BLACKROCK, INC. 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, information and cyber security 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) terrorist activities, civil unrest, international hostilities and natural disasters, which may adversely affect the general economy, domestic and local financial and capital markets, specific industries or BlackRock; (18) the ability to attract and retain highly talented professionals; (19) fluctuations in the carrying value of BlackRock's economic investments; (20) 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; (21) BlackRock's success in negotiating distribution arrangements and maintaining distribution channels for its products; (22) the failure by a key vendor of BlackRock to fulfill its obligations to the Company; (23) operational, technological and regulatory risks associated with BlackRock's major technology partnerships; (24) any disruption to the operations of third parties whose functions are integral to BlackRock's exchange-traded funds ("ETF") platform; (25) 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 (26) the impact of problems at other financial institutions or the failure or negative performance of products at other financial institutions. 39 --------------------------------------------------------------------------------
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$9.5 trillion of AUM atJune 30, 2021 . With approximately 16,900 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,Cachematrix and FutureAdvisor, 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, and existing and new variants of
COVID-19, affect 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 duration of the pandemic and any
recovery period, the emergence and spread of 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. See Part II, Item 1A - Risk Factors, of
this filing for further information on the possible future impact of the
COVID-19 pandemic on BlackRock's business, results of operations and financial
condition.
40
--------------------------------------------------------------------------------
United Kingdom Exit from
OnDecember 31, 2020 , theUnited Kingdom ("UK") and theEuropean Union ("EU") reverted to being distinct regulatory, legal and customs territories. TheUK and the EU concluded a free trade agreement, known as the "EU-UK Trade and Cooperation Agreement." The agreement does not include any substantive provisions governing cross-border trade in financial services between theUK and the EU. As a result, sinceJanuary 1, 2021 , cross-border financial services trade between theUK and the EU has been governed by their respective financial services regulations and market access regimes. BlackRock implemented a number of steps to prepare for this outcome. These steps, which may add complexity to BlackRock's future European operations, include effecting organizational, governance and operational changes, applying for and receiving additional licenses and permissions in the EU, and engaging in client communications. In addition, depending on how the future relationship between theUK and the EU develops, BlackRock may experience further organizational and operational challenges and incur additional costs in connection with its European operations, particularly with regard to delegation and outsourcing, which may impede the Company's growth or impact its financial performance.
Acquisition
OnFebruary 1, 2021 , the Company acquired 100% of the equity interests ofAperio Group, LLC (the "Aperio Transaction" or "Aperio"), a pioneer in customizing tax-optimized index equity separately managed accounts ("SMAs") for approximately$1.1 billion in cash, using existing cash resources. The acquisition ofAperio increased BlackRock's SMA assets under management and expanded the breadth of the Company's capabilities via tax-managed strategies across factors, broad market indexing, and investor Environmental, Social, and Governance preferences across all asset classes. 41 --------------------------------------------------------------------------------
EXECUTIVE SUMMARY
Three Months Ended Six Months Ended
June 30, June 30,
(in millions, except shares and per
share data) 2021 2020 2021 2020
GAAP basis:
Total revenue $ 4,820 $ 3,648 $ 9,218 $ 7,358
Total expense 2,889 2,242 5,742 5,268
Operating income $ 1,931 $ 1,406 $ 3,476 $ 2,090
Operating margin 40.1 % 38.5 % 37.7 % 28.4 %
Nonoperating income (expense), less net
income (loss)
attributable to noncontrolling
interests 101 169 73 277
Income tax expense (654 ) (361 ) (972 ) (347 )
Net income attributable to BlackRock
$ 2,577 $ 2,020 Diluted earnings per common share$ 8.92 $ 7.85 $ 16.69 $ 12.99 Effective tax rate 32.2 % 22.9 % 27.4 % 14.7 % As adjusted(1): Operating income$ 1,931 $ 1,406 $ 3,476 $ 2,679 Operating margin 44.9 % 43.7 % 44.7 % 42.7 % Nonoperating income (expense), less net income (loss) attributable to noncontrolling interests $ 101 $ 169 $ 73 $ 155 Net income attributable to BlackRock$ 1,549 $ 1,214 $ 2,748 $ 2,246 Diluted earnings per common share$ 10.03 $ 7.85 $ 17.80 $ 14.44 Effective tax rate 23.8 % 22.9 % 22.6 % 20.7 % Other: AUM (end of period)$ 9,495,993 $ 7,317,949 $ 9,495,993 $ 7,317,949 Diluted weighted-average common shares outstanding 154,417,581 154,712,032 154,359,353 155,556,187 Shares outstanding (end of period) 152,298,784 152,460,239 152,298,784 152,460,239 Book value per share(2)$ 236.59 $ 214.68 $ 236.59 $ 214.68 Cash dividends declared and paid per share$ 4.13 $ 3.63 $ 8.26 $ 7.26 (1) As adjusted items are described in more detail in Non-GAAP Financial Measures.
(2) Total BlackRock stockholders' equity divided by total shares outstanding at
June 30 of the respective period-end. 42
--------------------------------------------------------------------------------
THREE MONTHS ENDED
GAAP. Operating income of$1,931 million increased$525 million and operating margin of 40.1% increased 160 bps from the second quarter of 2020. Increases in operating income and operating margin reflected significant market gains as well as strong organic growth, higher performance fees and technology services revenue, partially offset by higher expense, including higher employee compensation and benefits, higher volume-related expense and higher general and administration expense. Nonoperating income (expense) less net income (loss) attributable to noncontrolling interests ("NCI") decreased$68 million from the second quarter of 2020, reflecting lower mark-to-market gains on the Company'sun -hedged seed capital portfolios and certain minority investments, partially offset by higher mark-to-market gains on the Company's private equity co-investment portfolio.
Second quarter 2021 income tax expense included
Earnings per diluted common share increased
As Adjusted. Operating income of$1,931 million increased$525 million and operating margin of 44.9% increased 120 bps from the second quarter of 2020. Earnings per diluted common share increased$2.18 , or 28%, from the second quarter of 2020. The noncash net tax expense related to the revaluation of certain deferred tax assets and liabilities described above has been excluded from as adjusted results.
SIX MONTHS ENDED
GAAP. Operating income of$3,476 million increased$1,386 million and operating margin of 37.7% increased 930 bps from the six months endedJune 30, 2020 . Increases in operating income and operating margin reflected the impact of$589 million related to the previously reported charitable contribution of BlackRock's remaining 20% stake in PennyMac Financial Services, Inc. (the "Charitable Contribution") during the six months endedJune 30, 2020 . Operating income and operating margin also reflected higher investment advisory and administration fees (collectively "base fees"), performance fees and technology services revenue, partially offset by higher employee compensation and benefits expense and higher product launch costs in 2021, including the impact of$178 million associated with theMarch 2021 close of the$4.9 billion BlackRock Innovation and Growth Trust. Nonoperating income (expense) less net income (loss) attributable to NCI decreased$204 million from the six months endedJune 30, 2020 , reflecting the impact of a pre-tax gain of approximately$240 million in connection with a recapitalization of iCapitalNetwork, Inc. ("iCapital") and$122 million pre-tax gain related to the Charitable Contribution during the six months endedJune 30, 2020 , partially offset by mark-to-market gains on the Company's co-investment andun -hedged seed capital portfolios during the six months endedJune 30, 2021 . Income tax expense for the six months endedJune 30, 2021 reflected the$171 million noncash net expense described above. Income tax expense for the six months endedJune 30, 2020 included a discrete tax benefit of$241 million recognized in connection with the Charitable Contribution. Income tax expense for the six months endedJune 30, 2021 and 2020 also reflected$39 million and$66 million , respectively, of discrete tax benefits, including benefits related to stock-based compensation awards that vested in the first quarter of each year. See Income Tax Expense within Discussion of Financial Results for more information. Earnings per diluted common share increased$3.70 , or 28%, from the six months endedJune 30, 2020 , reflecting the impact of the Charitable Contribution incurred in the six months endedJune 30, 2020 . The increase in earnings per diluted common share also included higher revenue, partially offset by higher product launch costs, lower nonoperating income, and a higher effective tax rate in the six months endedJune 30, 2021 . As Adjusted. Operating income of$3,476 million increased$797 million and operating margin of 44.7% increased 200 bps from the six months endedJune 30, 2020 . Earnings per diluted common share increased$3.36 , or 23%, from the six months endedJune 30, 2020 , primarily due to higher operating income, partially offset by lower nonoperating income and a higher effective tax rate in the six months endedJune 30, 2021 . Income tax expense for the six months endedJune 30, 2021 excluded the$171 million noncash net expense described above. The financial impact related to the Charitable Contribution has been excluded from as adjusted results for the six months endedJune 30, 2020 . See Non-GAAP Financial Measures for further information on as adjusted items and the reconciliation to accounting principles generally accepted inthe United States ("GAAP").
For further discussion of BlackRock's revenue, expense, nonoperating results and income tax expense, see Discussion of Financial Results herein.
43
--------------------------------------------------------------------------------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 the comparability of this information 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.
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 Six Months Ended
June 30, June 30,
(in millions) 2021 2020 2021 2020
Operating income, GAAP basis $ 1,931 $ 1,406 $ 3,476 $ 2,090
Non-GAAP expense adjustment:
Charitable Contribution - - - 589
Operating income, as adjusted 1,931 1,406 3,476 2,679
Product launch costs and
commissions - - 185 87
Operating income used for operating
margin
measurement $ 1,931 $ 1,406 $ 3,661 $ 2,766
Revenue, GAAP basis $ 4,820 $ 3,648 $ 9,218 $ 7,358
Non-GAAP adjustments:
Distribution fees (369 ) (253 ) (709 ) (529 )
Investment advisory fees (154 ) (176 ) (319 ) (345 )
Revenue used for operating margin
measurement $ 4,297 $ 3,219 $ 8,190 $ 6,484
Operating margin, GAAP basis 40.1 % 38.5 % 37.7 % 28.4 %
Operating margin, as adjusted 44.9 % 43.7 % 44.7 % 42.7 %
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 and to determine the long-term and annual compensation of the Company's senior-level employees. Furthermore, this metric is used to evaluate the Company's relative performance against industry peers, as it 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.
• Operating income, as adjusted, includes a non-GAAP expense adjustment
during the six months ended
expense of $589 million has been excluded from operating income, as
adjusted, due to its nonrecurring nature.
• 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.
44
--------------------------------------------------------------------------------
• 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 therelationship 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 apredetermined 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) Nonoperating income (expense), less net income (loss) attributable to NCI,
as adjusted:
Three Months Ended Six Months Ended
June 30, June 30,
(in millions) 2021 2020 2021 2020
Nonoperating income (expense), GAAP
basis $ 270 $ 357 $ 316 $ 286
Less: Net income (loss) attributable to
NCI 169 188 243 9
Nonoperating income (expense), net of
NCI 101 169 73 277
Less: Gain related to the Charitable
Contribution - - - 122
Nonoperating income (expense), less net
income (loss)
attributable to NCI, as adjusted $ 101 $ 169 $ 73 $ 155
Management believes nonoperating income (expense), less net income (loss)
attributable to NCI, as adjusted, is an effective measure for reviewing
BlackRock's nonoperating contribution to its results and provides comparability
of this information among reporting periods. Management believes nonoperating
income (expense), less net income (loss) attributable to NCI, as adjusted,
provides a useful measure, for both management and investors, of BlackRock's
nonoperating results, which ultimately impact BlackRock's book value. During the
six months ended June 30, 2020 , the noncash, nonoperating pre-tax gain of $122
million related to the Charitable Contribution has been excluded from
nonoperating income (expense), less net income (loss) attributable to NCI, as
adjusted, due to its nonrecurring nature.
(3) Net income attributable to
Three Months Ended Six Months Ended
June 30, June 30,
(in millions, except per share data) 2021 2020 2021 2020
Net income attributable to BlackRock,
Inc., GAAP basis $ 1,378 $ 1,214 $ 2,577 $ 2,020
Non-GAAP adjustment:
Charitable Contribution, net of tax - - - 226
Income tax matters 171 - 171 -
Net income attributable to BlackRock,
Inc., as adjusted $ 1,549 $ 1,214 $ 2,748 $ 2,246
Diluted weighted-average common shares
outstanding 154.4 154.7 154.4 155.6
Diluted earnings per common share, GAAP
basis $ 8.92 $ 7.85 $ 16.69 $ 12.99
Diluted earnings per common share, as
adjusted $ 10.03 $ 7.85 $
17.80
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. See aforementioned discussion regarding operating income, as adjusted, operating margin, as adjusted, and nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, for information on the Charitable Contribution. 45 -------------------------------------------------------------------------------- The six months endedJune 30, 2020 included a discrete tax benefit of$241 million that was recognized in connection with the Charitable Contribution. The discrete tax benefit has been excluded from as adjusted results due to the nonrecurring nature of the Charitable Contribution. Amounts for income tax matters represent net noncash (benefits) expense primarily associated with the revaluation of certain deferred tax liabilities related to intangible assets and goodwill as a result of tax rate changes. These amounts have been excluded from the as adjusted results as these items will not have a cash flow impact and to ensure comparability among periods presented.
Per share amounts reflect net income attributable to
46
--------------------------------------------------------------------------------ASSETS UNDER MANAGEMENT
AUM for reporting purposes generally is based upon how base 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 Six Months Twelve Months
Ended Ended Ended
June 30, March 31, December 31, June 30, June 30, June 30, June 30,
(in millions) 2021 2021 2020 2020 2021 2021 2021
Retail $ 995,483 $ 934,177 $ 845,917 $ 695,154 $ 21,386 $ 57,896 $ 112,767
ETFs 3,031,505 2,813,524 2,669,007 2,162,597 75,147 143,636 263,723
Institutional:
Active 1,624,049 1,524,430 1,524,462 1,341,610 43,469 60,002 90,975
Index 3,097,073 3,009,150 2,948,683 2,482,336 (80,298 ) (69,192 ) (61,319 )
Institutional
subtotal 4,721,122 4,533,580 4,473,145 3,823,946 (36,829 ) (9,190 ) 29,656
Long-term 8,748,110 8,281,281 7,988,069 6,681,697 59,704 192,342 406,146
Cash management 727,603 703,916 666,252 619,351 23,339 62,529 99,239
Advisory(1) 20,280 22,214 22,359 16,901 (2,083 ) (2,269 ) 2,853
Total $ 9,495,993 $ 9,007,411 $ 8,676,680 $ 7,317,949 $ 80,960 $ 252,602 $ 508,238 AUM and Net Inflows (Outflows) by Investment Style and Product Type
AUM Net inflows (outflows)
Three Months Six Months Twelve Months
Ended Ended Ended
June 30, March 31, December 31, June 30, June 30, June 30, June 30,
(in millions) 2021 2021 2020 2020 2021 2021 2021
Active $ 2,446,632 $ 2,297,642 $ 2,250,887 $ 1,943,828 $ 62,750 $ 121,704 $ 199,824
Index and ETFs 6,301,478 5,983,639 5,737,182 4,737,869 (3,046 ) 70,638 206,322
Long-term 8,748,110 8,281,281 7,988,069 6,681,697 59,704 192,342 406,146
Cash management 727,603 703,916 666,252 619,351 23,339 62,529 99,239
Advisory(1) 20,280 22,214 22,359 16,901 (2,083 ) (2,269 ) 2,853
Total $ 9,495,993 $ 9,007,411 $ 8,676,680 $ 7,317,949 $ 80,960 $ 252,602 $ 508,238 AUM and Net Inflows (Outflows) by Product Type
AUM Net inflows (outflows)
Three Months Six Months Twelve Months
Ended Ended Ended
June 30, March 31, December 31, June 30, June 30, June 30, June 30,
(in millions) 2021 2021 2020 2020 2021 2021 2021
Equity $ 5,034,391 $ 4,745,781 $ 4,419,806 $ 3,519,225 $ (26,453 ) $ 23,407 $ 73,654
Fixed income 2,712,165 2,620,460 2,674,488 2,411,092 41,290 102,129 235,197
Multi-asset 748,770 677,372 658,733 551,362 36,137 49,889 63,467
Alternatives:
Illiquid alternatives 95,961 92,207 85,770 76,607 3,347 9,572 16,303
Liquid alternatives 81,560 76,266 73,218 63,120 3,319 5,673 9,262
Currency and
commodities(2) 75,263 69,195 76,054 60,291 2,064 1,672 8,263
Alternatives subtotal 252,784 237,668 235,042 200,018 8,730 16,917 33,828
Long-term 8,748,110 8,281,281 7,988,069 6,681,697 59,704 192,342 406,146
Cash management 727,603 703,916 666,252 619,351 23,339 62,529 99,239
Advisory(1) 20,280 22,214 22,359 16,901 (2,083 ) (2,269 ) 2,853
Total $ 9,495,993 $ 9,007,411 $ 8,676,680 $ 7,317,949 $ 80,960 $ 252,602 $ 508,238 (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. Approximately
held in advisory accounts associated with the
York ("FRBNY") assignment as of
as of
These holdings are excluded from Advisory AUM.
(2) Amounts include commodity ETFs.
47
--------------------------------------------------------------------------------
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
March 31, inflows Market FX June 30, Average(in millions) 2021 (outflows) change impact(1) 2021 AUM(2) Retail: Equity$ 407,715 $ 9,866 $ 28,643 $ 103 $ 446,327 $ 431,075 Fixed income 349,640 6,689 2,480 671 359,480 355,500 Multi-asset 139,115 879 7,161 73 147,228 144,138 Alternatives 37,707 3,952 748 41 42,448 40,310 Retail subtotal 934,177 21,386 39,032 888 995,483 971,023 ETFs: Equity 2,077,818 51,376 126,762 1,872 2,257,828 2,186,497 Fixed income 667,829 21,710 9,639 831 700,009 686,205 Multi-asset 6,958 379 310 16 7,663 7,359 Alternatives 60,919 1,682 3,380 24 66,005 65,379 ETFs subtotal 2,813,524 75,147 140,091
2,743 3,031,505 2,945,440 Institutional: Active: Equity 176,081 (3,958 ) 11,876 175 184,174 181,046 Fixed income 692,474 9,058 14,558 581 716,671 706,642 Multi-asset 522,220 35,148 26,086 1,128 584,582 549,152 Alternatives 133,655 3,221 1,708 38 138,622 136,351 Active subtotal 1,524,430 43,469 54,228 1,922 1,624,049 1,573,191 Index: Equity 2,084,167 (83,737 ) 143,764 1,868 2,146,062 2,127,456 Fixed income 910,517 3,833 21,230 425 936,005 931,252 Multi-asset 9,079 (269 ) 500 (13 ) 9,297 9,193 Alternatives 5,387 (125 ) 451 (4 ) 5,709 5,671 Index subtotal 3,009,150 (80,298 ) 165,945 2,276 3,097,073 3,073,572 Institutional subtotal 4,533,580 (36,829 ) 220,173 4,198 4,721,122 4,646,763 Long-term 8,281,281 59,704 399,296 7,829 8,748,110 8,563,226 Cash management 703,916 23,339 (84 ) 432 727,603 732,270 Advisory(3) 22,214 (2,083 ) 141 8 20,280 21,596 Total$ 9,007,411 $ 80,960 $ 399,353 $ 8,269 $ 9,495,993 $ 9,317,092
(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. Approximately
held in advisory accounts associated with the FRBNY assignment as of
2021 (disclosed via FRBNY reporting as of
Fixed Income ETFs AUM above. These holdings are excluded from Advisory AUM.
48
--------------------------------------------------------------------------------
The following table presents the component changes in AUM by investment style
and product type for the three months ended
Net
March 31, inflows Market FX June 30, Average
(in millions) 2021 (outflows) change impact(1) 2021 AUM(2)
Active:
Equity$ 443,780 $ 4,182 $ 31,012 $ 266 $ 479,240 $ 465,115 Fixed income 1,021,168 15,370 16,743 1,236 1,054,517 1,040,682 Multi-asset 661,333 36,026 33,246 1,201 731,806 693,285 Alternatives 171,361 7,172 2,457 79 181,069 176,660 Active subtotal 2,297,642 62,750 83,458 2,782 2,446,632 2,375,742 Index and ETFs: ETFs: Equity 2,077,818 51,376 126,762 1,872 2,257,828 2,186,497 Fixed income 667,829 21,710 9,639 831 700,009 686,205 Multi-asset 6,958 379 310 16 7,663 7,359 Alternatives 60,919 1,682 3,380 24 66,005 65,379 ETFs subtotal 2,813,524 75,147 140,091 2,743 3,031,505 2,945,440 Non-ETF Index: Equity 2,224,183 (82,011 ) 153,271 1,880 2,297,323 2,274,462 Fixed income 931,463 4,210 21,525 441 957,639 952,712 Multi-asset 9,081 (268 ) 501 (13 ) 9,301 9,198 Alternatives 5,388 (124 ) 450 (4 ) 5,710 5,672
Non-ETF Index subtotal 3,170,115 (78,193 ) 175,747 2,304 3,269,973 3,242,044 Index & ETFs subtotal 5,983,639
(3,046 ) 315,838 5,047 6,301,478 6,187,484
Long-term 8,281,281 59,704 399,296 7,829 8,748,110 8,563,226
Cash management 703,916 23,339 (84 ) 432 727,603 732,270
Advisory(3) 22,214 (2,083 ) 141 8 20,280 21,596
Total $ 9,007,411 $ 80,960 $ 399,353 $ 8,269 $ 9,495,993 $ 9,317,092 The following table presents the component changes in AUM by product type for
the three months ended
Net
March 31, inflows Market FX June 30, Average
(in millions) 2021 (outflows) change impact(1) 2021 AUM(2)
Equity $ 4,745,781 $ (26,453 ) $ 311,045 $ 4,018 $ 5,034,391 $ 4,926,074
Fixed income 2,620,460 41,290 47,907 2,508 2,712,165 2,679,599
Multi-asset 677,372 36,137 34,057 1,204 748,770 709,842
Alternatives:
Illiquid alternatives 92,207 3,347 352 55 95,961 94,238
Liquid alternatives 76,266 3,319 1,945 30 81,560 79,138
Currency and 69,195 2,064 3,990 14 75,263 74,335
commodities(4)
Alternatives subtotal 237,668 8,730 6,287 99 252,784 247,711
Long-term 8,281,281 59,704 399,296 7,829 8,748,110 8,563,226
Cash management 703,916 23,339 (84 ) 432 727,603 732,270
Advisory(3) 22,214 (2,083 ) 141 8 20,280 21,596
Total $ 9,007,411 $ 80,960 $ 399,353 $ 8,269 $ 9,495,993 $ 9,317,092 (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. Approximately
held in advisory accounts associated with the FRBNY assignment as of
2021 (disclosed via FRBNY reporting as of
Fixed Income ETFs AUM or Fixed Income AUM above. These holdings are excluded
from Advisory AUM.
(4) Amounts include commodity ETFs.
49
--------------------------------------------------------------------------------
AUM increased
Long-term net inflows of$59.7 billion were comprised of net inflows of$75.1 billion and$21.4 billion into ETFs and retail, respectively, partially offset by net outflows$36.8 billion from institutional clients. Net flows in long-term products are described below.
• ETFs net inflows of
equity and sustainable ETFs, as well as inflows into precision exposures
and renewed strength in fixed income ETFs. Net inflows were positive
across all asset classes and were led by equity and fixed income. Equity
net inflows of
equity market exposures. Fixed income net inflows of
led by flows into core, inflation linked, emerging market and municipal
bond ETFs. By region, ETFs inflows were diversified with
net inflows in US-listed ETFs and $25.9 billion of net inflows in
European-listed ETFs.
• Retail net inflows of $21.4 billion were positive in both the US andinternationally, and across all major asset classes. Equity net inflows of
fixed income net inflows of
fixed income funds. Retail alternatives net inflows of $4.0 billion were
led by event-driven and systematic multi-strategy funds.
• Institutional active net inflows of
billion of multi-asset net inflows largely driven by a significant
Outsourced Chief Investment Officer ("OCIO") mandate from a
client. Net inflows also reflected continued growth in LifePath®
target-date funds and alternatives.
• Institutional index net outflows of
of a
public pension client.
Cash management AUM increased to
Net market appreciation of
AUM increased
50
--------------------------------------------------------------------------------
Component Changes in AUM for the Six Months Ended
The following table presents the component changes in AUM by client type and
product type for the six months ended
Net
December 31, inflows Market FX June 30, Average
(in millions) 2020 (outflows) Acquisition(1) change impact(2) 2021 AUM(3)
Retail:
Equity $ 338,434 $ 24,199 $ 41,324 $ 43,286 $ (916 ) $ 446,327 $ 401,271
Fixed income 340,468 21,486 - (1,300 ) (1,174 ) 359,480 350,847
Multi-asset 132,624 4,874 - 9,837 (107 ) 147,228 139,864
Alternatives 34,391 7,337 - 787 (67 ) 42,448 38,207
Retail subtotal 845,917 57,896 41,324 52,610 (2,264 ) 995,483 930,189
ETFs:
Equity 1,905,101 117,798 - 238,644 (3,715 ) 2,257,828 2,080,914
Fixed income 690,033 23,315 - (11,332 ) (2,007 ) 700,009 685,500
Multi-asset 6,268 945 - 420 30 7,663 6,948
Alternatives 67,605 1,578 - (3,151 ) (27 ) 66,005 66,467
ETFs subtotal 2,669,007 143,636 - 224,581 (5,719 ) 3,031,505 2,839,829
Institutional:
Active:
Equity 169,522 (3,491 ) - 18,964 (821 ) 184,174 176,544
Fixed income 716,269 11,322 - (7,836 ) (3,084 ) 716,671 707,256
Multi-asset 511,242 43,631 - 32,733 (3,024 ) 584,582 532,983
Alternatives 127,429 8,540 - 3,124 (471 ) 138,622 133,087
Active subtotal 1,524,462 60,002 - 46,985 (7,400 ) 1,624,049 1,549,870
Index:
Equity 2,006,749 (115,099 ) - 264,295 (9,883 ) 2,146,062 2,076,052
Fixed income 927,718 46,006 - (25,587 ) (12,132 ) 936,005 925,527
Multi-asset 8,599 439 - 499 (240 ) 9,297 8,872
Alternatives 5,617 (538 ) - 685 (55 ) 5,709 5,619
Index subtotal 2,948,683 (69,192 ) - 239,892 (22,310 ) 3,097,073 3,016,070 Institutional subtotal 4,473,145 (9,190 )
- 286,877 (29,710 ) 4,721,122 4,565,940 Long-term 7,988,069 192,342 41,324 564,068 (37,693 ) 8,748,110 8,335,958 Cash management 666,252 62,529 - (211 ) (967 ) 727,603 697,856 Advisory(4) 22,359 (2,269 ) - 176 14 20,280 21,952 Total$ 8,676,680 $ 252,602 $ 41,324 $ 564,033 $ (38,646 ) $ 9,495,993 $ 9,055,766
(1) Amounts include AUM attributable to the Aperio Transaction.
(2) Foreign exchange reflects the impact of translating non-US dollar denominated
AUM into US dollars for reporting purposes.
(3) Average AUM is calculated as the average of the month-end spot AUM amounts
for the trailing seven months.
(4) Advisory AUM represents mandates linked to purchases and disposition of
assets and portfolios on behalf of official institutions and long-term
portfolio liquidation assignments. Approximately
held in advisory accounts associated with the FRBNY assignment as of
2021 (disclosed via FRBNY reporting as of
Fixed Income ETFs AUM above. These holdings are excluded from Advisory AUM.
51
--------------------------------------------------------------------------------
The following table presents the component changes in AUM by investment style
and product type for the six months ended
Net
December 31, inflows Market FX June 30, Average
(in millions) 2020 (outflows) Acquisition(1) change impact(2) 2021 AUM(3)
Active:
Equity $ 410,189 $ 25,202 $ - $ 45,605 $ (1,756 ) $ 479,240 $ 445,721
Fixed income 1,035,015 32,122 - (8,317 ) (4,303 ) 1,054,517 1,036,594
Multi-asset 643,864 48,504 - 42,569 (3,131 ) 731,806 672,842
Alternatives 161,819 15,876 - 3,912 (538 ) 181,069 171,293
Active subtotal 2,250,887 121,704 - 83,769 (9,728 ) 2,446,632 2,326,450
Index and ETFs:
ETFs:
Equity 1,905,101 117,798 - 238,644 (3,715 ) 2,257,828 2,080,914
Fixed income 690,033 23,315 - (11,332 ) (2,007 ) 700,009 685,500
Multi-asset 6,268 945 - 420 30 7,663 6,948
Alternatives 67,605 1,578 - (3,151 ) (27 ) 66,005 66,467
ETFs subtotal 2,669,007 143,636 - 224,581 (5,719 ) 3,031,505 2,839,829
Non-ETF Index:
Equity 2,104,516 (119,593 ) 41,324 280,940 (9,864 ) 2,297,323 2,208,146
Fixed income 949,440 46,692 - (26,406 ) (12,087 ) 957,639 947,036
Multi-asset 8,601 440 - 500 (240 ) 9,301 8,877
Alternatives 5,618 (537 ) - 684 (55 ) 5,710 5,620
Non-ETF Index subtotal 3,068,175 (72,998 ) 41,324 255,718 (22,246 ) 3,269,973 3,169,679
Index & ETFs subtotal 5,737,182 70,638 41,324 480,299 (27,965 ) 6,301,478 6,009,508
Long-term 7,988,069 192,342 41,324 564,068 (37,693 ) 8,748,110 8,335,958
Cash management 666,252 62,529 - (211 ) (967 ) 727,603 697,856
Advisory(4) 22,359 (2,269 ) - 176 14 20,280 21,952
Total $ 8,676,680 $ 252,602 $ 41,324 $ 564,033 $ (38,646 ) $ 9,495,993 $ 9,055,766 The following table presents the component changes in AUM by product type for
the six months ended
Net
December 31, inflows Market FX June 30, Average
(in millions) 2020 (outflows) Acquisition(1) change impact(2) 2021 AUM(3)
Equity $ 4,419,806 $ 23,407 $ 41,324 $ 565,189 $ (15,335 ) $ 5,034,391 $ 4,734,781
Fixed income 2,674,488 102,129 - (46,055 ) (18,397 ) 2,712,165 2,669,130
Multi-asset 658,733 49,889 - 43,489 (3,341 ) 748,770 688,667
Alternatives:
Illiquid alternatives 85,770 9,572 - 952 (333 ) 95,961 90,987
Liquid alternatives 73,218 5,673 - 2,736 (67 ) 81,560 77,169
Currency and commodities(5) 76,054 1,672 - (2,243 ) (220 ) 75,263 75,224
Alternatives subtotal 235,042 16,917 - 1,445 (620 ) 252,784 243,380
Long-term 7,988,069 192,342 41,324 564,068 (37,693 ) 8,748,110 8,335,958
Cash management 666,252 62,529 - (211 ) (967 ) 727,603 697,856
Advisory(4) 22,359 (2,269 ) - 176 14 20,280 21,952
Total $ 8,676,680 $ 252,602 $ 41,324 $ 564,033 $ (38,646 ) $ 9,495,993 $ 9,055,766 (1) Amounts include AUM attributable to the Aperio Transaction.
(2) Foreign exchange reflects the impact of translating non-US dollar denominated
AUM into US dollars for reporting purposes.
(3) Average AUM is calculated as the average of the month-end spot AUM amounts
for the trailing seven months.
(4) Advisory AUM represents mandates linked to purchases and disposition of
assets and portfolios on behalf of official institutions and long-term
portfolio liquidation assignments. Approximately
held in advisory accounts associated with the FRBNY assignment as of
2021 (disclosed via FRBNY reporting as of
Fixed Income ETFs AUM or Fixed Income AUM above. These holdings are excluded
from Advisory AUM.
(5) Amounts include commodity ETFs.
52
--------------------------------------------------------------------------------
AUM increased
Long-term net inflows of$192.3 billion were comprised of net inflows of$143.6 billion and$57.9 billion into ETFs and retail, respectively, partially offset by net outflows of$9.2 billion from institutional clients. Net flows in long-term products are described below.
• 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 investment grade corporate bonds, high yield, treasuries and
core bond ETFs. By region, ETFs inflows were diversified with
billion of net inflows in US-listed ETFs and
in European-listed ETFs.
• Retail net inflows of
respectively. Retail net inflows reflected strength in thematic and global
equity funds, global and US core fixed income funds, and alternatives
funds.
• Institutional active net inflows of
discussed impact of a significant OCIO mandate from a
and also reflected continued growth in
fixed income strategies and illiquid alternatives.
• Institutional index net outflows of
discussed impact of a
Equity net outflows of $115.1 billion were partially offset by fixed
income net inflows of $46 billion .
Cash management AUM increased to
Net market appreciation of
AUM decreased
53
--------------------------------------------------------------------------------
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
June 30, inflows Market FX June 30, Average
(in millions) 2020 (outflows) Acquisition(1) change impact(2) 2021 AUM(3)
Retail:
Equity $ 254,104 $ 47,302 $ 41,324 $ 97,009 $ 6,588 $ 446,327 $ 345,277
Fixed income 301,160 44,028 - 9,401 4,891 359,480 334,847
Multi-asset 111,934 9,296 - 25,148 850 147,228 130,418
Alternatives 27,956 12,141 - 1,923 428 42,448 34,768
Retail subtotal 695,154 112,767 41,324 133,481 12,757 995,483 845,310
ETFs:
Equity 1,470,314 197,907 - 578,981 10,626 2,257,828 1,858,812
Fixed income 634,098 56,540 - 2,637 6,734 700,009 675,322
Multi-asset 5,074 1,516 - 997 76 7,663 6,250
Alternatives 53,111 7,760 - 5,006 128 66,005 65,259
ETFs subtotal 2,162,597 263,723 - 587,621 17,564 3,031,505 2,605,643
Institutional:
Active:
Equity 133,932 (2,308 ) - 49,350 3,200 184,174 163,639
Fixed income 666,693 26,849 - 14,142 8,987 716,671 698,882
Multi-asset 426,553 52,413 - 93,379 12,237 584,582 499,070
Alternatives 114,432 14,021 - 7,477 2,692 138,622 126,717
Active subtotal 1,341,610 90,975 - 164,348 27,116 1,624,049 1,488,308
Index:
Equity 1,660,875 (169,247 ) - 623,656 30,778 2,146,062 1,937,458
Fixed income 809,141 107,780 - (19,713 ) 38,797 936,005 894,457
Multi-asset 7,801 242 - 1,296 (42 ) 9,297 8,576
Alternatives 4,519 (94 ) - 1,176 108 5,709 5,244
Index subtotal 2,482,336 (61,319 ) - 606,415 69,641 3,097,073 2,845,735 Institutional subtotal 3,823,946 29,656
- 770,763 96,757 4,721,122 4,334,043 Long-term
6,681,697 406,146 41,324 1,491,865 127,078 8,748,110 7,784,996
Cash management 619,351 99,239 - (157 ) 9,170 727,603 673,619
Advisory(4) 16,901 2,853 - 479 47 20,280 20,975
Total $ 7,317,949 $ 508,238 $ 41,324 $ 1,492,187 $ 136,295 $ 9,495,993 $ 8,479,590 (1) Amounts include AUM attributable to the Aperio Transaction.
(2) Foreign exchange reflects the impact of translating non-US dollar denominated
AUM into US dollars for reporting purposes.
(3) Average AUM is calculated as the average of the month-end spot AUM amounts
for the trailing thirteen months.
(4) Advisory AUM represents mandates linked to purchases and disposition of
assets and portfolios on behalf of official institutions and long-term
portfolio liquidation assignments. Approximately
held in advisory accounts associated with the FRBNY assignment as of
2021 (disclosed via FRBNY reporting as of
Fixed Income ETFs AUM above. These holdings are excluded from Advisory AUM.
54
--------------------------------------------------------------------------------
The following table presents the component changes in AUM by investment style
and product type for the twelve months ended
Net
June 30, inflows Market FX June 30, Average
(in millions) 2020 (outflows) Acquisition(1) change impact(2) 2021 AUM(3)
Active:
Equity $ 312,809 $ 43,888 $ - $ 116,600 $ 5,943 $ 479,240 $ 400,020
Fixed income 950,143 68,072 - 23,910 12,392 1,054,517 1,013,129
Multi-asset 538,489 61,704 - 118,526 13,087 731,806 629,486
Alternatives 142,387 26,160 - 9,402 3,120 181,069 161,484
Active subtotal 1,943,828 199,824 - 268,438 34,542 2,446,632 2,204,119
Index and ETFs:
ETFs:
Equity 1,470,314 197,907 - 578,981 10,626 2,257,828 1,858,812
Fixed income 634,098 56,540 - 2,637 6,734 700,009 675,322
Multi-asset 5,074 1,516 - 997 76 7,663 6,250
Alternatives 53,111 7,760 - 5,006 128 66,005 65,259
ETFs subtotal 2,162,597 263,723 - 587,621 17,564 3,031,505 2,605,643
Non-ETF Index:
Equity 1,736,102 (168,141 ) 41,324 653,415 34,623 2,297,323 2,046,354
Fixed income 826,851 110,585 - (20,080 ) 40,283 957,639 915,057
Multi-asset 7,799 247 - 1,297 (42 ) 9,301 8,578
Alternatives 4,520 (92 ) - 1,174 108 5,710 5,245
Non-ETF Index subtotal 2,575,272 (57,401 ) 41,324 635,806 74,972 3,269,973 2,975,234 Index & ETFs subtotal 4,737,869 206,322
41,324 1,223,427 92,536 6,301,478 5,580,877 Long-term
6,681,697 406,146 41,324 1,491,865 127,078 8,748,110 7,784,996
Cash management 619,351 99,239 - (157 ) 9,170 727,603 673,619
Advisory(4) 16,901 2,853 - 479 47 20,280 20,975
Total $ 7,317,949 $ 508,238 $ 41,324 $ 1,492,187 $ 136,295 $ 9,495,993 $ 8,479,590 The following table presents the component changes in AUM by product type for
the twelve months ended
Net
June 30, inflows Market FX June 30, Average
(in millions) 2020 (outflows) Acquisition(1) change impact(2) 2021 AUM(3)
Equity $ 3,519,225 $ 73,654 $ 41,324 $ 1,348,996 $ 51,192 $ 5,034,391 $ 4,305,186
Fixed income 2,411,092 235,197 - 6,467 59,409 2,712,165 2,603,508
Multi-asset 551,362 63,467 - 120,820 13,121 748,770 644,314
Alternatives:
Illiquid alternatives 76,607 16,303 - 1,570 1,481 95,961 85,690
Liquid alternatives 63,120 9,262 - 7,496 1,682 81,560 72,848
Currency and commodities(5) 60,291 8,263 - 6,516 193 75,263 73,450
Alternatives subtotal 200,018 33,828 - 15,582 3,356 252,784 231,988
Long-term 6,681,697 406,146 41,324 1,491,865 127,078 8,748,110 7,784,996
Cash management 619,351 99,239 - (157 ) 9,170 727,603 673,619
Advisory(4) 16,901 2,853 - 479 47 20,280 20,975
Total $ 7,317,949 $ 508,238 $ 41,324 $ 1,492,187 $ 136,295 $ 9,495,993 $ 8,479,590 (1) Amounts include AUM attributable to the Aperio Transaction.
(2) Foreign exchange reflects the impact of translating non-US dollar denominated
AUM into US dollars for reporting purposes.
(3) Average AUM is calculated as the average of the month-end spot AUM amounts
for the trailing thirteen months.
(4) Advisory AUM represents mandates linked to purchases and disposition of
assets and portfolios on behalf of official institutions and long-term
portfolio liquidation assignments. Approximately
held in advisory accounts associated with the FRBNY assignment as of
2021 (disclosed via FRBNY reporting as of
Fixed Income ETFs AUM or Fixed Income AUM above. These holdings are excluded
from Advisory AUM.
(5) Amounts include commodity ETFs.
55
--------------------------------------------------------------------------------
AUM increased
Long-term net inflows of$406.1 billion were comprised of net inflows of$263.7 billion ,$112.8 billion and$29.6 billion from ETFs, retail and institutional clients, respectively. Net flows in long-term products are described below.
• 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 investment grade corporate bonds, high yield, treasuries and
core bond ETFs. By region, ETFs net inflows were diversified with
billion of net inflows in US-listed ETFs and
in European-listed ETFs.
• Retail net inflows of
and
inflows reflected strength in thematic and global equity funds, global and
US core fixed income funds, and alternatives funds.
• Institutional active net inflows of
discussed impact of a significant OCIO mandate from a
and also reflected continued growth in
fixed income strategies and illiquid alternatives.
• Institutional index net outflows of
discussed impact of a
Equity net outflows of $169.2 billion were partially offset fixed income
net inflows of $107.8 billion .
Cash management AUM increased to
Net market appreciation of
AUM increased
56
--------------------------------------------------------------------------------DISCUSSION OF FINANCIAL RESULTS
The Company's results of operations for the three and six months endedJune 30, 2021 and 2020 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, 2020 ("2020 Form 10-K").
Revenue
The table below presents detail of revenue for the three and six months ended
Three Months Ended Six Months Ended
June 30, June 30,
(in millions) 2021 2020 2021 2020
Investment advisory, administration
fees and
securities lending revenue:
Equity:
Active $ 641 $ 381 $ 1,217 $ 779
ETFs 1,156 792 2,224 1,671
Non-ETF Index 198 178 374 341
Equity subtotal 1,995 1,351 3,815 2,791
Fixed income:
Active 545 464 1,070 945
ETFs 294 261 589 520
Non-ETF Index 116 129 229 241
Fixed income subtotal 955 854 1,888 1,706
Multi-asset 344 270 672 563
Alternatives:
Illiquid alternatives 167 128 335 276
Liquid alternatives 150 117 297 229
Currency and commodities(1) 55 35 108 67
Alternatives subtotal 372 280 740 572
Long-term 3,666 2,755 7,115 5,632
Cash management 91 211 234 389
Total investment advisory, 3,757 2,966 7,349 6,021
administration fees and
securities lending revenue
Investment advisory performance fees:
Equity 36 23 62 25
Fixed income 15 2 29 4
Multi-asset 9 2 17 3
Alternatives:
Illiquid alternatives 90 32 97 49
Liquid alternatives 190 53 264 72
Alternatives subtotal 280 85 361 121
Total performance fees 340 112 469 153
Technology services revenue 316 278 622 552
Distribution fees:
Retrocessions 264 162 502 331
12b-1 fees (US mutual fund distribution
fees) 87 78 172 169
Other 18 13 35 29
Total distribution fees 369 253 709 529
Advisory and other revenue:
Advisory 9 17 24 34
Other 29 22 45 69
Total advisory and other revenue 38 39 69 103
Total revenue $ 4,820 $ 3,648 $ 9,218 $ 7,358 (1) Amounts include commodity ETFs.
57
--------------------------------------------------------------------------------The table below lists a percentage breakdown of base fees and securities lending revenue and average AUM by product type:
Three Months Ended June 30, Six Months Ended June 30,
Percentage of Percentage of Percentage of Percentage of
Base Fees and Average AUM Base Fees and Average AUM
Securities Lending Revenue by Product Type(1) Securities Lending Revenue by Product Type(2)
2021 2020 2021 2020 2021 2020 2021 2020
Equity:
Active 18 % 13 % 5 % 4 % 19 % 12 % 5 % 4 %
ETFs 31 % 27 % 24 % 20 % 30 % 28 % 23 % 21 %
Non-ETF Index 5 % 6 % 23 % 24 % 5 % 6 % 24 % 24 %
Equity subtotal 54 % 46 % 52 % 48 % 54 % 46 % 52 % 49 %
Fixed income:
Active 14 % 16 % 12 % 12 % 14 % 16 % 11 % 12 %
ETFs 8 % 9 % 7 % 9 % 8 % 9 % 8 % 8 %
Non-ETF Index 3 % 4 % 10 % 12 % 3 % 4 % 10 % 12 %
Fixed income subtotal 25 % 29 % 29 % 33 % 25 % 29 % 29 % 32 %
Multi-asset 9 % 9 % 8 % 8 % 9 % 9 % 8 % 8 %
Alternatives:
Illiquid alternatives 5 % 4 % 1 % 1 % 5 % 5 % 1 % 1 %
Liquid alternatives 4 % 4 % 1 % 1 % 4 % 4 % 1 % 1 %
Currency and 1 % 1 % 1 % 1 % 1 % 1 %
commodities(3) 1 % 1 %
Alternatives subtotal 10 % 9 % 3 % 3 % 10 % 10 % 3 % 3 %
Long-term 98 % 93 % 92 % 92 % 98 % 94 % 92 % 92 %
Cash management 2 % 7 % 8 % 8 % 2 % 6 % 8 % 8 %
Total excluding
Advisory AUM 100 % 100 % 100 % 100 % 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) Average AUM is calculated as the average of the month-end spot AUM amounts
for the trailing seven months.
(3) Amounts include commodity ETFs.
Three Months Ended
Revenue increased
Investment advisory, administration fees and securities lending revenue of$3,757 million increased$791 million from$2,966 million for the three months endedJune 30, 2020 , primarily driven by the positive impact of market beta and foreign exchange movements on average AUM and strong organic base fee growth, partially offset by the impact of yield-related fee waivers on certain money market funds and strategic pricing changes to certain products, and lower securities lending revenue. Securities lending revenue of$140 million decreased$70 million from$210 million for the three months endedJune 30, 2020 , primarily reflecting lower spreads, partially offset by higher average balances of securities on loan.
Investment advisory performance fees of
Technology services revenue of
58
--------------------------------------------------------------------------------
Six Months Ended
Revenue increased$1,860 million , or 25%, from the six months endedJune 30, 2020 , reflecting higher base and performance fees and higher technology services revenue, partially offset by lower securities lending revenue. Investment advisory, administration fees and securities lending revenue of$7,349 million increased$1,328 million from$6,021 million for the six months endedJune 30, 2020 , primarily driven by the positive impact of market beta and foreign exchange movements on average AUM and organic growth, partially offset by the impact of yield-related fee waivers on certain money market funds and strategic pricing changes to certain products, and lower securities lending revenue. Securities lending revenue of$267 million decreased$101 million from$368 million for the six months endedJune 30, 2020 , primarily reflecting lower spreads, partially offset by higher average balances of securities on loan. Investment advisory performance fees of$469 million increased$316 million from$153 million for the six months endedJune 30, 2020 , primarily reflecting higher revenue from liquid and illiquid alternative and long-only products.
Technology services revenue of
Advisory and other revenue of
Expense
Three Months Ended Six Months Ended
June 30, June 30,
(in millions) 2021 2020 2021 2020
Expense:
Employee compensation and benefits
2,957$ 2,289 Distribution and servicing costs: Retrocessions 264 162 502 331 12b-1 costs 85 75 168 164 Other 174 192 358 379 Total distribution and servicing costs 523 429 1,028 874 Direct fund expense 320 246 640 523 General and administration expense: Marketing and promotional 53 39 88 108 Occupancy and office related 80 80 159 158 Portfolio services 87 65 174 130 Technology 129 92 233 180 Professional services 41 41 80 85 Communications 11 14 22 26 Foreign exchange remeasurement (2 ) 1 2 6 Contingent consideration fair value adjustments 1 (2 ) 4 23 Product launch costs - - 178 84 Charitable Contribution - - - 589 Other general and administration 61 58 106 141 Total general and administration expense 461 388 1,046 1,530 Amortization of intangible assets 37 27 71 52 Total expense$ 2,889 $ 2,242 $ 5,742 $ 5,268 59
--------------------------------------------------------------------------------
Three Months Ended
Expense increased
Employee compensation and benefits expense increased$396 million from the three months endedJune 30, 2020 , primarily reflecting higher incentive compensation, driven by higher operating income and higher performance fees, and higher deferred compensation, reflecting the impact of additional grants associated with prior-year compensation and certain previous acquisition-related compensation arrangements.
Direct fund expense increased
General and administration expense increased$73 million from the three months endedJune 30, 2020 , largely driven by higher technology, portfolio services, and marketing and promotional expense.
Amortization of intangible assets expense increased
Six Months Ended
Expense increased$474 million from the six months endedJune 30, 2020 , largely driven by higher employee compensation and benefits expense and higher volume-related expense, partially offset by lower general and administration expense, reflecting the impact of the Charitable Contribution incurred in the six months endedJune 30, 2020 . Expense also reflected higher product launch costs during the six months endedJune 30, 2021 . Employee compensation and benefits expense increased$668 million from the six months endedJune 30, 2020 , primarily reflecting higher incentive compensation, driven by higher operating income and higher performance fees, and higher deferred compensation.
Direct fund expense increased
General and administration expense decreased$484 million from the six months endedJune 30, 2020 , largely driven by the Charitable Contribution recorded in the six months endedJune 30, 2020 . General and administration expense also reflected higher product launch costs, higher technology and portfolio services expense, partially offset by lower marketing and promotional expense and contingent consideration fair value adjustments, and the impact of costs related to certain legal matters incurred during the six months endedJune 30, 2020 .
Amortization of intangible assets expense increased
60
--------------------------------------------------------------------------------Nonoperating Results The summary of nonoperating income (expense), less net income (loss) attributable to NCI for the three and six months endedJune 30, 2021 and 2020 was as follows: Three Months Ended Six Months Ended June 30, June 30, (in millions) 2021 2020 2021 2020 Nonoperating income (expense), GAAP basis(1)$ 270 $ 357 $ 316 $ 286 Less: Net income (loss) attributable to NCI 169 188 243 9 Nonoperating income (expense), net of NCI(2)$ 101 $ 169 $ 73 $ 277 Three Months Ended Six Months Ended June 30, June 30, (in millions) 2021 2020 2021 2020 Net gain (loss) on investments(1)(2) Private equity $ 66 $ 8$ 88 $ (10 ) Real assets 3 - 6 5 Other alternatives(3) 17 21 30 (4 ) Other investments(4) 48 130 45 (20 ) Subtotal 134 159 169 (29 ) Gain related to the Charitable Contribution - - - 122 Other gains (losses)(5) 11 51 (16 ) 256 Total net gain (loss) on investments(1)(2) 145 210 153 349 Interest and dividend income 8 10 27 25 Interest expense (52 ) (51 ) (107 ) (97 ) Net interest expense (44 ) (41 ) (80 ) (72 )
Nonoperating income (expense)(1)
73$ 277
(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 non-GAAP financial
measures for the three and six months ended
(3) Amounts primarily include net gains (losses) related to 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.
(5) Amount for the six months ended
gain of approximately
iCapital. Additional amounts primarily include noncash pre-tax gains (losses)
related to the revaluation of certain other corporate minority investments.
61
--------------------------------------------------------------------------------
Income Tax Expense
GAAP As Adjusted(1)
Three Months Ended Six Months Ended Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
(in millions) 2021 2020 2021 2020 2021 2020 2021 2020
Operating
income(1) $ 1,931 $ 1,406 $ 3,476 $ 2,090 $ 1,931 $ 1,406 $ 3,476 $ 2,679
Total nonoperating
income
(expense)(1)(2) $ 101 $ 169 $ 73 $ 277 $ 101 $ 169 $ 73 $ 155
Income before
income taxes $ 2,032 $ 1,575 $ 3,549 $ 2,367 $ 2,032 $ 1,575 $ 3,549 $ 2,834
Income tax expense $ 654 $ 361 $ 972 $ 347 $ 483 $ 361 $ 801 $ 588
Effective tax rate 32.2 % 22.9 % 27.4 % 14.7 % 23.8 % 22.9 % 22.6 % 20.7 %
(1) As adjusted items are described in more detail in Non-GAAP Financial
Measures.
(2) Net of net income (loss) attributable to NCI.
2021. Income tax expense for the three and six months endedJune 30, 2021 included$171 million noncash net expense related to the revaluation of certain deferred tax assets and liabilities as a result of legislation enacted in theUK increasing its corporate tax rate. Income tax expense for the six months endedJune 30, 2021 , also reflected$39 million of discrete tax benefits related to stock-based compensation awards that vested in the first quarter of 2021.
The as adjusted effective tax rate of 23.8% and 22.6% for the three and six
months ended
2020. Income tax expense for the six months ended
The as adjusted effective tax rate of 20.7% for the six months ended
62
--------------------------------------------------------------------------------
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 received underBlackRock Life Limited securities lending arrangements 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, "consolidated sponsored investment products" or "CIPs"). See Note
2, Significant Accounting Policies, in the notes to the consolidated financial
statements contained in the 2020 Form 10-K for more information on the Company's
consolidation policy.
63
--------------------------------------------------------------------------------
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.
June 30, 2021
Separate
Account
GAAP Assets/ As
(in millions) Basis Collateral(1) CIPs(2) Adjusted
Assets
Cash and cash equivalents $ 6,416 $ - $ 280 $ 6,136
Accounts receivable 3,790 - - 3,790
Investments 7,595 - 2,308 5,287
Separate account assets and
collateral held
under securities lending agreements 120,042 120,042 - -
Other assets(3) 5,243 - 121 5,122
Subtotal 143,086 120,042 2,709 20,335
Goodwill and intangible assets, net 33,876 - - 33,876
Total assets $ 176,962 $ 120,042 $ 2,709 $ 54,211
Liabilities
Accrued compensation and benefits $ 1,704 $ - $ - $ 1,704
Accounts payable and accrued
liabilities 1,238 - - 1,238
Borrowings 6,491 - - 6,491
Separate account liabilities and
collateral
liabilities under securities
lending agreements 120,042 120,042 - -
Deferred income tax liabilities(4) 3,907 - - 3,907
Other liabilities 5,190 - 429 4,761
Total liabilities 138,572 120,042 429 18,101
Equity
Total BlackRock, Inc. stockholders'
equity 36,033 - - 36,033
Noncontrolling interests 2,357 - 2,280 77
Total equity 38,390 - 2,280 36,110
Total liabilities and equity $ 176,962 $ 120,042 $ 2,709 $ 54,211 (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 portion of assets and liabilities of CIPs attributable
to NCI.
(3) Amounts include property and equipment and other assets.
(4) Amounts include 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 ofJune 30, 2021 andDecember 31, 2020 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
Accounts receivable atJune 30, 2021 increased$255 million fromDecember 31, 2020 , primarily due to higher base and performance fee receivables. Investments, including the impact of CIPs, increased$676 million fromDecember 31, 2020 (for more information see Investments herein).Goodwill and intangible assets increased$1,062 million fromDecember 31, 2020 , primarily due to theAperio Transaction, partially offset by amortization of intangible assets. Other assets (including property and equipment) increased$1,363 million fromDecember 31, 2020 , primarily due to an increase in unit trust receivables (substantially offset by an increase in unit trust payables recorded within other liabilities) and an increase in current taxes receivable. 64 -------------------------------------------------------------------------------- Liabilities. Accrued compensation and benefits atJune 30, 2021 decreased$795 million fromDecember 31, 2020 , primarily due to 2020 incentive compensation cash payments in the first quarter of 2021, partially offset by 2021 incentive compensation accruals. Accounts payable and accrued liabilities atJune 30, 2021 decreased$210 million fromDecember 31, 2020 , primarily due to increased accruals. Other liabilities increased$1,498 million fromDecember 31, 2020 , 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. Net deferred income tax liabilities atJune 30, 2021 increased$234 million fromDecember 31, 2020 , primarily due to theAperio Transaction and the effects of temporary differences associated with stock-based compensation and the revaluation of certain deferred income tax liabilities due to tax legislation enacted in theUK .
Investments
The Company's investments were$7,595 million and$6,919 million atJune 30, 2021 andDecember 31, 2020 , respectively. Investments include consolidated investments held by CIPs accounted for as VREs and VIEs. Management reviews BlackRock's investments on an "economic" basis, which eliminates the portion of investments that does not impact BlackRock's book value or net income attributable to BlackRock. BlackRock's management does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. The Company presents investments, as adjusted, to enable investors to understand the portion of investments that is owned by the Company, net of NCI, as a gauge to measure the impact of changes in net nonoperating income (expense) on investments to net income (loss) attributable to BlackRock. The Company further presents net "economic" investment exposure, net of hedged investments, to reflect another helpful measure for investors. The impact of certain investments is substantially mitigated by swap hedges. Carried interest capital allocations are excluded as there is no impact to BlackRock's stockholders' equity until such amounts are realized as performance fees. Finally, the Company's regulatory investment inFederal Reserve Bank stock, which is not subject to market or interest rate risk, is excluded from the Company's net economic investment exposure. June 30, December 31, (in millions) 2021 2020 Investments, GAAP$ 7,595 $ 6,919 Investments held by CIPs (5,282 ) (4,976 ) Net interest in CIPs(1) 2,974 2,490 Investments, as adjusted 5,287 4,433 Federal Reserve Bank stock (95 ) (94 ) Deferred compensation investments - (6 ) Hedged investments (863 ) (833 ) Carried interest (1,213 ) (627 )
Total "economic" investment exposure(2)
(1) Amounts include carried interest (VIEs) of
Company's "economic" investment exposure.
(2) Amounts exclude corporate minority investments included in other assets on
the condensed consolidated statements of financial condition.
65
--------------------------------------------------------------------------------
The following table represents the carrying value of the Company's economic
investment exposure, by asset type, at
June 30, December 31,
(in millions) 2021 2020
Equity(1) $ 1,045 $ 835
Fixed income(2) 788 958
Multi-asset(3) 117 127
Alternatives:
Private equity 596 418
Real assets 261 251
Other alternatives(4) 309 284
Alternatives subtotal 1,166 953
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 include direct hedge fund strategies and hedge fund
solutions.
As adjusted investment activity for the six months endedJune 30, 2021 was as follows: Six Months Ended (in millions)June 30, 2021 Investments, as adjusted, beginning balance $
4,433
Purchases/capital contributions 721 Sales/maturities (591 ) Distributions(1)
(88 ) Market appreciation(depreciation)/earnings from equity method investments
253
Carried interest capital allocations/(distributions)
586
Other(2) (27 ) Investments, as adjusted, ending balance $ 5,287
(1) Amount includes distributions representing return of capital and return on investments.
(2) Amount includes the impact of foreign exchange movements.
66
--------------------------------------------------------------------------------
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:
© Edgar Online, source
