS ENDED
GAAP. Operating income of$1,764 million increased$219 million and operating margin of 37.5% increased 240 bps from the first quarter of 2021. Increases in operating income and operating margin reflected strong organic growth and higher technology services revenue, partially offset by lower performance fees and higher expense, primarily driven by higher employee compensation and benefits expense. Operating income and operating margin also reflected the impact of$178 million of product launch costs in the first quarter of 2021. Nonoperating income (expense) less net income (loss) attributable to noncontrolling interests ("NCI") decreased$37 million from the first quarter of 2021, driven primarily by mark-to-market losses on the Company'sun -hedged seed capital investments. First quarter 2022 income tax expense included$133 million of discrete tax benefits related to stock-based compensation awards that vested in the first quarter and the resolution of certain outstanding tax matters. First quarter 2021 income tax expense included$39 million of discrete tax benefits related to stock-based compensation awards. In addition, first quarter 2022 income tax expense included$18 million of net noncash tax benefits related to the revaluation of certain deferred income tax liabilities. Earnings per diluted common share increased$1.58 , or 20%, from the first quarter of 2021, primarily reflecting higher operating income, a lower effective tax rate and a lower diluted share count, partially offset by lower nonoperating income in the current quarter. The increase in earnings per diluted common share also included the impact of$178 million of product launch costs incurred in the first quarter of 2021.
As Adjusted. Operating income of
Earnings per diluted common share increased$1.48 , or 18%, from the first quarter of 2021, primarily due to higher operating income, a lower effective tax rate, and a lower diluted share count, partially offset by lower nonoperating income, in the current quarter. Income tax expense, as adjusted, for the first quarter of 2022 excluded$18 million of net noncash tax benefits described above. See Non-GAAP Financial Measures for further information on as adjusted items and the reconciliation to accounting principles generally accepted inthe United States ("GAAP"). Beginning in the first quarter of 2022, BlackRock updated the definitions of operating income, as adjusted, operating margin, as adjusted, and net income attributable toBlackRock, Inc. , as adjusted, to include new adjustments. Such measures have been recast for 2021 to reflect the inclusion of such new adjustments. For further information, refer to the Current Report on Form 8-K furnished onApril 13, 2022 .
For further discussion of BlackRock's revenue, expense, nonoperating results and income tax expense, see Discussion of Financial Results herein.
37 --------------------------------------------------------------------------------
NON-GAAP FINANCIAL MEASURES
BlackRock reports its financial results in accordance with GAAP; however, management believes evaluating the Company's ongoing operating results may be enhanced if investors have additional non-GAAP financial measures. Management reviews non-GAAP financial measures to assess ongoing operations and considers them to be helpful, for both management and investors, in evaluating BlackRock's financial performance over time. Management also uses non-GAAP financial measures as a benchmark to compare its performance with other companies and to enhance comparability for the reporting periods presented. Non-GAAP measures may pose limitations because they do not include all of BlackRock's revenue and expense. BlackRock's management does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Non-GAAP measures may not be comparable to other similarly titled measures of other companies.
Management uses both GAAP and non-GAAP financial measures in evaluating BlackRock's financial performance. Adjustments to GAAP financial measures ("non-GAAP adjustments") include certain items management deems nonrecurring or that occur infrequently, transactions that ultimately will not impact BlackRock's book value or certain tax items that do not impact cash flow.
Beginning in the first quarter of 2022, the Company updated its definition of operating income, as adjusted, operating margin, as adjusted, and net income attributable toBlackRock, Inc. , as adjusted, to include adjustments related to amortization of intangible assets, other acquisition-related costs, including compensation costs for nonrecurring retention-related deferred compensation, and contingent consideration fair value adjustments incurred in connection with certain acquisitions. Such measures have been recast for 2021 to reflect the inclusion of such new adjustments. For further information, refer to the Current Report on Form 8-K furnished onApril 13, 2022 .
Computations for all periods are derived from the condensed consolidated statements of income as follows:
(1) Operating income, as adjusted, and operating margin, as adjusted:
Three Months Ended March 31, (in millions) 2022 2021 Operating income, GAAP basis$ 1,764 $ 1,545 Non-GAAP expense adjustments: Amortization of intangible assets 38
34
Acquisition-related compensation costs 7
17
Contingent consideration fair value adjustments 1
3
Lease cost - Hudson Yards 12
-
Operating income, as adjusted 1,822
1,599
Product launch costs and commissions -
185
Operating income used for operating margin measurement$ 1,822 $ 1,784 Revenue, GAAP basis$ 4,699 $ 4,398 Non-GAAP adjustments: Distribution fees (381 ) (340 ) Investment advisory fees (193 ) (165 ) Revenue used for operating margin measurement$ 4,125 $ 3,893 Operating margin, GAAP basis 37.5 % 35.1 % Operating margin, as adjusted 44.2 %
45.8 %
Management believes operating income, as adjusted, and operating margin, as adjusted, are effective indicators of BlackRock's financial performance over time, and, therefore, provide useful disclosure to investors. Management believes that operating margin, as adjusted, reflects the Company's long-term ability to manage ongoing costs in relation to its revenues. The Company uses operating margin, as adjusted, to assess the Company's financial performance, to determine the long-term and annual compensation of the Company's senior-level employees and to evaluate the Company's relative performance against industry peers. Furthermore, this metric eliminates margin variability arising from the accounting of revenues and expenses related to distributing different product structures in multiple distribution channels utilized by asset managers. 38 --------------------------------------------------------------------------------
• Operating income, as adjusted, includes non-GAAP expense adjustments.
Beginning in the first quarter of 2022, the Company updated its definition
of operating income, as adjusted, to include adjustments related to
amortization of intangible assets, other acquisition-related costs,
including compensation costs for nonrecurring retention-related deferred
compensation, and contingent consideration fair value adjustments incurred
in connection with certain acquisitions. Management believes excluding the
impact of these expenses when calculating operating income, as adjusted,
provides a helpful indication of the Company's financial performance over time, thereby providing helpful information for both management and investors while also increasing comparability with other companies. In
addition, as previously reported in 2021, the Company recorded expense
related to the lease of office space for its future headquarters located at
50 Hudson Yards in
While the Company expects to begin to occupy the new office space in late
2022 (and begin cash lease payments in
to record lease expense when it obtained access to the building to begin its
tenant improvements. As a result, the Company is recognizing lease expense
for both its current and future headquarters until its current headquarters
lease expires in
Hudson Yards when calculating operating income, as adjusted, is useful to
assess the Company's financial performance and enhances comparability among
periods presented.
• Operating income used for measuring operating margin, as adjusted, is equal
to operating income, as adjusted, excluding the impact of product launch
costs (e.g. closed-end fund launch costs) and related commissions.
Management believes the exclusion of such costs and related commissions is
useful because these costs can fluctuate considerably and revenue associated
with the expenditure of these costs will not fully impact BlackRock's results until future periods.
• Revenue used for calculating operating margin, as adjusted, is reduced to
exclude all of the Company's distribution fees, which are recorded as a
separate line item on the condensed consolidated statements of income, as
well as a portion of investment advisory fees received that is used to pay
distribution and servicing costs. For certain products, based on distinct
arrangements, distribution fees are collected by the Company and then
passed-through to third-party client intermediaries. For other products,
investment advisory fees are collected by the Company and a portion is passed-through to third-party client intermediaries. However, in both structures, the third-party client intermediary similarly owns the
relationship with the retail client and is responsible for distributing the
product and servicing the client. The amount of distribution and investment
advisory fees fluctuates each period primarily based on a predetermined
percentage of the value of AUM during the period. These fees also vary based
on the type of investment product sold and the geographic location where it
is sold. In addition, the Company may waive fees on certain products that
could result in the reduction of payments to the third-party intermediaries.
(2) Net income attributable to
Three Months
Ended
March
31,
(in millions, except per share data) 2022
2021
Net income attributable to BlackRock, Inc., GAAP basis$ 1,436 $ 1,199 Non-GAAP adjustments: Amortization of intangible assets, net of tax 29
26
Acquisition-related compensation costs, net of tax 5
13
Contingent consideration fair value adjustments, net of tax 1
2
Lease cost - Hudson Yards, net of tax 9
-
Income tax matters (18 )
-
Net income attributable to
153.5
154.3
Diluted earnings per common share, GAAP basis$ 9.35 $ 7.77 Diluted earnings per common share, as adjusted$ 9.52
Management believes net income attributable toBlackRock, Inc. , as adjusted, and diluted earnings per common share, as adjusted, are useful measures of BlackRock's profitability and financial performance. Net income attributable toBlackRock, Inc. , as adjusted, equals net income attributable toBlackRock, Inc. , GAAP basis, adjusted for significant nonrecurring items, charges that ultimately will not impact BlackRock's book value or certain tax items that do not impact cash flow. 39 -------------------------------------------------------------------------------- See note (1) above regarding operating income, as adjusted, and operating margin, as adjusted, for information on the updated presentation of non-GAAP expense adjustments related to amortization of intangible assets, other acquisition-related costs, including compensation costs for nonrecurring retention-related deferred compensation, and contingent consideration fair value adjustments incurred in connection with certain acquisitions, as well as previously reported Lease cost - Hudson Yards.
Per share amounts reflect net income attributable to
40 --------------------------------------------------------------------------------
ASSETS UNDER MANAGEMENT
AUM for reporting purposes generally is based upon how investment advisory and administration fees are calculated for each portfolio. Net asset values, total assets, committed assets or other measures may be used to determine portfolio AUM.
AUM and Net Inflows (Outflows) by Client Type and Product Type
AUM Net inflows (outflows) Three Months Twelve Months Ended Ended March 31, December 31, March 31, March 31, March 31, (in millions) 2022 2021 2021 2022 2022 Retail$ 989,123 $ 1,040,053 $ 934,177 $ 10,164 $ 75,745 ETFs 3,150,496 3,267,354 2,813,524 56,207 293,253 Institutional: Active 1,676,167 1,756,717 1,524,430 16,398 168,932 Index 3,019,763 3,181,652 3,009,150 30,975 (97,957 ) Institutional subtotal 4,695,930 4,938,369 4,533,580 47,373 70,975 Long-term 8,835,549 9,245,776 8,281,281 113,744 439,973 Cash management 724,939 755,057 703,916 (27,095 ) 27,759 Advisory(1) 9,025 9,310 22,214 (285 ) (13,356 ) Total$ 9,569,513 $ 10,010,143 $ 9,007,411 $ 86,364 $ 454,376
AUM and Net Inflows (Outflows) by Investment Style and Product Type
AUM Net inflows (outflows) Three Months Twelve Months Ended Ended March 31, December 31, March 31, March 31, March 31, (in millions) 2022 2021 2021 2022 2022 Active$ 2,479,139 $ 2,606,325 $ 2,297,642 $ 20,040 $ 227,822 Index and ETFs 6,356,410 6,639,451 5,983,639 93,704 212,151 Long-term 8,835,549 9,245,776 8,281,281 113,744 439,973 Cash management 724,939 755,057 703,916 (27,095 ) 27,759 Advisory(1) 9,025 9,310 22,214 (285 ) (13,356 ) Total$ 9,569,513 $ 10,010,143 $ 9,007,411 $ 86,364 $ 454,376
AUM and Net Inflows (Outflows) by Product Type
AUM Net inflows (outflows) Three Months Twelve Months Ended Ended March 31, December 31, March 31, March 31, March 31, (in millions) 2022 2021 2021 2022 2022 Equity$ 5,119,044 $ 5,342,360 $ 4,745,781 $ 76,024 $ 127,844 Fixed income 2,645,871 2,822,041 2,620,460 7,522 177,020 Multi-asset 785,181 816,494 677,372 17,672 101,751 Alternatives: Illiquid alternatives 109,141 102,579 92,207 3,873 13,769 Liquid alternatives 87,326 87,348 76,266 1,908 10,880 Currency and commodities(2) 88,986 74,954 69,195 6,745 8,709 Alternatives subtotal 285,453 264,881 237,668 12,526 33,358 Long-term 8,835,549 9,245,776 8,281,281 113,744 439,973 Cash management 724,939 755,057 703,916 (27,095 ) 27,759 Advisory(1) 9,025 9,310 22,214 (285 ) (13,356 ) Total$ 9,569,513 $ 10,010,143 $ 9,007,411 $ 86,364 $ 454,376
(1) Advisory AUM represents mandates linked to purchases and disposition of
assets and portfolios on behalf of official institutions and long-term
portfolio liquidation assignments.
(2) Amounts include commodity ETFs.
41 --------------------------------------------------------------------------------
Component Changes in AUM for the Three Months Ended
The following table presents the component changes in AUM by client type and
product type for the three months ended
Net December 31, inflows Market FX March 31, Average (in millions) 2021 (outflows) change impact(1) 2022 AUM(2) Retail: Equity$ 471,937 $ 6,202 $ (29,379 ) $ (2,717 ) $ 446,043 $ 448,767 Fixed income 365,306 (1,896 ) (18,752 ) (946 ) 343,712 353,889 Multi-asset 155,461 2,978 (8,685 ) (274 ) 149,480 151,053 Alternatives 47,349 2,880 (196 ) (145 ) 49,888 48,585 Retail subtotal 1,040,053 10,164 (57,012 ) (4,082 ) 989,123 1,002,294 ETFs: Equity 2,447,248 41,170 (135,834 ) (2,163 ) 2,350,421 2,356,531 Fixed income 745,373 8,150 (39,128 ) (1,628 ) 712,767 723,773 Multi-asset 9,119 69 (491 ) 19 8,716 8,747 Alternatives 65,614 6,818 6,173 (13 ) 78,592 70,614 ETFs subtotal 3,267,354 56,207 (169,280 ) (3,785 ) 3,150,496 3,159,665 Institutional: Active: Equity 199,980 1,831 (11,743 ) (1,246 ) 188,822 191,121 Fixed income 767,402 (2,893 ) (43,230 ) (3,054 ) 718,225 743,349 Multi-asset 642,951 14,131 (35,697 ) (3,542 ) 617,843 625,565 Alternatives 146,384 3,329 2,091 (527 ) 151,277 149,754 Active subtotal 1,756,717 16,398 (88,579 ) (8,369 ) 1,676,167 1,709,789 Index: Equity 2,223,195 26,821 (101,545 ) (14,713 ) 2,133,758 2,127,884 Fixed income 943,960 4,161 (57,212 ) (19,742 ) 871,167 911,671 Multi-asset 8,963 494 (198 ) (117 ) 9,142 8,726 Alternatives 5,534 (501 ) 756 (93 ) 5,696 5,517 Index subtotal 3,181,652 30,975 (158,199 ) (34,665 ) 3,019,763 3,053,798 Institutional subtotal 4,938,369 47,373 (246,778 ) (43,034 ) 4,695,930 4,763,587 Long-term 9,245,776 113,744 (473,070 ) (50,901 ) 8,835,549 8,925,546 Cash management 755,057 (27,095 ) (628 ) (2,395 ) 724,939 734,531 Advisory(3) 9,310 (285 ) - - 9,025 9,125 Total$ 10,010,143 $ 86,364 $ (473,698 ) $ (53,296 ) $ 9,569,513 $ 9,669,202
(1) Foreign exchange reflects the impact of translating non-US dollar denominated
AUM into US dollars for reporting purposes.
(2) Average AUM is calculated as the average of the month-end spot AUM amounts
for the trailing four months.
(3) Advisory AUM represents mandates linked to purchases and disposition of
assets and portfolios on behalf of official institutions and long-term portfolio liquidation assignments. 42
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The following table presents the component changes in AUM by investment style
and product type for the three months ended
Net December 31, inflows Market FX March 31, Average (in millions) 2021 (outflows) change impact(1) 2022 AUM(2) Active: Equity$ 507,103 $ 1,999 $ (33,529 ) $ (2,724 ) $ 472,849 $ 479,629 Fixed income 1,107,085 (5,277 ) (60,478 ) (3,517 ) 1,037,813 1,072,960 Multi-asset 798,404 17,109 (44,381 ) (3,817 ) 767,315 776,610 Alternatives 193,733 6,209 1,892 (672 ) 201,162 198,338 Active subtotal 2,606,325 20,040 (136,496 ) (10,730 ) 2,479,139 2,527,537 Index and ETFs: ETFs: Equity 2,447,248 41,170 (135,834 ) (2,163 ) 2,350,421 2,356,531 Fixed income 745,373 8,150 (39,128 ) (1,628 ) 712,767 723,773 Multi-asset 9,119 69 (491 ) 19 8,716 8,747 Alternatives 65,614 6,818 6,173 (13 ) 78,592 70,614 ETFs subtotal 3,267,354 56,207 (169,280 ) (3,785 ) 3,150,496 3,159,665 Non-ETF Index: Equity 2,388,009 32,855 (109,138 ) (15,952 ) 2,295,774 2,288,143 Fixed income 969,583 4,649 (58,716 ) (20,225 ) 895,291 935,949 Multi-asset 8,971 494 (199 ) (116 ) 9,150 8,734 Alternatives 5,534 (501 ) 759 (93 ) 5,699 5,518 Non-ETF Index subtotal 3,372,097 37,497 (167,294 ) (36,386 ) 3,205,914 3,238,344 Index & ETFs subtotal 6,639,451 93,704 (336,574 ) (40,171 ) 6,356,410 6,398,009 Long-term 9,245,776 113,744 (473,070 ) (50,901 ) 8,835,549 8,925,546 Cash management 755,057 (27,095 ) (628 ) (2,395 ) 724,939 734,531 Advisory(3) 9,310 (285 ) - - 9,025 9,125 Total$ 10,010,143 $ 86,364 $ (473,698 ) $ (53,296 ) $ 9,569,513 $ 9,669,202
The following table presents the component changes in AUM by product type for
the three months ended
Net December 31, inflows Market FX March 31, Average (in millions) 2021 (outflows) change impact(1) 2022 AUM(2) Equity$ 5,342,360 $ 76,024 $ (278,501 ) $ (20,839 ) $ 5,119,044 $ 5,124,303 Fixed income 2,822,041 7,522 (158,322 ) (25,370 ) 2,645,871 2,732,682 Multi-asset 816,494 17,672 (45,071 ) (3,914 ) 785,181 794,091 Alternatives: Illiquid alternatives 102,579 3,873 3,208 (519 ) 109,141 106,925 Liquid alternatives 87,348 1,908 (1,859 ) (71 ) 87,326 87,196 Currency and 74,954 6,745 7,475 (188 ) 88,986 80,349 commodities(4) Alternatives subtotal 264,881 12,526 8,824 (778 ) 285,453 274,470 Long-term 9,245,776 113,744 (473,070 ) (50,901 ) 8,835,549 8,925,546 Cash management 755,057 (27,095 ) (628 ) (2,395 ) 724,939 734,531 Advisory(3) 9,310 (285 ) - - 9,025 9,125 Total$ 10,010,143 $ 86,364 $ (473,698 ) $ (53,296 ) $ 9,569,513 $ 9,669,202
(1) Foreign exchange reflects the impact of translating non-US dollar denominated
AUM into US dollars for reporting purposes.
(2) Average AUM is calculated as the average of the month-end spot AUM amounts
for the trailing four months.
(3) Advisory AUM represents mandates linked to purchases and disposition of
assets and portfolios on behalf of official institutions and long-term
portfolio liquidation assignments.
(4) Amounts include commodity ETFs.
43 --------------------------------------------------------------------------------
AUM decreased
Long-term net inflows of
• ETFs net inflows of
product categories, including core equity, sustainable and commodity ETFs.
Equity net inflows of
equity market exposures. Fixed income net inflows of
demand for treasuries, short duration inflation-linked, sustainable,
municipal bond, and broad bond market ETFs.
• Institutional active net inflows of
growth in LifePath® target-date, alternatives and systematic active equity
offerings.
• Institutional index net inflows of
equity net inflows and included approximately$70 billion from two large institutional clients. • Retail net inflows of$10 billion were positive in both the US and
internationally, and reflected strength in equity, active multi-asset and
liquid alternative funds.
Cash management AUM decreased to
Net market depreciation of
AUM decreased
44 --------------------------------------------------------------------------------
Component Changes in AUM for the Twelve Months Ended
The following table presents the component changes in AUM by client type and
product type for the twelve months ended
Net March 31, inflows Market FX March 31, Average (in millions) 2021 (outflows) change impact(1) 2022 AUM(2)
Retail:
Equity$ 407,715 $ 33,928 $ 10,287 $ (5,887 ) $ 446,043 $ 446,567 Fixed income 349,640 18,177 (21,686 ) (2,419 ) 343,712 357,330 Multi-asset 139,115 11,562 (568 ) (629 ) 149,480 149,461 Alternatives 37,707 12,078 409 (306 ) 49,888 44,551 Retail subtotal 934,177 75,745 (11,558 ) (9,241 ) 989,123 997,909 ETFs: Equity 2,077,818 197,603 83,560 (8,560 ) 2,350,421 2,288,811 Fixed income 667,829 85,404 (36,053 ) (4,413 ) 712,767 710,392 Multi-asset 6,958 1,769 (13 ) 2 8,716 8,120 Alternatives 60,919 8,477 9,228 (32 ) 78,592 67,029 ETFs subtotal 2,813,524 293,253 56,722 (13,003 ) 3,150,496 3,074,352 Institutional: Active: Equity 176,081 7,468 8,021 (2,748 ) 188,822 186,121 Fixed income 692,474 59,043 (26,264 ) (7,028 ) 718,225 726,296 Multi-asset 522,220 88,628 17,578 (10,583 ) 617,843 598,147 Alternatives 133,655 13,793 5,162 (1,333 ) 151,277 142,739 Active subtotal 1,524,430 168,932 4,497 (21,692 ) 1,676,167 1,653,303 Index: Equity 2,084,167 (111,155 ) 191,838 (31,092 ) 2,133,758 2,143,929 Fixed income 910,517 14,396 (16,287 ) (37,459 ) 871,167 933,864 Multi-asset 9,079 (208 ) 511 (240 ) 9,142 9,471 Alternatives 5,387 (990 ) 1,456 (157 ) 5,696 5,625 Index subtotal 3,009,150 (97,957 ) 177,518 (68,948 ) 3,019,763 3,092,889 Institutional subtotal 4,533,580 70,975 182,015 (90,640 ) 4,695,930 4,746,192 Long-term 8,281,281 439,973 227,179 (112,884 ) 8,835,549 8,818,453 Cash management 703,916 27,759 (1,640 ) (5,096 ) 724,939 728,633 Advisory(3) 22,214 (13,356 ) 160 7 9,025 13,606 Total$ 9,007,411 $ 454,376 $ 225,699 $ (117,973 ) $ 9,569,513 $ 9,560,692
(1) Foreign exchange reflects the impact of translating non-US dollar denominated
AUM into US dollars for reporting purposes.
(2) Average AUM is calculated as the average of the month-end spot AUM amounts
for the trailing thirteen months.
(3) Advisory AUM represents mandates linked to purchases and disposition of
assets and portfolios on behalf of official institutions and long-term portfolio liquidation assignments. 45
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The following table presents the component changes in AUM by investment style
and product type for the twelve months ended
Net March 31, inflows Market FX March 31, Average (in millions) 2021 (outflows) change impact(1) 2022 AUM(2) Active: Equity$ 443,780 $ 29,750 $ 5,568 $ (6,249 ) $ 472,849 $ 477,970 Fixed income 1,021,168 72,016 (46,740 )
(8,631 ) 1,037,813 1,060,789 Multi-asset 661,333 100,186 17,008 (11,212 ) 767,315 747,602 Alternatives 171,361 25,870 5,570 (1,639 ) 201,162 187,289 Active subtotal 2,297,642 227,822 (18,594 ) (27,731 ) 2,479,139 2,473,650 Index and ETFs: ETFs: Equity 2,077,818 197,603 83,560 (8,560 ) 2,350,421 2,288,811 Fixed income 667,829 85,404 (36,053 ) (4,413 ) 712,767 710,392 Multi-asset 6,958 1,769 (13 ) 2 8,716 8,120 Alternatives 60,919 8,477 9,228 (32 ) 78,592 67,029 ETFs subtotal 2,813,524 293,253 56,722 (13,003 ) 3,150,496 3,074,352 Non-ETF Index: Equity 2,224,183 (99,509 ) 204,578 (33,478 ) 2,295,774 2,298,647 Fixed income 931,463 19,600 (17,497 ) (38,275 ) 895,291 956,701 Multi-asset 9,081 (204 ) 513 (240 ) 9,150 9,477 Alternatives 5,388 (989 ) 1,457 (157 ) 5,699 5,626 Non-ETF Index subtotal 3,170,115 (81,102 ) 189,051 (72,150 ) 3,205,914 3,270,451 Index & ETFs subtotal 5,983,639 212,151 245,773 (85,153 ) 6,356,410 6,344,803 Long-term 8,281,281 439,973 227,179 (112,884 ) 8,835,549 8,818,453 Cash management 703,916 27,759 (1,640 ) (5,096 ) 724,939 728,633 Advisory(3) 22,214 (13,356 ) 160 7 9,025 13,606 Total$ 9,007,411 $ 454,376 $ 225,699 $ (117,973 ) $ 9,569,513 $ 9,560,692
The following table presents the component changes in AUM by product type for
the twelve months ended
Net March 31, inflows Market FX
AUM(2) Equity$ 4,745,781 $ 127,844 $ 293,706 $ (48,287 ) $ 5,119,044 $ 5,065,428 Fixed income 2,620,460 177,020 (100,290 ) (51,319 ) 2,645,871 2,727,882 Multi-asset 677,372 101,751 17,508 (11,450 ) 785,181 765,199 Alternatives: Illiquid 92,207 13,769 4,356 (1,191 ) 109,141 99,781 alternatives Liquid alternatives 76,266 10,880 480 (300 ) 87,326 83,773 Currency and 69,195 8,709 11,419 (337 ) 88,986 76,390 commodities(4) Alternatives 237,668 33,358 16,255 (1,828 ) 285,453 259,944 subtotal Long-term 8,281,281 439,973 227,179 (112,884 ) 8,835,549 8,818,453 Cash management 703,916 27,759 (1,640 ) (5,096 ) 724,939 728,633 Advisory(3) 22,214 (13,356 ) 160 7 9,025 13,606 Total$ 9,007,411 $ 454,376 $ 225,699 $ (117,973 ) $ 9,569,513 $ 9,560,692
(1) Foreign exchange reflects the impact of translating non-US dollar denominated
AUM into US dollars for reporting purposes.
(2) Average AUM is calculated as the average of the month-end spot AUM amounts
for the trailing thirteen months.
(3) Advisory AUM represents mandates linked to purchases and disposition of
assets and portfolios on behalf of official institutions and long-term
portfolio liquidation assignments.
(4) Amounts include commodity ETFs.
46 --------------------------------------------------------------------------------
AUM increased
Long-term net inflows of
• ETFs net inflows of
equity, strategic and precision ETFs, and across asset classes. Equity net
inflows of
market exposures. Fixed income net inflows of
flows into treasuries, inflation-protected, municipal and core bond ETFs.
By region, ETFs net inflows were diversified with$189 billion of net inflows in US-listed ETFs and$86 billion of net inflows in European-listed ETFs.
• Institutional active net inflows of
disclosed impact of a significant outsourced chief investment officer
("OCIO") mandate from a
well as a more recent significant active fixed income mandate from an
insurance client and an OCIO mandate from an
inflows also reflected continued growth in
illiquid alternatives and active equity strategies.
• Institutional index net outflows of
discussed impact of a
in the second quarter of 2021, as well as approximately
inflows from two large institutional clients in the first quarter of 2022.
Equity net outflows of$111 billion were partially offset by fixed income net inflows of$14 billion .
• Retail net inflows of
inflows reflected strength in thematic and global equity and US growth
equity funds, natural resources, unconstrained, municipal and total return
fixed income funds, multi-asset and alternatives funds.
Cash management AUM increased to
Net market appreciation of
AUM decreased
47 --------------------------------------------------------------------------------
DISCUSSION OF FINANCIAL RESULTS
The Company's results of operations for the three months endedMarch 31, 2022 and 2021 are discussed below. For a further description of the Company's revenue and expense, see the Company's Annual Report on Form 10-K for the year endedDecember 31, 2021 ("2021 Form 10-K").
Revenue
The table below presents detail of revenue for the three months ended
Three Months Ended March 31, (in millions) 2022 2021
Investment advisory, administration fees and
securities lending revenue: Equity: Active$ 616 $ 576 ETFs 1,158 1,068 Non-ETF Index 187 176 Equity subtotal 1,961 1,820 Fixed income: Active 534 525 ETFs 289 295 Non-ETF Index 118 113 Fixed income subtotal 941 933 Multi-asset 359 328 Alternatives: Illiquid alternatives 179 168 Liquid alternatives 167 147 Currency and commodities(1) 56 53 Alternatives subtotal 402 368 Long-term 3,663 3,449 Cash management 170 143
Total investment advisory, administration fees and 3,833 3,592
securities lending revenue Investment advisory performance fees: Equity 12 26 Fixed income 9 14 Multi-asset 5 8 Alternatives: Illiquid alternatives 37 7 Liquid alternatives 35 74 Alternatives subtotal 72 81 Total performance fees 98 129 Technology services revenue 341 306 Distribution fees: Retrocessions 279 238 12b-1 fees (US mutual fund distribution fees) 88 85 Other 14 17 Total distribution fees 381 340 Advisory and other revenue: Advisory 16 15 Other 30 16 Total advisory and other revenue 46 31 Total revenue$ 4,699 $ 4,398
(1) Amounts include commodity ETFs.
48 --------------------------------------------------------------------------------
The table below lists a percentage breakdown of base fees and securities lending revenue and average AUM by product type:
Three Months Ended
Percentage of Base Fees and Percentage of Average AUM Securities Lending Revenue by Product Type(1) 2022 2021 2022 2021 Equity: Active 16 % 16 % 5 % 5 % ETFs 30 % 30 % 24 % 23 % Non-ETF Index 5 % 5 % 24 % 24 % Equity subtotal 51 % 51 % 53 % 52 % Fixed income: Active 14 % 15 % 11 % 10 % ETFs 8 % 8 % 7 % 8 % Non-ETF Index 3 % 3 % 10 % 11 % Fixed income subtotal 25 % 26 % 28 % 29 % Multi-asset 9 % 9 % 8 % 8 % Alternatives: Illiquid alternatives 5 % 5 % 1 % 1 % Liquid alternatives 4 % 4 % 1 % 1 % Currency and commodities(2) 2 % 1 % 1 % 1 % Alternatives subtotal 11 % 10 % 3 % 3 % Long-term 96 % 96 % 92 % 92 % Cash management 4 % 4 % 8 % 8 % Total excluding Advisory AUM 100 % 100 % 100 % 100 %
(1) Average AUM is calculated as the average of the month-end spot AUM amounts
for the trailing four months.
(2) Amounts include commodity ETFs.
Three Months Ended
Revenue increased
Investment advisory, administration fees and securities lending revenue of$3,833 million increased$241 million from$3,592 million for the three months endedMarch 31, 2021 , primarily driven by strong organic base fee growth. Securities lending revenue of$138 million increased from$127 million from the three months endedMarch 31, 2021 , primarily reflecting higher spreads and higher average balances of securities on loan. Investment advisory performance fees of$98 million decreased$31 million from$129 million for the three months endedMarch 31, 2021 , primarily reflecting lower revenue from liquid alternative and long-only products, partially offset by higher revenue from illiquid alternative products.
Technology services revenue of
49 --------------------------------------------------------------------------------
Expense Three Months Ended March 31, (in millions) 2022 2021 Expense: Employee compensation and benefits$ 1,498 $ 1,409 Distribution and servicing costs: Retrocessions 279 238 12b-1 costs 86 83 Other 209 184 Total distribution and servicing costs 574 505 Direct fund expense 329 320 General and administration expense: Marketing and promotional 60 35 Occupancy and office related 99 79 Portfolio services 69 65 Sub-advisory 22 22 Technology 145 104 Professional services 40 39 Communications 11 11 Foreign exchange remeasurement (3 ) 4 Contingent consideration fair value adjustments 1 3 Product launch costs - 178 Other general and administration 52 45 Total general and administration expense 496 585 Amortization of intangible assets 38 34 Total expense$ 2,935 $ 2,853 50
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Three Months Ended
Expense increased
Employee compensation and benefits expense increased
General and administration expense decreased$89 million from the three months endedMarch 31, 2021 , primarily driven by$178 million of product launch costs incurred in the first quarter of 2021, partially offset by higher technology and marketing and promotional expense. The increase also reflected higher occupancy and office related expense, including$12 million of noncash occupancy expense related to the lease of office space for the Company's future headquarters located at 50 Hudson Yards inNew York ("Lease cost - Hudson Yards"), which it expects to begin to occupy in late 2022 (and begin lease payments inMay 2023 ). Lease cost - Hudson Yards has been excluded from our "as adjusted" financial results. See Non-GAAP Financial Measures for further information on as adjusted items. 51
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Nonoperating Results
The summary of nonoperating income (expense), less net income (loss) attributable to NCI for the three months endedMarch 31, 2022 and 2021 was as follows: Three Months Ended March 31, (in millions) 2022 2021
Nonoperating income (expense), GAAP basis
(73 ) 74
Nonoperating income (expense), net of NCI(1)(2)
Three Months Ended March 31, (in millions) 2022 2021 Net gain (loss) on investments(1)(2) Private equity$ 10 $ 22 Real assets 13 3 Other alternatives(3) 4 13 Other investments(4) (75 ) (3 ) Subtotal (48 ) 35 Other gains (losses) 19 (27 ) Total net gain (loss) on investments(1)(2) (29 ) 8 Interest and dividend income 18 19 Interest expense (54 ) (55 ) Net interest expense (36 ) (36 ) Nonoperating income (expense)(1)$ (65 ) $ (28 )
(1) Net of net income (loss) attributable to NCI.
(2) Management believes nonoperating income (expense), less net income (loss)
attributable to NCI, is an effective measure for reviewing BlackRock's
nonoperating results, which ultimately impacts BlackRock's book value. See
Non-GAAP Financial Measures for further information on other non-GAAP
financial measures for the three months ended
(3) Amounts primarily include net gains (losses) related to credit funds, direct
hedge fund strategies and hedge fund solutions.
(4) Amounts primarily include net gains (losses) related to unhedged equity,
fixed income and multi-asset seed investments. 52
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Income Tax Expense GAAP As Adjusted Three Months Ended Three Months Ended March 31, March 31, (in millions) 2022 2021 2022 2021 Operating income(1)$ 1,764 $ 1,545 $ 1,822 $ 1,599 Total nonoperating income (expense)(1)(2) $ (65 )$ (28 ) $ (65 )$ (28 ) Income before income taxes$ 1,699 $ 1,517 $ 1,757 $ 1,571 Income tax expense $ 263$ 318 $ 295$ 331 Effective tax rate 15.5 % 20.9 % 16.8 % 20.9 %
(1) As adjusted items are described in more detail in Non-GAAP Financial
Measures. Beginning in the first quarter of 2022, BlackRock updated the
definitions of operating income, as adjusted, operating margin, as adjusted,
and net income attributable to
adjustments. Such measures have been recast for 2021 to reflect the inclusion
of such new adjustments. For further information, refer to the Current Report
on Form 8-K furnished on
(2) Net of net income (loss) attributable to NCI.
First quarter 2022 income tax expense included$133 million of discrete tax benefits related to stock-based compensation awards that vested in the first quarter and the resolution of certain outstanding tax matters. In addition, first quarter 2022 GAAP income tax expense included$18 million of net noncash tax benefits related to the revaluation of certain deferred income tax liabilities, which was excluded from our as adjusted results, as it will not have a cash flow impact and to ensure comparability among periods presented.
First quarter 2021 income tax expense included
53 --------------------------------------------------------------------------------
STATEMENT OF FINANCIAL CONDITION OVERVIEW
As Adjusted Statement of Financial Condition
The following table presents a reconciliation of the condensed consolidated statement of financial condition presented on a GAAP basis to the condensed consolidated statement of financial condition, excluding the impact of separate account assets and separate account collateral held under securities lending agreements (directly related to lending separate account securities) and separate account liabilities and separate account collateral liabilities under securities lending agreements and consolidated sponsored investment products ("CIPs"). The Company presents the as adjusted statement of financial condition as additional information to enable investors to exclude certain assets that have equal and offsetting liabilities or NCI that ultimately do not have an impact on stockholders' equity or cash flows. Management views the as adjusted statement of financial condition, which contains non-GAAP financial measures, as an economic presentation of the Company's total assets and liabilities; however, it does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.
Separate Account Assets and Liabilities and Separate Account Collateral Held under Securities Lending Agreements
Separate account assets are maintained byBlackRock Life Limited , a wholly owned subsidiary of the Company that is a registered life insurance company in theUK , and represent segregated assets held for purposes of funding individual and group pension contracts. The Company records equal and offsetting separate account liabilities. The separate account assets are not available to creditors of the Company and the holders of the pension contracts have no recourse to the Company's assets. The net investment income attributable to separate account assets accrues directly to the contract owners and is not reported on the condensed consolidated statements of income. While BlackRock has no economic interest in these assets or liabilities, BlackRock earns an investment advisory fee for the service of managing these assets on behalf of its clients. In addition, the Company records on its condensed consolidated statements of financial condition the separate account collateral obtained underBlackRock Life Limited securities lending arrangements for which it has legal title as its own asset in addition to an equal and offsetting separate account collateral liability for the obligation to return the collateral. The collateral is not available to creditors of the Company, and the borrowers under the securities lending arrangements have no recourse to the Company's assets.
Consolidated Sponsored Investment Products
The Company consolidates certain sponsored investment products accounted for as variable interest entities ("VIEs") and voting rights entities ("VREs"), (collectively, "CIPs"). See Note 2, Significant Accounting Policies, in the notes to the consolidated financial statements contained in the 2021 Form 10-K for more information on the Company's consolidation policy. 54 -------------------------------------------------------------------------------- The Company cannot readily access cash and cash equivalents or other assets held by CIPs to use in its operating activities. In addition, the Company cannot readily sell investments held by CIPs in order to obtain cash for use in the Company's operations. March 31, 2022 Separate Account GAAP Assets/ As (in millions) Basis Collateral(1) CIPs(2) Adjusted Assets Cash and cash equivalents$ 7,262 $ -$ 376 $ 6,886 Accounts receivable 3,801 - - 3,801 Investments 7,615 - 1,327 6,288 Separate account assets and collateral held under securities lending agreements 82,436 82,436 - - Operating lease right-of-use assets 1,583 - - 1,583 Other assets(3) 6,866 - 85 6,781 Subtotal 109,563 82,436 1,788 25,339 Goodwill and intangible assets, net 33,764 - - 33,764 Total assets$ 143,327 $ 82,436 $ 1,788 $ 59,103 Liabilities Accrued compensation and benefits$ 1,104 $ - $ -$ 1,104 Accounts payable and accrued liabilities 1,451 - - 1,451 Borrowings 7,430 - - 7,430 Separate account liabilities and collateral liabilities under securities lending agreements 82,436 82,436 - - Deferred income tax liabilities(4) 2,857 - - 2,857 Operating lease liabilities 1,842 - - 1,842 Other liabilities 7,348 - 491 6,857 Total liabilities 104,468 82,436 491 21,541 EquityTotal BlackRock, Inc. stockholders' equity 37,489 - - 37,489 Noncontrolling interests 1,370 - 1,297 73 Total equity 38,859 - 1,297 37,562 Total liabilities and equity$ 143,327 $ 82,436 $ 1,788 $ 59,103
(1) Amounts represent segregated client assets and related liabilities, in which
BlackRock has no economic interest. BlackRock earns an investment advisory
fee for the service of managing these assets on behalf of its clients.
(2) Amounts represent the impact of consolidating CIPs.
(3) Amount includes property and equipment and other assets.
(4) Amount includes approximately
related to goodwill and intangibles.
The following discussion summarizes the significant changes in assets and liabilities on a GAAP basis. Please see the condensed consolidated statements of financial condition as ofMarch 31, 2022 andDecember 31, 2021 contained in Part I, Item 1 of this filing. The discussion does not include changes related to assets and liabilities that are equal and offsetting and have no impact on BlackRock's stockholders' equity.
Assets. Cash and cash equivalents at
Investments, including the impact of CIPs, increased$353 million fromDecember 31, 2021 (for more information see Investments herein).Goodwill and intangible assets decreased$40 million fromDecember 31, 2021 , primarily due to amortization of intangible assets. Other assets increased$3.3 billion fromDecember 31, 2021 , primarily related to an increase in unit trust receivables (substantially offset by an increase in unit trust payables recorded within other liabilities). 55 -------------------------------------------------------------------------------- Liabilities. Accrued compensation and benefits atMarch 31, 2022 decreased$1.8 billion fromDecember 31, 2021 , primarily due to 2021 incentive compensation cash payments in the first quarter of 2022, partially offset by 2022 incentive compensation accruals. Accounts payable and accrued liabilities atMarch 31, 2022 increased$54 million fromDecember 31, 2021 , primarily due to increased accruals. Other liabilities increased$3.3 billion fromDecember 31, 2021 , primarily due to higher unit trust payables (substantially offset by an increase in unit trust receivables recorded within other assets), and higher other liabilities of CIPs, including deferred carried interest liabilities. Net deferred income tax liabilities atMarch 31, 2022 increased$99 million fromDecember 31, 2021 , primarily due to the effects of temporary differences associated with stock-based compensation.
Investments
The Company's investments were$7.6 billion and$7.3 billion atMarch 31, 2022 andDecember 31, 2021 , respectively. Investments include CIPs accounted for as VIEs and VREs. Management reviews BlackRock's investments on an "economic" basis, which eliminates the portion of investments that does not impact BlackRock's book value or net income attributable to BlackRock. BlackRock's management does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. The Company presents investments, as adjusted, to enable investors to understand the portion of investments that is owned by the Company, net of NCI, as a gauge to measure the impact of changes in net nonoperating income (expense) on investments to net income (loss) attributable to BlackRock. The Company further presents net "economic" investment exposure, net of hedged investments, to reflect another helpful measure for investors. The impact of certain investments is substantially mitigated by swap hedges. Carried interest capital allocations are excluded as there is no impact to BlackRock's stockholders' equity until such amounts are realized as performance fees. Finally, the Company's regulatory investment inFederal Reserve Bank stock, which is not subject to market or interest rate risk, is excluded from the Company's net economic investment exposure. March 31, December 31, (in millions) 2022 2021 Investments, GAAP$ 7,615 $ 7,262 Investments held by CIPs (4,916 ) (4,623 ) Net interest in CIPs(1) 3,589 3,391 Investments, as adjusted 6,288 6,030 Federal Reserve Bank stock (96 ) (96 ) Hedged investments (688 ) (720 ) Carried interest (1,778 ) (1,555 )
Total "economic" investment exposure(2)
(1) Amounts included
of
the Company's "economic" investment exposure.
(2) Amounts exclude investments in strategic minority investments included in
other assets on the condensed consolidated statements of financial condition.
56 -------------------------------------------------------------------------------- The following table represents the carrying value of the Company's economic investment exposure, by asset type, atMarch 31, 2022 andDecember 31, 2021 : March 31, December 31, (in millions) 2022 2021 Equity(1)$ 1,311 $ 1,352 Fixed income(2) 606 600 Multi-asset(3) 120 125 Alternatives: Private equity 974 960 Real assets 306 279 Other alternatives(4) 409 343 Alternatives subtotal 1,689 1,582
Total "economic" investment exposure
(1) Equity includes unhedged seed investments in equity mutual funds/strategies
and equity securities.
(2) Fixed income includes unhedged seed investments in fixed income mutual
funds/strategies, bank loans and
regulatory purposes.
(3) Multi-asset includes unhedged seed investments in multi-asset mutual
funds/strategies.
(4) Other alternatives primarily include co-investments in direct hedge fund
strategies and hedge fund solutions.
As adjusted investment activity for the three months endedMarch 31, 2022 was as follows: Three Months Ended (in millions)March 31, 2022 Investments, as adjusted, beginning balance $
6,030
Purchases/capital contributions 392 Sales/maturities (209 ) Distributions(1)
(46 ) Market appreciation(depreciation)/earnings from equity method investments
(86 ) Carried interest capital allocations/(distributions)
223
Other(2) (16 ) Investments, as adjusted, ending balance $ 6,288 (1) Amount includes distributions representing return of capital and return on investments. (2) Amount includes the impact of foreign exchange movements. 57
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LIQUIDITY AND CAPITAL RESOURCES
BlackRock Cash Flows Excluding the Impact of CIPs
The condensed consolidated statements of cash flows include the cash flows of the CIPs. The Company uses an adjusted cash flow statement, which excludes the impact of CIPs, as a supplemental non-GAAP measure to assess liquidity and capital requirements. The Company believes that its cash flows, excluding the impact of the CIPs, provide investors with useful information on the cash flows of BlackRock relating to its ability to fund additional operating, investing and financing activities. BlackRock's management does not advocate that investors consider such non-GAAP measures in isolation from, or as a substitute for, its cash flows presented in accordance with GAAP.
The following table presents a reconciliation of the condensed consolidated statements of cash flows presented on a GAAP basis to the condensed consolidated statements of cash flows, excluding the impact of the cash flows of CIPs:
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