BlackRock, Inc. is a leading publicly traded investment management firm with $10.01 trillion of assets under management (“AUM”) at December 31, 2021. With approximately 18,400 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, iShares® and BlackRock exchange-traded funds (“ETFs”), separate accounts, collective trust funds and other pooled investment vehicles.
Profile of BlackRock Inc
BlackRock also offers technology services, including the investment and risk management technology platform, Aladdin®, Aladdin Wealth, eFront, and Cachematrix, as well as advisory services and solutions to a broad base of institutional and wealth management clients. The Company is highly regulated and manages its clients’ assets as a fiduciary.
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.
BlackRock is an independent, publicly traded company, with no single majority shareholder and over 85% of its Board of Directors consisting of independent directors
Management seeks to deliver value for stockholders over time by, among other things, capitalizing on BlackRock’s differentiated competitive position, including:
• The Company’s focus on strong performance providing alpha for active products and limited or no tracking error for index products;
• The Company’s global reach and commitment to best practices around the world, with approximately 50% of employees outside the United States serving clients locally and supporting local investment capabilities. Approximately 40% of total AUM is managed for clients domiciled outside the United States;
• The Company’s breadth of investment strategies, including market-cap weighted index, factors, systematic active, traditional fundamental active, high conviction alpha and illiquid alternative product offerings, which enhance its ability to tailor wholeportfolio investment solutions to address specific client needs;
• The Company’s differentiated client relationships and fiduciary focus, which enable effective positioning toward changing client needs and macro trends including the secular shift to index investing and ETFs, growing allocations to private markets, demand for high-performing active strategies, increasing demand for sustainable investment strategies and whole portfolio solutions using index, active and illiquid alternatives products; and a continued focus on income and retirement; and
• The Company’s longstanding commitment to innovation, technology services and the continued development of, and increased interest in, BlackRock technology products and solutions, including Aladdin, Aladdin Wealth, eFront, Aladdin Climate, and Cachematrix. This commitment is further extended by minority investments in distribution technologies, data and whole portfolio capabilities including Envestnet, Scalable Capital, iCapital, Acorns, and Clarity AI.
BlackRock operates in a global marketplace impacted by changing market dynamics and economic uncertainty, factors that can significantly affect earnings and stockholder returns in any given period.
The Company’s ability to increase revenue, earnings and stockholder value over time is predicated on its ability to generate new business, including business in Aladdin and other technology products and services. New business efforts depend on BlackRock’s ability to achieve clients’ investment objectives, in a manner consistent with their risk preferences, to deliver excellent client service and to innovate in technology to serve clients’ evolving needs.
All of these efforts require the commitment and contributions of BlackRock employees. Accordingly, the ability to attract, develop and retain talented professionals is critical to the Company’s long-term success
AUM represents the broad range of financial assets managed for clients on a discretionary basis pursuant to investment management and trust agreements that are expected to continue for at least 12 months. In general, reported AUM reflects the valuation methodology that corresponds to the basis used for determining revenue (for example, net asset value). Reported AUM does not include assets for which BlackRock provides risk management or other forms of nondiscretionary advice, or assets that the Company is retained to manage on a shortterm, temporary basis.
Investment management fees are typically earned as a percentage of AUM. BlackRock also earns performance fees on certain portfolios relative to an agreed-upon benchmark or return hurdle. On some products, the Company also may earn securities lending revenue. In addition, BlackRock offers its proprietary Aladdin investment system as well as risk management, outsourcing, advisory and other technology services, to institutional investors and wealth management intermediaries.
Revenue for these services may be based on several criteria including value of positions, number of users, implementation go-lives and software solution delivery and support.
At December 31, 2021, total AUM was $10.01 trillion, representing a CAGR of 14% over the last five years. AUM growth during the period was achieved through the combination of net market valuation gains, net inflows and acquisitions, including the First Reserve Transaction, which added $3.3 billion of AUM in 2017, the net AUM impact from the TCP Transaction, the Citibanamex Transaction, the Aegon Transaction and the DSP Transaction, which added $27.5 billion of AUM in 2018, and the Aperio Transaction, which added $41.3 billion of AUM in February 2021.
BlackRock serves a diverse mix of institutional and retail clients across the globe, with a regionally focused business model. BlackRock leverages the benefits of scale across global investment, risk and technology platforms while at the same time using local distribution presence to deliver solutions for clients. Furthermore, our structure facilitates strong teamwork globally across both functions and regions in order to enhance our ability to leverage best practices to serve our clients and continue to develop
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.
ETFs are a growing component of both institutional and retail client portfolios. However, as ETFs are traded on exchanges, complete transparency on the ultimate end-client is unavailable. Therefore, ETFs are presented as a separate client type below, with investments in ETFs by institutions and retail clients excluded from figures and discussions in their respective sections.
BlackRock serves retail investors globally through a wide array of vehicles across the investment spectrum, including separate accounts, open-end and closed-end funds, unit trusts and private investment funds. Retail investors are served principally through intermediaries, including broker-dealers, banks, trust companies, insurance companies and independent financial advisors.
Technology solutions, digital distribution tools and a shift toward portfolio construction are increasing the number of financial advisors and end-retail investors using BlackRock products.
Retail represented 11% of long-term AUM at December 31, 2021 and 34% of long-term investment advisory and administration fees (collectively “base fees”) and securities lending revenue for 2021. ETFs have a significant retail component but are shown separately below. With the exclusion of ETFs, retail AUM is predominantly comprised of active mutual funds. Mutual funds totaled $841.4 billion, or 81%, of retail long-term AUM at year-end, with the remainder invested in private investment funds and separately managed accounts. 82% of retail long-term AUM is invested in active products.
BlackRock is the leading ETF provider in the world with $3.3 trillion of AUM at December 31, 2021, and generated record net inflows of $305.5 billion in 2021. The majority of ETF AUM and net inflows represent the Company’s index-tracking iShares-branded ETFs. The Company also offers a select number of active BlackRock-branded ETFs that seek outperformance and/or differentiated outcomes.
Equity ETF net inflows of $222.9 billion were driven by flows into core and sustainable ETFs, as well as continued client use of BlackRock’s broad-based precision exposure ETFs to express risk-on sentiment during the year. Fixed income ETF net inflows of $78.9 billion were diversified across exposures, led by flows into inflation-protected, core and municipal bond funds. Multi-asset and alternative ETFs contributed a combined $3.8 billion of net inflows, primarily into core allocation and commodities funds.
ETFs represented 35% of long-term AUM at December 31, 2021 and 41% of long-term base fees and securities lending revenue for 2021.
The retail client base is diversified geographically, with 67% of long-term AUM managed for investors based in the Americas, 28% in EMEA and 5% in Asia-Pacific at year-end 2021.
• US retail long-term net inflows of $59.7 billion were led by equity and fixed income net inflows of $24.1 billion and $20.6 billion, respectively. Equity net inflows were led by flows into US growth, technology and global equities franchises. Fixed income net inflows were diversified across exposures and products, with strong flows into unconstrained, municipal and total return bond offerings.
Alternatives net inflows of $9.1 billion were driven by flows into the BlackRock Alternative Capital Strategies and Global Event Driven funds. Multi-asset net inflows of $5.9 billion included the successful close of the $2.1 billion BlackRock ESG Capital Allocation Trust.
In the first quarter of 2021, BlackRock closed the acquisition of Aperio, a pioneer in customizing tax-optimized index equity separately managed accounts (“SMA”), to enhance its wealth platform and provide whole-portfolio solutions to ultra-high net worth advisors. The combination of Aperio with BlackRock’s existing SMA franchise expands the breadth of personalization capabilities available to wealth managers from BlackRock via tax-managed strategies across factors, broad market indexing, and investor Environmental, Social, and Governance (“ESG”) preferences across all asset classes.
In the third quarter of 2021, BlackRock made a minority investment in SpiderRock Advisors, a tech-enabled asset manager focused on providing professionally managed option overlay strategies. The Company expects this investment to add incremental product capabilities to Aperio and support expansion of its personalized SMA franchise.
• International retail long-term net inflows of $42.4 billion were led by equity net inflows of $18.0 billion, reflecting strong flows into index equity mutual funds, and our natural resources and technology active equity franchises. In addition, equity net inflows reflected $1.4 billion raised from the launch of BlackRock’s wholly owned Fund Management Company (“FMC”) and Wealth Management Company (“WMC”) joint venture in China.
Fixed income net inflows of $14.3 billion were driven by flows into index fixed income mutual funds and Asia bond strategies. Multi-asset net inflows of $6.6 billion were led by flows into ESG and world allocation strategies. Alternatives net inflows of $3.5 billion reflected demand for BlackRock’s Global Event Driven fund.
Institutional active AUM ended 2021 at $1.8 trillion, reflecting $169.1 billion of net inflows, driven by broadbased strength across all product categories, the funding of several significant outsourced chief investment officer (“OCIO”) mandates and continued growth in our LifePath® target-date franchise.
Alternatives net inflows of $15.8 billion were led by inflows into private credit, infrastructure, real estate and private equity. Excluding return of capital and investment of $8.3 billion, alternatives net inflows were $24.1 billion. In addition, 2021 was another strong fundraising year for illiquid alternatives.
In 2021, BlackRock raised a record $42 billion of client capital, which includes both net inflows and non-fee paying commitments raised. At year-end, BlackRock had approximately $36 billion of non-fee-earning committed capital to deploy for institutional clients, which is not included in AUM. Institutional active represented 19% of long-term AUM and 18% of long-term base fees and securities lending revenue for 2021.
Institutional index AUM totaled $3.2 trillion at December 31, 2021, reflecting $117.8 billion of net outflows which included a $58 billion low-fee redemption in the second quarter. Equity net outflows of $169.3 billion also reflected clients rebalancing portfolios after significant equity market gains, or tactically shifting assets to fixed income and cash. Fixed income net inflows of $52.4 billion were driven by demand for liability-driven investment solutions.
Institutional index represented 35% of long-term AUM and 7% of long-term base fees and securities lending revenue for 2021.
The Company’s institutional clients consist of the following:
• Pensions, Foundations and Endowments. BlackRock is among the world’s largest managers of pension plan assets with $3.2 trillion, or 65%, of long-term institutional AUM managed for defined benefit, defined contribution and other pension plans for
corporations, governments and unions at December 31, 2021. The market landscape continues to shift from defined benefit to defined contribution, and our defined contribution channel represented $1.4 trillion of total pension AUM. BlackRock remains well positioned to capitalize on the on-going evolution of the defined contribution market and demand for outcome-oriented investments.
An additional $96.0 billion, or 2%, of long-term institutional AUM was managed for other tax-exempt investors, including charities, foundations and endowments.
• Official Institutions. BlackRock managed $316.4 billion, or 7%, of long-term institutional AUM for official institutions, including central banks, sovereign wealth funds, supranationals, multilateral entities and government ministries and agencies at year-end 2021.
These clients often require specialized investment advice, the u e of customized benchmarks and training support.
• Financial and Other Institutions. BlackRock is a top independent manager of assets for insurance companies, which accounted for $507.8 billion.
Assets managed for other taxable institutions, including corporations, banks and third-party fund sponsors for which the Company provides sub-advisory services, totaled $797.3 billion, or 16%, of long-term institutional AUM at year-end.
Long-term product offerings include alpha-seeking active and index strategies. Our alpha-seeking active strategies seek to earn attractive returns in excess of a market benchmark or performance hurdle while maintaining an appropriate risk profile and leverage fundamental research and quantitative models to drive portfolio construction. In contrast, index strategies seek to closely track the returns of a corresponding index, generally by investing in substantially the same underlying securities within the index or in a subset of those securities selected to approximate a similar risk and return profile of the index. Index strategies
include both our non-ETF index products and ETFs.
Although many clients use both alpha-seeking active and index strategies, the application of these strategies may differ. For example, clients may use index products to gain exposure to a market or asset class or may use a combination of index strategies to target active returns. In addition, institutional non-ETF index assignments tend to be very large (multi-billion dollars) and typically reflect low fee rates. Net flows in institutional index products generally have a small impact on BlackRock’s revenues and earnings.
Equity Year-end 2021 equity AUM totaled $5.3 trillion, reflecting net inflows of $101.7 billion. Net inflows included $222.9 billion and $48.8 billion into ETFs and active, respectively, partially offset by non-ETF index net outflows of $170.0 billion. Record active equity net inflows were driven by flows into US growth, technology and global fundamental equities franchises, as well as flows into quantitative strategies.
BlackRock’s effective fee rates fluctuate due to changes in AUM mix. Approximately half of BlackRock’s equity AUM is tied to international markets, including emerging markets, which tend to have higher fee rates than US equity strategies. Accordingly, fluctuations in international equity markets, which may not consistently move in tandem with US markets, have a greater impact on BlackRock’s equity revenues and effective fee rate.
Equity represented 58% of long-term AUM and 54% of long-term base fees and securities lending revenue for 2021. Fixed income AUM ended 2021 at $2.8 trillion, reflecting net inflows of $230.3 billion. Net inflows included $94.0 billion, $78.9 billion and $57.4 billion in active, ETFs and non-ETF index, respectively. Record active fixed income net inflows of $94.0 billion reflected the funding of a significant core fixed income mandate in the fourth quarter, as well as strong flows into unconstrained, municipal, total return and Asia bond offerings.
Fixed income represented 30% of long-term AUM and 26% of long-term base fees and securities lending revenue for 2021.
BlackRock manages a variety of multi-asset balanced funds and bespoke mandates for a diversified client base that leverages our broad investment expertise in global equities, bonds, currencies and commodities, and our extensive risk management capabilities. Investment solutions may include a combination of long-only portfolios and alternative investments as well as tactical asset allocation overlays.
Multi-asset represented 9% of long-term AUM and 10% of long-term base fees and securities lending revenue for 2021.
Multi-asset net inflows reflected ongoing institutional demand for our solutions-based advice with $83.0 billion of net inflows coming from institutional clients. Defined contribution plans of institutional clients remained a significant driver of flows and contributed $53.5 billion to institutional multi-asset net inflows in 2021, primarily into target date and target risk product offerings.
The Company’s multi-asset strategies include the following:
• Target date and target risk products generated net inflows of $30.5 billion. Institutional investors represented 90% of target date and target risk AUM, with defined contribution plans representing 84% of AUM. Flows were driven by defined contribution
investments in our LifePath offerings. LifePath products utilize a proprietary active asset allocation overlay model that seeks to balance risk and return over an investment horizon based on the investor’s expected retirement timing. Underlying investments
are primarily index products.
• Asset allocation and balanced products generated $37.2 billion of net inflows. These strategies combine equity, fixed income and alternative components for investors seeking a tailored solution relative to a specific benchmark and within a risk budget. In
certain cases, these strategies seek to minimize downside risk through diversification, derivatives strategies and tactical asset allocation decisions.
Flagship products include our Global Allocation and Multi-Asset Income fund families.
• Fiduciary management services are complex mandates in which pension plan sponsors or endowments and foundations retain BlackRock to assume responsibility for some or all aspects of investment management, often with BlackRock acting as outsourced chief investment officer. These customized services require strong partnership with the clients’ investment staff and trustees in order to tailor investment strategies to meet client-specific risk budgets and return objectives. Fiduciary net inflows of $30.1 billion reflected the funding of several significant OCIO mandates.
BlackRock alternatives focus on sourcing and managing high-alpha investments with lower correlation to public markets and developing a holistic approach to address client needs in alternatives investing.
The company alternatives products fall into three main categories — 1) illiquid alternatives, 2) liquid alternatives, and 3) currency and commodities. Illiquid alternatives include offerings in alternative solutions, private equity, opportunistic and credit, real estate and infrastructure. Liquid alternatives include offerings in direct hedge funds and hedge fund solutions (funds of funds).
In 2021, liquid and illiquid alternatives generated a combined $27.4 billion of net inflows, or $36.6 billion excluding return of capital/investment of $9.2 billion. The largest contributors to return of capital/investment were opportunistic and credit strategies, private equity solutions and infrastructure. Net inflows were driven by direct hedge funds, private equity, infrastructure and opportunistic and credit strategies.
At year-end, BlackRock had approximately $36 billion of non-fee paying, unfunded, uninvested commitments, which are expected to be deployed in future years; these commitments are not included in AUM or flows until they are fee-paying. Currency and commodities saw $1.6 billion of net inflows, primarily into commodities ETFs.
BlackRock believes that as alternatives become more conventional and investors adapt their asset allocation strategies, investors will further increase their use of alternative investments to complement core holdings. BlackRock’s highly diversified alternatives franchise is well positioned to continue to meet growing demand from both institutional and retail investors. Alternatives represented 3% of long-term AUM and 10% of long-term base fees and securities lending revenue for
The Company’s illiquid alternatives strategies include the following:
• Alternative Solutions represents highly customized portfolios of alternative investments. In 2021, alternative solutions portfolios had $6.0 billion in AUM, and $1.4 billion of net inflows.
• Private Equity and Opportunistic included AUM of $19.4 billion in private equity solutions, $19.3 billion in opportunistic and credit offerings, and $3.5 billion in Long Term Private Capital (“LTPC”). Net inflows of $9.1 billion into private equity and opportunistic strategies included $6.3 billion of net inflows into opportunistic and credit offerings and $2.8 billion of net inflows into private equity solutions.
• Real Assets, which includes infrastructure and real estate, totaled $54.4 billion in AUM, reflecting net inflows of $5.7 billion, led by infrastructure capital raise and deployments.
The Company’s liquid alternatives products’ net inflows of $11.3 billion reflected net inflows of $10.0 billion and $1.3 billion from direct hedge fund strategies and hedge fund solutions, respectively. Direct hedge fund strategies includes a variety of single- and multi-strategy offerings.
In addition, the Company manages $103.9 billion in liquid credit strategies which is included in active fixed income.
Currency and Commodities
The Company’s currency and commodities products include a range of active and index products. Currency and commodities products had $1.6 billion of net inflows, primarily driven by ETFs. ETF commodities products represented $65.6 billion of AUM and are not eligible for performance fees.
Cash management AUM totaled $755.1 billion at December 31, 2021, reflecting a record $94.0 billion of net inflows. Cash management products include taxable and tax-exempt money market funds, short-term investment funds and customized separate accounts. Portfolios are denominated in US dollars, Canadian dollars, Australian dollars, Euros, Swiss Francs, New Zealand Dollars or British pounds. Strong growth in cash management reflects BlackRock’s success in leveraging scale for clients and delivering innovative digital distribution and risk management solutions.
BlackRock is currently voluntarily waiving a portion of its management fees on certain money market funds to ensure that they maintain a minimum level of daily net investment income. During 2021, these waivers resulted in a reduction of management fees of approximately $500 million, which was partially offset by a reduction of BlackRock’s distribution and servicing costs paid to financial intermediaries. BlackRock has provided voluntary yield support waivers in prior periods and may increase or decrease the level of yield support waivers in future periods. For more information see Note 2, Significant Accounting Policies, in the notes to the consolidated financial statements included in Part II, Item 8 of this filing.