UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 20172023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to .

Commission file number 001-33099

img177475217_0.jpg 

BlackRock, Inc.

(Exact name of registrant as specified in its charter)

Delaware

32-0174431

(State or Other Jurisdiction of

Incorporation or Organization)

    (I.R.S.(I.R.S. Employer Identification No.)

55 East 52nd Street, 50 Hudson Yards, New York, NY 1005510001

(Address of Principal Executive Offices) (Zip Code)

(Zip Code)212) 810-5300

(212) 810-5300

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, $.01 par value

BLK

New York Stock Exchange

1.250% Notes due 2025

BLK25

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

X

No

Indicate by check mark whether the registrant has submitted electronically, and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes

X

No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Large accelerated filer                Accelerated filer

       Non-accelerated filer (Do not check if a smaller reporting company)

            Smaller reporting company

            Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

No

X

As of October 31, 2017,2023, there were 160,332,161148,762,471 shares of the registrant’s common stock outstanding.


BlackRock, Inc.

Index to Form 10-Q

PART I

FINANCIAL INFORMATION

Page

Item 1.

Financial Statements (unaudited)

Condensed Consolidated Statements of Financial Condition

1

Condensed Consolidated Statements of Income

2

Condensed Consolidated Statements of Comprehensive Income

3

Condensed Consolidated Statements of Changes in Equity

4

Condensed Consolidated Statements of Cash Flows

6

Notes to Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

3436

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

6569

Item 4.

Controls and Procedures

6670

PART II

OTHER INFORMATION

Item 1.

Legal Proceedings

6771

Item 2.1A.

Risk Factors

72

Item 2.

Unregistered Sales of Equity Securities, and Use of Proceeds, and Issuer Purchases of Equity Securities

6973

Item 6.

Exhibits

7074

Signatures

75

i


PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

BlackRock, Inc.

Condensed Consolidated Statements of Financial Condition

(unaudited)

 

 

September 30,

 

 

December 31,

 

(in millions, except shares and per share data)

 

2023

 

 

2022

 

Assets

 

 

 

 

 

 

Cash and cash equivalents(1)

 

$

7,316

 

 

$

7,416

 

Accounts receivable

 

 

3,886

 

 

 

3,264

 

Investments(1)

 

 

9,835

 

 

 

7,466

 

Separate account assets

 

 

51,606

 

 

 

54,066

 

Separate account collateral held under securities lending agreements

 

 

4,740

 

 

 

5,765

 

Property and equipment (net of accumulated depreciation and amortization of $1,487 and
   $
1,390 at September 30, 2023 and December 31, 2022, respectively)

 

 

1,058

 

 

 

1,031

 

Intangible assets (net of accumulated amortization of $580 and $483 at
   September 30, 2023 and December 31, 2022, respectively)

 

 

18,291

 

 

 

18,302

 

Goodwill

 

 

15,516

 

 

 

15,341

 

Operating lease right-of-use assets

 

 

1,429

 

 

 

1,516

 

Other assets(1)

 

 

4,908

 

 

 

3,461

 

Total assets

 

$

118,585

 

 

$

117,628

 

Liabilities

 

 

 

 

 

 

Accrued compensation and benefits

 

$

1,796

 

 

$

2,272

 

Accounts payable and accrued liabilities

 

 

1,217

 

 

 

1,294

 

Borrowings

 

 

7,884

 

 

 

6,654

 

Separate account liabilities

 

 

51,606

 

 

 

54,066

 

Separate account collateral liabilities under securities lending agreements

 

 

4,740

 

 

 

5,765

 

Deferred income tax liabilities

 

 

3,448

 

 

 

3,381

 

Operating lease liabilities

 

 

1,780

 

 

 

1,835

 

Other liabilities(1)

 

 

5,483

 

 

 

3,576

 

Total liabilities

 

 

77,954

 

 

 

78,843

 

Commitments and contingencies (Note 14)

 

 

 

 

 

 

Temporary equity

 

 

 

 

 

 

Redeemable noncontrolling interests

 

 

1,851

 

 

 

909

 

Permanent equity

 

 

 

 

 

 

BlackRock, Inc. stockholders’ equity

 

 

 

 

 

 

Common stock, $0.01 par value;

 

 

2

 

 

 

2

 

Shares authorized: 500,000,000 at September 30, 2023 and December 31, 2022;
   Shares issued:
172,075,373 at September 30, 2023 and December 31, 2022;
   Shares outstanding:
148,942,746 and 149,756,492 at September 30, 2023 and
      December 31, 2022, respectively

 

 

 

 

 

 

Additional paid-in capital

 

 

19,687

 

 

 

19,772

 

Retained earnings

 

 

31,711

 

 

 

29,876

 

Accumulated other comprehensive loss

 

 

(1,101

)

 

 

(1,101

)

Treasury stock, common, at cost (23,132,627 and 22,318,881 shares held at September 30, 2023
   and December 31, 2022, respectively)

 

 

(11,672

)

 

 

(10,805

)

Total BlackRock, Inc. stockholders’ equity

 

 

38,627

 

 

 

37,744

 

Nonredeemable noncontrolling interests

 

 

153

 

 

 

132

 

Total permanent equity

 

 

38,780

 

 

 

37,876

 

Total liabilities, temporary equity and permanent equity

 

$

118,585

 

 

$

117,628

 

 

 

September 30,

 

 

December 31,

 

(in millions, except shares and per share data)

 

2017

 

 

2016

 

Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

6,165

 

 

$

6,091

 

Accounts receivable

 

 

3,183

 

 

 

2,350

 

Investments

 

 

1,928

 

 

 

1,595

 

Assets of consolidated variable interest entities:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

82

 

 

 

84

 

Investments

 

 

1,286

 

 

 

1,008

 

Other assets

 

 

46

 

 

 

63

 

Separate account assets

 

 

147,938

 

 

 

149,089

 

Separate account collateral held under securities lending agreements

 

 

27,431

 

 

 

27,792

 

Property and equipment (net of accumulated depreciation of $708 and $601 at September 30,

   2017 and December 31, 2016, respectively)

 

 

571

 

 

 

559

 

Intangible assets (net of accumulated amortization of $909 and $832 at September 30, 2017

   and December 31, 2016, respectively)

 

 

17,400

 

 

 

17,363

 

Goodwill

 

 

13,226

 

 

 

13,118

 

Other assets

 

 

1,311

 

 

 

1,065

 

Total assets

 

$

220,567

 

 

$

220,177

 

Liabilities

 

 

 

 

 

 

 

 

Accrued compensation and benefits

 

$

1,614

 

 

$

1,880

 

Accounts payable and accrued liabilities

 

 

1,652

 

 

 

1,094

 

Liabilities of consolidated variable interest entities

 

 

319

 

 

 

216

 

Borrowings

 

 

5,000

 

 

 

4,915

 

Separate account liabilities

 

 

147,938

 

 

 

149,089

 

Separate account collateral liabilities under securities lending agreements

 

 

27,431

 

 

 

27,792

 

Deferred income tax liabilities

 

 

4,966

 

 

 

4,840

 

Other liabilities

 

 

1,230

 

 

 

1,007

 

Total liabilities

 

 

190,150

 

 

 

190,833

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

 

 

Temporary equity

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

 

320

 

 

 

194

 

Permanent Equity

 

 

 

 

 

 

 

 

BlackRock, Inc. stockholders’ equity

 

 

 

 

 

 

 

 

Common stock, $0.01 par value;

 

 

2

 

 

 

2

 

Shares authorized: 500,000,000 at September 30, 2017 and December 31, 2016;

Shares issued: 171,252,185 at September 30, 2017 and December 31, 2016;

Shares outstanding: 160,528,060 and 161,534,443 at September 30, 2017 and

December 31, 2016, respectively

 

 

 

 

 

 

 

 

Preferred stock (Note 15)

 

 

 

 

 

 

Additional paid-in capital

 

 

19,145

 

 

 

19,337

 

Retained earnings

 

 

15,065

 

 

 

13,660

 

Accumulated other comprehensive loss

 

 

(473

)

 

 

(716

)

Treasury stock, common, at cost (10,724,125 and 9,717,742 shares held at September 30, 2017 and

   December 31, 2016, respectively)

 

 

(3,697

)

 

 

(3,185

)

Total BlackRock, Inc. stockholders’ equity

 

 

30,042

 

 

 

29,098

 

Nonredeemable noncontrolling interests

 

 

55

 

 

 

52

 

Total permanent equity

 

 

30,097

 

 

 

29,150

 

Total liabilities, temporary equity and permanent equity

 

$

220,567

 

 

$

220,177

 

(1)
At September 30, 2023, cash and cash equivalents, investments, other assets and other liabilities include $246 million, $5.1 billion, $83 million, and $2.2 billion, respectively, related to consolidated variable interest entities (“VIEs”). At December 31, 2022, cash and cash equivalents, investments, other assets and other liabilities include $234 million, $3.9 billion, $68 million, and $1.9 billion, respectively, related to consolidated VIEs.

See accompanying notes to condensed consolidated financial statements.

1


BlackRock,

BlackRock, Inc.

Condensed Consolidated Statements of Income

(unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in millions, except per share data)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Investment advisory, administration fees
  and securities lending revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Related parties

 

$

2,765

 

 

$

2,647

 

 

$

8,065

 

 

$

8,299

 

Other third parties

 

 

916

 

 

 

884

 

 

 

2,729

 

 

 

2,753

 

Total investment advisory, administration fees
   and securities lending revenue

 

 

3,681

 

 

 

3,531

 

 

 

10,794

 

 

 

11,052

 

Investment advisory performance fees

 

 

70

 

 

 

82

 

 

 

243

 

 

 

286

 

Technology services revenue

 

 

407

 

 

 

338

 

 

 

1,106

 

 

 

1,011

 

Distribution fees

 

 

321

 

 

 

325

 

 

 

959

 

 

 

1,067

 

Advisory and other revenue

 

 

43

 

 

 

35

 

 

 

126

 

 

 

120

 

Total revenue

 

 

4,522

 

 

 

4,311

 

 

 

13,228

 

 

 

13,536

 

Expense

 

 

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

 

1,420

 

 

 

1,339

 

 

 

4,276

 

 

 

4,251

 

Distribution and servicing costs

 

 

526

 

 

 

536

 

 

 

1,549

 

 

 

1,682

 

Direct fund expense

 

 

354

 

 

 

318

 

 

 

1,013

 

 

 

951

 

General and administration expense

 

 

546

 

 

 

554

 

 

 

1,587

 

 

 

1,580

 

Amortization of intangible assets

 

 

39

 

 

 

38

 

 

 

113

 

 

 

114

 

Total expense

 

 

2,885

 

 

 

2,785

 

 

 

8,538

 

 

 

8,578

 

Operating income

 

 

1,637

 

 

 

1,526

 

 

 

4,690

 

 

 

4,958

 

Nonoperating income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

Net gain (loss) on investments

 

 

114

 

 

 

174

 

 

 

434

 

 

 

(242

)

Interest and dividend income

 

 

139

 

 

 

41

 

 

 

314

 

 

 

80

 

Interest expense

 

 

(82

)

 

 

(50

)

 

 

(210

)

 

 

(158

)

Total nonoperating income (expense)

 

 

171

 

 

 

165

 

 

 

538

 

 

 

(320

)

Income before income taxes

 

 

1,808

 

 

 

1,691

 

 

 

5,228

 

 

 

4,638

 

Income tax expense

 

 

213

 

 

 

330

 

 

 

1,041

 

 

 

951

 

Net income

 

 

1,595

 

 

 

1,361

 

 

 

4,187

 

 

 

3,687

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to
   noncontrolling interests

 

 

(9

)

 

 

(45

)

 

 

60

 

 

 

(232

)

Net income attributable to BlackRock, Inc.

 

$

1,604

 

 

$

1,406

 

 

$

4,127

 

 

$

3,919

 

Earnings per share attributable to BlackRock, Inc.
   common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

10.75

 

 

$

9.33

 

 

$

27.60

 

 

$

25.92

 

Diluted

 

$

10.66

 

 

$

9.25

 

 

$

27.36

 

 

$

25.67

 

Weighted-average common shares
   outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

149.2

 

 

 

150.6

 

 

 

149.6

 

 

 

151.2

 

Diluted

 

 

150.5

 

 

 

152.0

 

 

 

150.9

 

 

 

152.6

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(in millions, except shares and per share data)

 

September 30,

 

 

September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment advisory, administration fees and

  securities lending revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Related parties

 

$

1,995

 

 

$

1,768

 

 

$

5,662

 

 

$

5,098

 

Other third parties

 

 

797

 

 

 

778

 

 

 

2,335

 

 

 

2,296

 

Total investment advisory, administration fees and

   securities lending revenue

 

 

2,792

 

 

 

2,546

 

 

 

7,997

 

 

 

7,394

 

Investment advisory performance fees

 

 

191

 

 

 

58

 

 

 

309

 

 

 

166

 

Technology and risk management revenue

 

 

175

 

 

 

152

 

 

 

497

 

 

 

439

 

Distribution fees

 

 

5

 

 

 

10

 

 

 

17

 

 

 

32

 

Advisory and other revenue

 

 

70

 

 

 

71

 

 

 

202

 

 

 

234

 

Total revenue

 

 

3,233

 

 

 

2,837

 

 

 

9,022

 

 

 

8,265

 

Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

 

1,088

 

 

 

969

 

 

 

3,108

 

 

 

2,893

 

Distribution and servicing costs

 

 

123

 

 

 

114

 

 

 

361

 

 

 

320

 

Amortization of deferred sales commissions

 

 

4

 

 

 

8

 

 

 

13

 

 

 

27

 

Direct fund expense

 

 

234

 

 

 

200

 

 

 

666

 

 

 

583

 

General and administration

 

 

363

 

 

 

312

 

 

 

1,014

 

 

 

946

 

Restructuring charge

 

 

 

 

 

 

 

 

 

 

 

76

 

Amortization of intangible assets

 

 

27

 

 

 

25

 

 

 

77

 

 

 

75

 

Total expense

 

 

1,839

 

 

 

1,628

 

 

 

5,239

 

 

 

4,920

 

Operating income

 

 

1,394

 

 

 

1,209

 

 

 

3,783

 

 

 

3,345

 

Nonoperating income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain (loss) on investments

 

 

41

 

 

 

31

 

 

 

128

 

 

 

49

 

Interest and dividend income

 

 

15

 

 

 

22

 

 

 

35

 

 

 

33

 

Interest expense

 

 

(46

)

 

 

(52

)

 

 

(159

)

 

 

(154

)

Total nonoperating income (expense)

 

 

10

 

 

 

1

 

 

 

4

 

 

 

(72

)

Income before income taxes

 

 

1,404

 

 

 

1,210

 

 

 

3,787

 

 

 

3,273

 

Income tax expense

 

 

445

 

 

 

333

 

 

 

1,090

 

 

 

954

 

Net income

 

 

959

 

 

 

877

 

 

 

2,697

 

 

 

2,319

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling

   interests

 

 

12

 

 

 

2

 

 

 

31

 

 

 

(2

)

Net income attributable to BlackRock, Inc.

 

$

947

 

 

$

875

 

 

$

2,666

 

 

$

2,321

 

Earnings per share attributable to BlackRock, Inc.

   common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

5.85

 

 

$

5.33

 

 

$

16.41

 

 

$

14.09

 

Diluted

 

$

5.78

 

 

$

5.26

 

 

$

16.23

 

 

$

13.92

 

Cash dividends declared and paid per share

 

$

2.50

 

 

$

2.29

 

 

$

7.50

 

 

$

6.87

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

161,872,716

 

 

 

164,129,214

 

 

 

162,459,737

 

 

 

164,756,355

 

Diluted

 

 

163,773,546

 

 

 

166,256,598

 

 

 

164,289,042

 

 

 

166,760,912

 

See accompanying notes to condensed consolidated financial statements.

2


BlackRock,

BlackRock, Inc.

Condensed Consolidated Statements of Comprehensive Income

(unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in millions)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income

 

$

1,595

 

 

$

1,361

 

 

$

4,187

 

 

$

3,687

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments(1)

 

 

(221

)

 

 

(381

)

 

 

 

 

 

(922

)

Comprehensive income (loss)

 

 

1,374

 

 

 

980

 

 

 

4,187

 

 

 

2,765

 

Less: Comprehensive income (loss) attributable to
     noncontrolling interests

 

 

(9

)

 

 

(45

)

 

 

60

 

 

 

(232

)

Comprehensive income attributable to
     BlackRock, Inc.

 

$

1,383

 

 

$

1,025

 

 

$

4,127

 

 

$

2,997

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(in millions)

 

September 30,

 

 

September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net income

 

$

959

 

 

$

877

 

 

$

2,697

 

 

$

2,319

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments(1)

 

 

102

 

 

 

(38

)

 

 

244

 

 

 

(151

)

Other

 

 

 

 

 

 

 

 

(1

)

 

 

1

 

Other comprehensive income (loss)

 

 

102

 

 

 

(38

)

 

 

243

 

 

 

(150

)

Comprehensive income

 

 

1,061

 

 

 

839

 

 

 

2,940

 

 

 

2,169

 

Less: Comprehensive income (loss) attributable to

     noncontrolling interests

 

 

12

 

 

 

2

 

 

 

31

 

 

 

(2

)

Comprehensive income attributable to BlackRock, Inc.

 

$

1,049

 

 

$

837

 

 

$

2,909

 

 

$

2,171

 

(1)
Amounts for the three months ended September 30, 2023 and 2022 include gains from a net investment hedge of $17 million (net of tax expense of $5 million) and $35 million (net of tax expense of $11 million), respectively. Amounts for the nine months ended September 30, 2023 and 2022 include gains from a net investment hedge of $5 million (net of tax expense of $1 million) and $84 million (net of tax expense of $26 million), respectively.

(1)

Amounts for the three months ended September 30, 2017 and 2016 include a loss from a net investment hedge of $18 million (net of a tax benefit of $11 million) and $5 million (net of a tax benefit of $4 million), respectively.  Amounts for the nine months ended September 30, 2017 and 2016 include a loss from a net investment hedge of $56 million (net of a tax benefit of $33 million) and $16 million (net of a tax benefit of $10 million), respectively.  

See accompanying notes to condensed consolidated financial statements.

3


BlackRock,

BlackRock, Inc.

Condensed Consolidated Statements of Changes in Equity

(unaudited)

For the Nine Months Ended September 30, 2023

(in millions)

Additional
Paid-in
Capital
(1)

 

 

Retained
Earnings

 

 

Accumulated
Other
Comprehensive
Income (Loss)

 

 

Treasury
Stock
Common

 

 

Total
BlackRock
Stockholders’
Equity

 

 

Nonredeemable
Noncontrolling
Interests

 

 

Total
Permanent
Equity

 

 

Redeemable
Noncontrolling
Interests /
Temporary
Equity

 

December 31, 2022

$

19,774

 

 

$

29,876

 

 

$

(1,101

)

 

$

(10,805

)

 

$

37,744

 

 

$

132

 

 

$

37,876

 

 

$

909

 

Net income

 

 

 

 

4,127

 

 

 

 

 

 

 

 

 

4,127

 

 

 

23

 

 

 

4,150

 

 

 

37

 

Dividends declared ($15.00 per share)

 

 

 

 

(2,292

)

 

 

 

 

 

 

 

 

(2,292

)

 

 

 

 

 

(2,292

)

 

 

 

Stock-based compensation

 

469

 

 

 

 

 

 

 

 

 

 

 

 

469

 

 

 

 

 

 

469

 

 

 

 

Issuance of common shares related to
   employee stock transactions

 

(554

)

 

 

 

 

 

 

 

 

633

 

 

 

79

 

 

 

 

 

 

79

 

 

 

 

Employee tax withholdings related to
   employee stock transactions

 

 

 

 

 

 

 

 

 

 

(369

)

 

 

(369

)

 

 

 

 

 

(369

)

 

 

 

Shares repurchased

 

 

 

 

 

 

 

 

 

 

(1,131

)

 

 

(1,131

)

 

 

 

 

 

(1,131

)

 

 

 

Subscriptions (redemptions/distributions)
    — noncontrolling interest holders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(21

)

 

 

(21

)

 

 

1,053

 

Net consolidations (deconsolidations)
   of sponsored investment funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19

 

 

 

19

 

 

 

(148

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2023

$

19,689

 

 

$

31,711

 

 

$

(1,101

)

 

$

(11,672

)

 

$

38,627

 

 

$

153

 

 

$

38,780

 

 

$

1,851

 

(in millions)

 

Additional

Paid-in

Capital(1)

 

 

Retained

Earnings

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Treasury

Stock

Common

 

 

Total

BlackRock

Stockholders’

Equity

 

 

Nonredeemable

Noncontrolling

Interests

 

 

Total

Permanent

Equity

 

 

Redeemable

Noncontrolling

Interests /

Temporary

Equity

 

December 31, 2016

 

$

19,339

 

 

$

13,660

 

 

$

(716

)

 

$

(3,185

)

 

$

29,098

 

 

$

52

 

 

$

29,150

 

 

$

194

 

Net income

 

 

 

 

 

2,666

 

 

 

 

 

 

 

 

 

2,666

 

 

 

3

 

 

 

2,669

 

 

 

28

 

Dividends paid

 

 

 

 

 

(1,259

)

 

 

 

 

 

 

 

 

(1,259

)

 

 

 

 

 

(1,259

)

 

 

 

Stock-based compensation

 

 

417

 

 

 

 

 

 

 

 

 

 

 

 

417

 

 

 

 

 

 

417

 

 

 

 

PNC preferred stock capital

    contribution

 

 

193

 

 

 

 

 

 

 

 

 

 

 

 

193

 

 

 

 

 

 

193

 

 

 

 

Retirement of preferred stock

 

 

(193

)

 

 

 

 

 

 

 

 

 

 

 

(193

)

 

 

 

 

 

(193

)

 

 

 

Issuance of common shares

   related to employee stock

   transactions

 

 

(612

)

 

 

 

 

 

 

 

 

621

 

 

 

9

 

 

 

 

 

 

9

 

 

 

 

Employee tax withholdings

   related to employee stock

   transactions

 

 

 

 

 

 

 

 

 

 

 

(308

)

 

 

(308

)

 

 

 

 

 

(308

)

 

 

 

Shares repurchased

 

 

 

 

 

 

 

 

 

 

 

(825

)

 

 

(825

)

 

 

 

 

 

(825

)

 

 

 

Subscriptions (redemptions/

   distributions) —

   noncontrolling interest

   holders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14

)

 

 

(14

)

 

 

338

 

Net consolidations

  (deconsolidations) of

   sponsored

   investment funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14

 

 

 

14

 

 

 

(240

)

Other comprehensive

   income (loss)

 

 

 

 

 

 

 

 

243

 

 

 

 

 

 

243

 

 

 

 

 

 

243

 

 

 

 

Adoption of new accounting

   pronouncement

 

 

3

 

 

 

(2

)

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

 

 

 

September 30, 2017

 

$

19,147

 

 

$

15,065

 

 

$

(473

)

 

$

(3,697

)

 

$

30,042

 

 

$

55

 

 

$

30,097

 

 

$

320

 

(1)
Amounts include $2 million of common stock at both September 30, 2023 and December 31, 2022.

For the Three Months Ended September 30, 2023

(in millions)

Additional
Paid-in
Capital
(1)

 

 

Retained
Earnings

 

 

Accumulated
Other
Comprehensive
Income (Loss)

 

 

Treasury
Stock
Common

 

 

Total
BlackRock
Stockholders’
Equity

 

 

Nonredeemable
Noncontrolling
Interests

 

 

Total
Permanent
Equity

 

 

Redeemable
Noncontrolling
Interests /
Temporary
Equity

 

June 30, 2023

$

19,573

 

 

$

30,855

 

 

$

(880

)

 

$

(11,340

)

 

$

38,208

 

 

$

142

 

 

$

38,350

 

 

$

1,546

 

Net income

 

 

 

 

1,604

 

 

 

 

 

 

 

 

 

1,604

 

 

 

3

 

 

 

1,607

 

 

 

(12

)

Dividends declared ($5.00 per share)

 

 

 

 

(748

)

 

 

 

 

 

 

 

 

(748

)

 

 

 

 

 

(748

)

 

 

 

Stock-based compensation

 

146

 

 

 

 

 

 

 

 

 

 

 

 

146

 

 

 

 

 

 

146

 

 

 

 

Issuance of common shares related to
   employee stock transactions

 

(30

)

 

 

 

 

 

 

 

 

62

 

 

 

32

 

 

 

 

 

 

32

 

 

 

 

Employee tax withholdings related to
   employee stock transactions

 

 

 

 

 

 

 

 

 

 

(15

)

 

 

(15

)

 

 

 

 

 

(15

)

 

 

 

Shares repurchased

 

 

 

 

 

 

 

 

 

 

(379

)

 

 

(379

)

 

 

 

 

 

(379

)

 

 

 

Subscriptions (redemptions/distributions)
    — noncontrolling interest holders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11

)

 

 

(11

)

 

 

403

 

Net consolidations (deconsolidations)
   of sponsored investment funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19

 

 

 

19

 

 

 

(86

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

(221

)

 

 

 

 

 

(221

)

 

 

 

 

 

(221

)

 

 

 

September 30, 2023

$

19,689

 

 

$

31,711

 

 

$

(1,101

)

 

$

(11,672

)

 

$

38,627

 

 

$

153

 

 

$

38,780

 

 

$

1,851

 

(1)

Amounts include $2 million of common stock at both September 30, 2017 and December 31, 2016.

(1)
Amounts include $2 million of common stock at both September 30, 2023 and June 30, 2023.

See accompanying notes to condensed consolidated financial statements.

4


BlackRock, Inc.

Condensed Consolidated Statements of Changes in Equity

(unaudited)

For the Nine Months Ended September 30, 2022

(in millions)

Additional
Paid-in
Capital
(1)

 

 

Retained
Earnings

 

 

Accumulated
Other
Comprehensive
Income (Loss)

 

 

Treasury
Stock
Common

 

 

Total
BlackRock
Stockholders’
Equity

 

 

Nonredeemable
Noncontrolling
Interests

 

 

Total
Permanent
Equity

 

 

Redeemable
Noncontrolling
Interests /
Temporary
Equity

 

December 31, 2021

$

19,642

 

 

$

27,688

 

 

$

(550

)

 

$

(9,087

)

 

$

37,693

 

 

$

113

 

 

$

37,806

 

 

$

1,087

 

Net income

 

 

 

 

3,919

 

 

 

 

 

 

 

 

 

3,919

 

 

 

2

 

 

 

3,921

 

 

 

(234

)

Dividends declared ($14.64 per share)

 

 

 

 

(2,259

)

 

 

 

 

 

 

 

 

(2,259

)

 

 

 

 

 

(2,259

)

 

 

 

Stock-based compensation

 

536

 

 

 

 

 

 

 

 

 

 

 

 

536

 

 

 

 

 

 

536

 

 

 

 

Issuance of common shares related to
   employee stock transactions

 

(567

)

 

 

 

 

 

 

 

 

589

 

 

 

22

 

 

 

 

 

 

22

 

 

 

 

Employee tax withholdings related to
   employee stock transactions

 

 

 

 

 

 

 

 

 

 

(452

)

 

 

(452

)

 

 

 

 

 

(452

)

 

 

 

Shares repurchased

 

 

 

 

 

 

 

 

 

 

(1,375

)

 

 

(1,375

)

 

 

 

 

 

(1,375

)

 

 

 

Subscriptions (redemptions/distributions)
    — noncontrolling interest holders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

2

 

 

 

499

 

Net consolidations (deconsolidations)
   of sponsored investment funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

 

 

 

10

 

 

 

(524

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

(922

)

 

 

 

 

 

(922

)

 

 

 

 

 

(922

)

 

 

 

September 30, 2022

$

19,611

 

 

$

29,348

 

 

$

(1,472

)

 

$

(10,325

)

 

$

37,162

 

 

$

127

 

 

$

37,289

 

 

$

828

 

(in millions)

 

Additional

Paid-in

Capital(1)

 

 

Retained

Earnings

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Treasury

Stock

Common

 

 

Total

BlackRock

Stockholders’

Equity

 

 

Nonredeemable

Noncontrolling

Interests

 

 

Total

Permanent

Equity

 

 

Redeemable

Noncontrolling

Interests /

Temporary

Equity

 

December 31, 2015

 

$

19,407

 

 

$

12,033

 

 

$

(448

)

 

$

(2,489

)

 

$

28,503

 

 

$

77

 

 

$

28,580

 

 

$

464

 

Net income

 

 

 

 

 

2,321

 

 

 

 

 

 

 

 

 

2,321

 

 

 

(2

)

 

 

2,319

 

 

 

 

Dividends paid

 

 

 

 

 

(1,171

)

 

 

 

 

 

 

 

 

(1,171

)

 

 

 

 

 

(1,171

)

 

 

 

Stock-based compensation

 

 

408

 

 

 

 

 

 

 

 

 

 

 

 

408

 

 

 

 

 

 

408

 

 

 

 

PNC preferred stock capital

    contribution

 

 

172

 

 

 

 

 

 

 

 

 

 

 

 

172

 

 

 

 

 

 

172

 

 

 

 

Retirement of preferred stock

 

 

(172

)

 

 

 

 

 

 

 

 

 

 

 

(172

)

 

 

 

 

 

(172

)

 

 

 

Issuance of common shares

    related to employee stock

    transactions

 

 

(654

)

 

 

 

 

 

 

 

 

688

 

 

 

34

 

 

 

 

 

 

34

 

 

 

 

Employee tax withholdings

    related to employee stock

    transactions

 

 

 

 

 

 

 

 

 

 

 

(268

)

 

 

(268

)

 

 

 

 

 

(268

)

 

 

 

Shares repurchased

 

 

 

 

 

 

 

 

 

 

 

(850

)

 

 

(850

)

 

 

 

 

 

(850

)

 

 

 

Net tax benefit (shortfall) from

   stock-based compensation

 

 

77

 

 

 

 

 

 

 

 

 

 

 

 

77

 

 

 

 

 

 

77

 

 

 

 

Subscriptions (redemptions/

    distributions) —

    noncontrolling interest

    holders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18

)

 

 

(18

)

 

 

1,017

 

Net consolidations

    (deconsolidations) of

     sponsored

     investment funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(881

)

Other comprehensive

    income (loss)

 

 

 

 

 

 

 

 

(150

)

 

 

 

 

 

(150

)

 

 

 

 

 

(150

)

 

 

 

September 30, 2016

 

$

19,238

 

 

$

13,183

 

 

$

(598

)

 

$

(2,919

)

 

$

28,904

 

 

$

57

 

 

$

28,961

 

 

$

600

 

(1)
Amounts include $2 million of common stock at both September 30, 2022 and December 31, 2021.

For the Three Months Ended September 30, 2022

(in millions)

Additional
Paid-in
Capital
(1)

 

 

Retained
Earnings

 

 

Accumulated
Other
Comprehensive
Income (Loss)

 

 

Treasury
Stock
Common

 

 

Total
BlackRock
Stockholders’
Equity

 

 

Nonredeemable
Noncontrolling
Interests

 

 

Total
Permanent
Equity

 

 

Redeemable
Noncontrolling
Interests /
Temporary
Equity

 

June 30, 2022

$

19,471

 

 

$

28,678

 

 

$

(1,091

)

 

$

(9,969

)

 

$

37,089

 

 

$

113

 

 

$

37,202

 

 

$

1,103

 

Net income

 

 

 

 

1,406

 

 

 

 

 

 

 

 

 

1,406

 

 

 

4

 

 

 

1,410

 

 

 

(49

)

Dividends declared ($4.88 per share)

 

 

 

 

(736

)

 

 

 

 

 

 

 

 

(736

)

 

 

 

 

 

(736

)

 

 

 

Stock-based compensation

 

160

 

 

 

 

 

 

 

 

 

 

 

 

160

 

 

 

 

 

 

160

 

 

 

 

Issuance of common shares related to
   employee stock transactions

 

(20

)

 

 

 

 

 

 

 

 

28

 

 

 

8

 

 

 

 

 

 

8

 

 

 

 

Employee tax withholdings related to
   employee stock transactions

 

 

 

 

 

 

 

 

 

 

(9

)

 

 

(9

)

 

 

 

 

 

(9

)

 

 

 

Shares repurchased

 

 

 

 

 

 

 

 

 

 

(375

)

 

 

(375

)

 

 

 

 

 

(375

)

 

 

 

Subscriptions (redemptions/distributions)
    — noncontrolling interest holders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

74

 

Net consolidations (deconsolidations)
   of sponsored investment funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

 

 

 

10

 

 

 

(300

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

(381

)

 

 

 

 

 

(381

)

 

 

 

 

 

(381

)

 

 

 

September 30, 2022

$

19,611

 

 

$

29,348

 

 

$

(1,472

)

 

$

(10,325

)

 

$

37,162

 

 

$

127

 

 

$

37,289

 

 

$

828

 

(1)

Amounts include $2 million of common stock at both September 30, 2016 and December 31, 2015.

(1)
Amounts include $2 million of common stock at both September 30, 2022 and June 30, 2022.

See accompanying notes to condensed consolidated financial statements.

5


BlackRock,

BlackRock, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

 

 

Nine Months Ended

 

 

 

September 30,

 

(in millions)

 

2023

 

 

2022

 

Operating activities

 

 

 

 

 

 

Net income

 

$

4,187

 

 

$

3,687

 

Adjustments to reconcile net income to net cash provided by/(used in) operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

316

 

 

 

308

 

Noncash lease expense

 

 

108

 

 

 

123

 

Stock-based compensation

 

 

469

 

 

 

536

 

Deferred income tax expense (benefit)

 

 

41

 

 

 

(104

)

Other investment gains

 

 

 

 

 

(276

)

Net (gains) losses within CIPs

 

 

(116

)

 

 

510

 

Net (purchases) proceeds within CIPs

 

 

(1,387

)

 

 

(804

)

(Earnings) losses from equity method investees

 

 

(304

)

 

 

54

 

Distributions of earnings from equity method investees

 

 

32

 

 

 

27

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(607

)

 

 

254

 

Investments, trading

 

 

52

 

 

 

217

 

Other assets

 

 

(1,410

)

 

 

(2,273

)

Accrued compensation and benefits

 

 

(479

)

 

 

(1,282

)

Accounts payable and accrued liabilities

 

 

(67

)

 

 

123

 

Other liabilities

 

 

1,332

 

 

 

1,883

 

Net cash provided by/(used in) operating activities

 

 

2,167

 

 

 

2,983

 

Investing activities

 

 

 

 

 

 

Purchases of investments

 

 

(681

)

 

 

(516

)

Proceeds from sales and maturities of investments

 

 

270

 

 

 

190

 

Distributions of capital from equity method investees

 

 

26

 

 

 

59

 

Net consolidations (deconsolidations) of sponsored investment funds

 

 

21

 

 

 

(48

)

Acquisition, net of cash acquired

 

 

(189

)

 

 

 

Purchases of property and equipment

 

 

(220

)

 

 

(399

)

Net cash provided by/(used in) investing activities

 

 

(773

)

 

 

(714

)

Financing activities

 

 

 

 

 

 

Repayments of long-term borrowings

 

 

 

 

 

(750

)

Proceeds from long-term borrowings

 

 

1,238

 

 

 

 

Cash dividends paid

 

 

(2,292

)

 

 

(2,259

)

Proceeds from stock options exercised

 

 

51

 

 

 

 

Repurchases of common stock

 

 

(1,500

)

 

 

(1,827

)

Net proceeds from (repayments of) borrowings by CIPs

 

 

(38

)

 

 

 

Net subscriptions received/(redemptions/distributions paid) from noncontrolling interest holders

 

 

1,032

 

 

 

501

 

Other financing activities

 

 

20

 

 

 

19

 

Net cash provided by/(used in) financing activities

 

 

(1,489

)

 

 

(4,316

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(5

)

 

 

(479

)

Net increase/(decrease) in cash, cash equivalents and restricted cash

 

 

(100

)

 

 

(2,526

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

7,433

 

 

 

9,340

 

Cash, cash equivalents and restricted cash, end of period

 

$

7,333

 

 

$

6,814

 

Supplemental schedule of noncash investing and financing transactions:

 

 

 

 

 

 

Issuance of common stock

 

$

554

 

 

$

567

 

Increase (decrease) in noncontrolling interests due to net consolidation (deconsolidation) of
   sponsored investment funds

 

$

(129

)

 

$

(514

)

 

 

Nine Months Ended

 

(in millions)

 

September 30,

 

 

 

2017

 

 

2016

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income

 

$

2,697

 

 

$

2,319

 

Adjustments to reconcile net income to cash flows from operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

190

 

 

 

198

 

Stock-based compensation

 

 

417

 

 

 

408

 

Deferred income tax expense (benefit)

 

 

175

 

 

 

(6

)

Assets and liabilities of consolidated VIEs:

 

 

 

 

 

 

 

 

Change in cash and cash equivalents

 

 

(19

)

 

 

(127

)

Net (gains) losses within consolidated VIEs

 

 

(95

)

 

 

(34

)

Net (purchases) proceeds within consolidated VIEs

 

 

(148

)

 

 

(855

)

(Earnings) losses from equity method investees

 

 

(92

)

 

 

(71

)

Distributions of earnings from equity method investees

 

 

24

 

 

 

16

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(776

)

 

 

(336

)

Investments, trading

 

 

(145

)

 

 

(278

)

Other assets

 

 

(190

)

 

 

(114

)

Accrued compensation and benefits

 

 

(267

)

 

 

(484

)

Accounts payable and accrued liabilities

 

 

595

 

 

 

309

 

Other liabilities

 

 

120

 

 

 

17

 

Cash flows from operating activities

 

 

2,486

 

 

 

962

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchases of investments

 

 

(400

)

 

 

(292

)

Proceeds from sales and maturities of investments

 

 

121

 

 

 

215

 

Distributions of capital from equity method investees

 

 

26

 

 

 

26

 

Net consolidations (deconsolidations) of sponsored investment funds

 

 

(35

)

 

 

(74

)

Acquisitions

 

 

(102

)

 

 

(30

)

Purchases of property and equipment

 

 

(100

)

 

 

(88

)

Cash flows from investing activities

 

 

(490

)

 

 

(243

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from long-term borrowings

 

 

697

 

 

 

 

Repayments of long-term borrowings

 

 

(700

)

 

 

 

Cash dividends paid

 

 

(1,259

)

 

 

(1,171

)

Proceeds from stock options exercised

 

 

 

 

 

26

 

Repurchases of common stock

 

 

(1,133

)

 

 

(1,118

)

Net (redemptions/distributions paid)/subscriptions received from noncontrolling

   interest holders

 

 

324

 

 

 

999

 

Excess tax benefit from stock-based compensation

 

 

 

 

 

81

 

Other financing activities

 

 

(12

)

 

 

3

 

Cash flows from financing activities

 

 

(2,083

)

 

 

(1,180

)

Effect of exchange rate changes on cash and cash equivalents

 

 

161

 

 

 

(168

)

Net increase (decrease) in cash and cash equivalents

 

 

74

 

 

 

(629

)

Cash and cash equivalents, beginning of period

 

 

6,091

 

 

 

6,083

 

Cash and cash equivalents, end of period

 

$

6,165

 

 

$

5,454

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for:

 

 

 

 

 

 

 

 

Interest

 

$

150

 

 

$

144

 

Income taxes (net of refunds)

 

$

916

 

 

$

910

 

Supplemental schedule of noncash investing and financing transactions:

 

 

 

 

 

 

 

 

Issuance of common stock

 

$

612

 

 

$

654

 

PNC preferred stock capital contribution

 

$

193

 

 

$

172

 

Increase (decrease) in noncontrolling interests due to net consolidation (deconsolidation) of

   sponsored investment funds

 

$

(226

)

 

$

(881

)

See accompanying notes to condensed consolidated financial statements.

6


BlackRock,

BlackRock, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

1. Business Overview

BlackRock, Inc. (together, with its subsidiaries, unless the context otherwise indicates, “BlackRock” or the “Company”) is a leading publicly traded investment management firm providing a broad range of investment management and risk managementtechnology services to institutional and retail clients worldwide.

BlackRock’s diverse platform of alpha-seeking active, (alpha)index and index (beta)cash management investment strategies across asset classes enables the Company to offer choice and 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 investmenttrust funds and other pooled investment vehicles. BlackRock also offers antechnology services, including the investment and risk management technology platform, Aladdin®, risk analytics,Aladdin Wealth, eFront and Cachematrix, as well as advisory and technology services and solutions to a broad base of institutional and wealth management investors.clients.

At September 30, 2017, The PNC Financial Services Group, Inc. (“PNC”) held 21.4% of the Company’s voting common stock and 21.9% of the Company’s capital stock, which includes outstanding common and nonvoting preferred stock.

2. Significant Accounting Policies

Basis of Presentation.

These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and include the accounts of the Company and its controlled subsidiaries. Noncontrolling interests (“NCI”) on the condensed consolidated statements of financial condition representsrepresent the portion of consolidated sponsored investment fundsproducts (“CIPs”) and a consolidated affiliate (collectively, “consolidated entities”) in which the Company does not have direct equity ownership. AccountsIntercompany balances and transactions between consolidated entities have been eliminated.eliminated upon consolidation.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting periods. Actual results could differ from those estimates.

Certain financial information that normally is included in annual financial statements, including certain financial statement footnotes, is not required for interim reporting purposes and has been condensed or omitted herein. These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notesfootnotes related thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016,2022, which was filed with the Securities and Exchange Commission (“SEC”) on February 28, 201724, 2023 (“20162022 Form 10-K”).

The interim financial information at September 30, 20172023 and for the three and nine months ended September 30, 20172023 and 20162022 is unaudited. However, in the opinion of management, the interim information includes all normal recurring adjustments necessary for the fair presentation of the Company’s results for the periods presented. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year.

Certain items previously reported have been reclassified to conform to the current year presentation. Beginning with the first quarter of 2017, Aladdin revenue previously reported within “BlackRock Solutions® and advisory” has been presented within “Technology and risk management revenue” on the condensed consolidated statements of income.  The remaining previously reported “BlackRock Solutions and advisory” revenue is currently reported as part of “Advisory and other revenue.” The prior period amounts reported for BlackRock Solutions and advisory for the three and nine months ended September 30, 2016 have been reclassified to conform to the current presentation.

Accounting Pronouncements Adopted in the Nine Months Ended September 30, 2017.

Accounting for Share-Based Payments. In March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). ASU 2016-09 simplifies accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the condensed consolidated

7


statements of cash flows. The Company adopted ASU 2016-09 as of January 1, 2017. ASU 2016-09 requires all excess tax benefits and deficiencies to be recognized in income tax expense on the condensed consolidated statements of income. Accordingly, the Company recorded a discrete income tax benefit of $81 million during the three months ended March 31, 2017 for vested restricted stock units where the grant date stock price was lower than the vesting date stock price. The new guidance will increase the volatility of income tax expense as a result of fluctuations in the Company’s stock price. Upon adoption, the Company elected to account for forfeitures as they occur, which did not have a material impact on the condensed consolidated financial statements.  In addition, the Company elected to present excess tax benefits and deficiencies prospectively in operating activities on the condensed consolidated statements of cash flows.

Fair Value Measurements.Measurements

Hierarchy of Fair Value Inputs.    Inputs. The Company uses a fair value hierarchy that prioritizes inputs to valuation approaches used to measure fair value. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. Assets and liabilities measured and reported at fair value are classified and disclosed in one of the following categories:

Level 1 Inputs:

Quoted prices (unadjusted) in active markets for identical assets or liabilities at the reporting date.

Level 1 assets may include listed mutual funds, ETFs, listed equities, commodities and certain exchange-traded derivatives.

7


Level 2 Inputs:

Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities that are not active; quotes from pricing services or brokers for which the Company can determine that orderly transactions took place at the quoted price or that the inputs used to arrive at the price are observable; and inputs other than quoted prices that are observable, such as models or other valuation methodologies.

Level 2 assets may include debt securities, investments in CLOs,loans held within consolidated collateralized loan obligations (“CLOs”), short-term floating-rate notes, asset-backed securities, securities held within consolidated hedge funds, restricted public securities valued at a discount, as well as over-the-counter derivatives, including interest and inflation rate swaps and foreign currency exchange contracts that have inputs to the valuations that generally can be corroborated by observable market data.

Level 3 Inputs:

Unobservable inputs for the valuation of the asset or liability, which may include nonbinding broker quotes. Level 3 assets include investments for which there is little, if any, market activity. These inputs require significant management judgment or estimation.

Level 3 assets may include direct private equity investments, including those held within CIPs, investments in CLOs, and loans held within consolidated fundsCLOs and investments in CLOs.

CIPs.

Level 3 liabilities may include borrowings of consolidated CLOs and contingent liabilities related to acquisitions valued based upon discounted cash flow analyses, using unobservable market data.

data, or other valuation techniques.

Significance of Inputs.The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument.

Valuation Approaches.The fair values of certain Level 3 assets and liabilities were determined using various valuation approaches as appropriate, including third-party pricing vendors, broker quotes and market and income approaches. Such quotes and modeled prices are evaluated for reasonableness through various procedures, including due diligence reviews of third-party pricing vendors, variance analyses, consideration of the current market environment and other analytical procedures.

A significant number of inputs used to value equity, debt securities, and investments inloans held within CLOs isand CIPs are sourced from third-party pricing vendors. Generally, prices obtained from pricing vendors are categorized as Level 1 inputs for identical securities traded in active markets and as Level 2 for other similar securities if the vendor uses observable inputs in determining the price. Annually, BlackRock’s internal valuation committee or other designated groups review both the valuation approaches, including the general assumptions and methods used to value various asset classes, and

8


operational processes with these vendors. On a quarterly basis, meetings are held with key vendors to identify any significant changes to the vendors’ processes.

In addition, quotes obtained from brokers generally are nonbinding and categorized as Level 3 inputs. However, if the Company is able to determine that market participants have transacted for the asset in an orderly manner near the quoted price or if the Company can determine that the inputs used by the broker are observable, the quote is classified as a Level 2 input.

Investments Measured at Net Asset Values.As a practical expedient, the Company uses net asset value (“NAV”) as the fair value for certain investments. The inputs to value these investments may include BlackRockthe Company’s capital accounts for its partnership interests in various alternative investments, including hedge funds, real assets and private equity funds, which may be adjusted by using the returns of certain market indices. The various partnerships generally are investment companies, which record their underlying investments at fair value based on fair value policies established by management of the underlying fund. Fair value policies at the underlying fund generally require the fund to utilize pricing/valuation information from third-party sources, including independent appraisals. However, in some instances, current valuation information for illiquid securities or securities in markets that are not active may not be available from any third-party source or fund management may conclude that the valuations that are available from third-party sources are not reliable. In these instances, fund management may perform model-based analytical valuations that could be used as an input to value these investments.

Derivative InstrumentsFair Value Assets and Liabilities of Consolidated CLO. The Company applies the fair value option provisions for eligible assets, including loans, held by a consolidated CLO. As the fair value of the financial assets of the consolidated CLO is more observable than the fair value of the borrowings of the consolidated CLO, the Company measures the fair value of the borrowings of the consolidated CLO equal to the fair value of the assets of the consolidated CLO less the fair value of the Company’s economic interest in the CLO.

Derivatives and Hedging Activities.Activities. The Company does not use derivative financial instruments for trading or speculative purposes. The Company uses derivative financial instruments primarily for purposes of hedging exposures to fluctuations in foreign currency exchange rates of certain assets and liabilities, and market price and interest rate exposures for certainwith respect to its total portfolio of seed investments. However, certain consolidatedinvestments in sponsored investment funds mayproducts. Certain CIPs also utilize derivatives as a part of their investment strategy.

8


In addition, during 2023, the Company acquired both investments and derivatives to economically hedge market valuation changes on certain deferred cash compensation plans, for which the final value of the deferred amount distributed to employees in cash upon vesting is determined based on the returns of specified investment funds. The Company recognizes compensation expense for the appreciation (depreciation) of the deferred cash compensation liability in proportion to the vested amount of the award during a respective period, while the gain (loss) to economically hedge these plans is immediately recognized in nonoperating income (expense). See Note 4, Investments, and Note 8, Derivatives and Hedging, for further information on the Company’s investments and derivatives, respectively, used to economically hedge these deferred cash compensation plans.

The Company records all derivative financial instruments as either assets or liabilities at fair value on a gross basis in the condensed consolidated statements of financial condition. Credit risks are managed through master netting and collateral support agreements. The amounts related to the right to reclaim or the obligation to return cash collateral may not be used to offset amounts due under the derivative instruments in the normal course of settlement. Therefore, such amounts are not offset against fair value amounts recognized for derivative instruments with the same counterparty and are included in other assets and other liabilities. Changes in the fair value of the Company’s derivative financial instruments are recognized in earnings and, where applicable, are offset by the corresponding gain or loss on the related foreign-denominated or hedged assets or liabilities, or hedged investments, on the condensed consolidated statements of income.

The Company may also use financial instruments designated as net investment hedges for accounting purposes to hedge net investments in international subsidiaries whose functional currency is not U.S.United States ("US") dollars. The gain or loss from revaluing accountingnet investment hedges of net investments in foreign operations at the spot rate is deferred and reported within accumulated other comprehensive income (loss) (“AOCI”) on the condensed consolidated statements of financial condition. The Company reassesses the effectiveness of its net investment hedge on a quarterly basis.at least quarterly.

Money Market Fee Waivers.    The Company is currently voluntarily waiving a portion of its management fees on certain money market funds to ensure that they maintain a targeted level of daily net investment income (the “Yield Support waivers”). During the three and nine months ended September 30, 2017, these waivers resulted in a reduction of management fees of approximately $0million and $6 million, respectively.  During the three and nine months ended September 30, 2016, these waivers resulted in a reduction of management fees of approximately $17million and $42 million, respectively.  Approximately 0% and 45% of Yield Support waivers for the nine months ended September 30, 2017 and 2016, respectively, were offset by a reduction of BlackRock’s distribution and servicing costs paid to a financial intermediary.  BlackRock may increase or decrease the level of Yield Support waivers in future periods.

Separate Account Assets and Liabilities. Separate account assets are maintained by BlackRock Life Limited, a wholly owned subsidiary of the Company, which is a registered life insurance company in the United Kingdom (“UK”), and represent segregated assets held for purposes of funding individual and group pension contracts. The life insurance company does not underwrite any insurance contracts that involve any insurance risk transfer from the insured to the life insurance company. The separate account assets primarily include equity securities, debt securities, money market funds and derivatives. The separate account assets are not subject to general claims of the creditors of BlackRock. These separate account assets and the related equal and offsetting liabilities are recorded as separate account assets and separate account liabilities on the condensed consolidated statements of financial condition.

The net investment income attributable to separate account assets supporting individual and group pension contracts accrues directly to the contract owner and is not reported on the condensed consolidated statements of income. While BlackRock has no economic interest in these separate account assets and liabilities, BlackRock earns policy administration and management fees associated with these products, which are included in investment advisory, administration fees and securities lending revenue on the condensed consolidated statements of income.

9


Separate Account Collateral Assets Held and Liabilities Under Securities Lending Agreements.The Company facilitates securities lending arrangements whereby securities held by separate accounts maintained by BlackRock Life Limited are lent to third parties under global master securities lending agreements. In exchange, the Company receivesobtains either (1) the legal title, toor (2) a first ranking priority security interest, in the collateral. The minimum collateral with minimum values generally rangingrange from approximately 102%102% to 112%112% of the value of the securities lent in order to reduce counterparty risk. The required collateral value is calculated on a daily basis. The global master securities lending agreements provide the Company the right to request additional collateral or, in the event of borrower default, the right to liquidate collateral. The securities lending transactions entered into by the Company are accompanied by an agreement that entitles the Company to request the borrower to return the securities at any time; therefore, these transactions are not reported as sales.

The9


In situations where the Company obtains the legal title to collateral under these securities lending arrangements, the Company records an asset on the condensed consolidated statements of financial condition the cash and noncash collateral received under these BlackRock Life Limited securities lending arrangements as its own asset in addition to an equal and offsetting collateral liability for the obligation to return the collateral. Additionally, in situations where the Company obtains a first ranking priority security interest in the collateral, the Company does not have the ability to pledge or resell the collateral and therefore does not record the collateral on the condensed consolidated statements of financial condition. At September 30, 2023 and December 31, 2022, the fair value of loaned securities held by separate accounts was approximately $8.6 billion and $10.2 billion, respectively, and the fair value of the collateral under these securities lending agreements was approximately $9.3 billion and $11.0 billion, respectively, of which approximately $4.7 billion as of September 30, 2023 and $5.8 billion as of December 31, 2022 was recognized on the condensed consolidated statements of financial condition. During the nine months ended September 30, 2023 and 2022, the Company had not resold or repledged any of the collateral obtained under these arrangements. The securities lending revenue earned from lending securities held by the separate accounts is included in investment advisory, administration fees and securities lending revenue on the condensed consolidated statements of income.income.

Property and Equipment. Property and equipment are recorded at cost less accumulated depreciation. Depreciation is generally determined by cost less any estimated residual value using the straight-line method over the estimated useful lives of the various classes of property and equipment. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life or the remaining lease term. During the nine months ended September 30, 20172023, BlackRock reclassed approximately $400 million from construction in progress to leasehold improvements primarily related to its new headquarters located at 50 Hudson Yards in New York.

Money Market Fee Waivers. The Company may voluntarily waive a portion of its management fees on certain money market funds to ensure that they maintain a targeted level of daily net investment income (the “Yield Support waivers”). There were no Yield Support waivers during the three and 2016, the Company had not resold or repledged any of the collateral received under these arrangements. Atnine months ended September 30, 20172023 and December 31, 2016,during the fair valuethree months ended September 30, 2022. During the nine months ended September 30, 2022 Yield Support waivers resulted in a reduction of loaned securities heldmanagement fees of approximately $72 million. The reduction in management fees was partially offset by separate accounts was approximately $24.7 billiona reduction of BlackRock’s distribution and $25.7 billion, respectively, and the fair value of the collateral held under these securities lending agreements was approximately $27.4 billion and $27.8 billion, respectively.

Recent Accounting Pronouncements Not Yet Adopted.

Revenue from Contracts with Customers.    In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 outlines a single comprehensive model for entitiesservicing costs paid to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance also changes the accounting for certain contract costs and revises the criteria for determining if an entity is acting as a principal or agent in certain arrangements.financial intermediaries. The Company continues to evaluatemay increase or decrease the impactlevel of ASU 2014-09 on the presentationYield Support waivers in future periods.

10


3. Cash, Cash Equivalents, and recognitionRestricted Cash

The following table provides a reconciliation of its revenue contractscash and certain contract costs. The most significant change identified to date relates to the presentation of certain distribution costs, which are currently presented net against revenues (contra-revenue) and will likely be presented as an expense on a gross basis. The Company currently expects such net gross up to annual revenue to be approximately $1 billion with a corresponding gross up to annual expense. The Company is currently evaluating which transition method it will apply when it adopts the new revenue recognition guidance in the first quarter of 2018.

Recognition and Measurement of Financial Instruments.In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”).  ASU 2016-01 amends guidance on the classification and measurement of financial instruments, including significant revisions in accounting related to the classification and measurement of investments in equity securities and presentation of certain fair value changes for financial liabilities when the fair value option is elected.  ASU 2016-01 also amends certain disclosure requirements associated with the fair value of financial instruments. The Company does not currently expect the reclassification of unrealized gains(losses) on equity securitiescash equivalents reported within accumulated other comprehensive income to retained earnings to be material upon adoption effective January 1, 2018.  

Leases. In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”), which requires lessees to recognize assets and liabilities arising from most operating leases on the condensed consolidated statements of financial condition. The Company expectscondition to record assetsthe cash, cash equivalents, and liabilities for its current operating leases upon adoption of ASU 2016-02 and does not expect the adoption to have a material impact on its results of operations orrestricted cash flows. ASU 2016-02 is effective for the Company on January 1, 2019, and the Company intends to apply the practical expedients allowed by the standard upon transition.  See Note 13 of the 2016 Form 10-K for information on the Company’s operating lease commitments.

Cash Flow Classification.  In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which amends and clarifies the current guidance to reduce diversity in practice of the classification of certain cash receipts and payments inreported within the condensed consolidated statements of cash flows. The Company is currently evaluating the impact of adopting ASU 2016-15, which is effective for the Company on January 1, 2018 with early adoption permitted. The Company must apply the guidance retrospectively to all periods presented.

 

 

September 30,

 

 

December 31,

 

(in millions)

 

2023

 

 

2022

 

Cash and cash equivalents

 

$

7,316

 

 

$

7,416

 

Restricted cash included in other assets

 

 

17

 

 

 

17

 

Total cash, cash equivalents and restricted cash

 

$

7,333

 

 

$

7,433

 

104. Investments


3.  Investments

A summary of the carrying value of total investments is as follows:

 

September 30,

 

 

December 31,

 

(in millions)

2023

 

 

2022

 

Debt securities:

 

 

 

 

 

Trading securities (including $2,059 and $1,279 held by CIPs at
   September 30, 2023 and December 31, 2022, respectively)

$

2,100

 

 

$

1,331

 

Held-to-maturity investments

 

595

 

 

 

544

 

Total debt securities

 

2,695

 

 

 

1,875

 

Equity securities at FVTNI (including $1,332 and $1,089 held by CIPs at
   September 30, 2023 and December 31, 2022, respectively)
(1)

 

1,449

 

 

 

1,211

 

Equity method investments:

 

 

 

 

 

Equity method investments(2)

 

2,306

 

 

 

1,895

 

Investments related to deferred cash compensation plans(1)

 

228

 

 

 

 

Total equity method investments

 

2,534

 

 

 

1,895

 

Loans held by CIPs

 

542

 

 

 

354

 

Federal Reserve Bank stock(3)

 

92

 

 

 

91

 

Carried interest(4)

 

1,945

 

 

 

1,550

 

Other investments(1)(5)

 

578

 

 

 

490

 

Total investments

$

9,835

 

 

$

7,466

 

 

 

September 30,

 

 

December 31,

 

(in millions)

 

2017

 

 

2016

 

Available-for-sale investments

 

$

104

 

 

$

80

 

Held-to-maturity investments

 

 

76

 

 

 

51

 

Trading investments:

 

 

 

 

 

 

 

 

Consolidated sponsored investment funds

 

 

507

 

 

 

465

 

Other equity and debt securities

 

 

131

 

 

 

101

 

Deferred compensation plan mutual funds

 

 

54

 

 

 

59

 

Total trading investments

 

 

692

 

 

 

625

 

Other investments:

 

 

 

 

 

 

 

 

Equity method investments(1)

 

 

944

 

 

 

730

 

Cost method investments(2)

 

 

92

 

 

 

91

 

Carried interest(3)

 

 

20

 

 

 

18

 

Total other investments

 

 

1,056

 

 

 

839

 

Total investments

 

$

1,928

 

 

$

1,595

 

(1)

(1)

Equity method investments primarily include BlackRock’s direct investments in certain BlackRock sponsored investment funds.

(2)

Amounts include nonmarketable securities, primarily Federal Reserve Bank stock, which is held for regulatory purposes and is restricted from sale. At September 30, 2017 and December 31, 2016, there were no indicatorsAmounts include investments held to economically hedge the impact of market valuation changes on certain deferred cash compensation plans of $228 million, $14 million, and $10 million included within equity method investments, equity securities at fair value recorded through net income ("FVTNI") and other investments, respectively, as of impairment on these investments.

(3)

Carried interest of consolidated sponsor investment funds accounted for as voting rights entities (“VREs”) represents allocations to BlackRock’s general partner capital accounts from certain funds. These balances are subject to change upon cash distributions, additional allocations or reallocations back to limited partners within the respective funds.

Available-for-Sale Investments

At both September 30, 20172023.

(2)
Equity method investments primarily include BlackRock’s direct investments in certain BlackRock sponsored investment funds.
(3)
Federal Reserve Bank stock is held for regulatory purposes and December 31, 2016, available-for-saleis restricted from sale.
(4)
Carried interest represents allocations to BlackRock’s general partner capital accounts from certain sponsored investment funds. These balances are subject to change upon cash distributions, additional allocations or reallocations back to limited partners within the respective funds.
(5)
Other investments primarilyinclude BlackRock’s investments in nonmarketable equity securities, which are measured at cost, adjusted for observable price changes, and private equity, real asset, and commodity investments held by CIPs, which are measured at fair value.

Held-to-Maturity Investments

Held-to-maturity investments included certain investments in CLOs and seed investments in BlackRock sponsored mutual funds.  The cost of these investments approximated carrying value. 

Held-to-Maturity Investments

The carrying value of held-to-maturity investments was $76 million and $51 million at September 30, 2017 and December 31, 2016, respectively. Held-to-maturity investments included foreign government debt held primarily for regulatory purposes and certain investments in CLOs. The amortized cost (carrying value) of these investments approximated fair value.value (primarily a Level 2 input). At September 30, 2017, $112023, $9 million of these investments mature between one to five years, $299 million of these investments mature between five toten years and $65$287 million of these investments mature after ten years.

11


Trading InvestmentsDebt Securities and Equity Securities at FVTNI

A summary of the cost and carrying value of trading investmentsdebt securities and equity securities at FVTNI is as follows:

 

 

 

 

 

 

 

 

 

 

September 30, 2023

 

 

December 31, 2022

 

(in millions)

Cost

 

 

Carrying
Value

 

 

Cost

 

 

Carrying
Value

 

Trading debt securities:

 

 

 

 

 

 

 

 

 

 

 

Corporate debt

$

1,500

 

 

$

1,434

 

 

$

823

 

 

$

795

 

Government debt

 

533

 

 

 

500

 

 

 

420

 

 

 

400

 

Asset/mortgage-backed debt

 

190

 

 

 

166

 

 

 

154

 

 

 

136

 

Total trading debt securities

$

2,223

 

 

$

2,100

 

 

$

1,397

 

 

$

1,331

 

Equity securities at FVTNI:

 

 

 

 

 

 

 

 

 

 

 

Equity securities/mutual funds

$

1,434

 

 

$

1,449

 

 

$

1,216

 

 

$

1,211

 

5. Consolidated Sponsored Investment Products

 

 

September 30,

 

 

December 31,

 

(in millions)

 

2017

 

 

2016

 

 

 

Cost

 

 

Carrying

Value

 

 

Cost

 

 

Carrying

Value

 

Trading investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation plan mutual funds

 

$

34

 

 

$

54

 

 

$

41

 

 

$

59

 

Equity securities/multi-asset mutual funds

 

 

323

 

 

 

353

 

 

 

290

 

 

 

308

 

Debt securities/fixed income mutual funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt

 

 

160

 

 

 

162

 

 

 

128

 

 

 

128

 

Government debt

 

 

59

 

 

 

60

 

 

 

60

 

 

 

60

 

Asset/mortgage backed debt

 

 

62

 

 

 

63

 

 

 

70

 

 

 

70

 

Total trading investments

 

$

638

 

 

$

692

 

 

$

589

 

 

$

625

 

At September 30, 2017, trading investments included $268 million of debt securities and $239 million of equity securities held by consolidated sponsored investment funds accounted for as VREs, $54 million of certain deferred compensation plan mutual fund investments and $131 million of other equity and debt securities.

11


At December 31, 2016, trading investments included $246 million of debt securities and $219 million of equity securities held by consolidated sponsored investment funds accounted for as VREs, $59 million of certain deferred compensation plan mutual fund investments and $101 million of other equity and debt securities.

Other

In addition, the Company accounts for its interest in PennyMac Financial Services, Inc. (“PennyMac”) as an equity method investment. At September 30, 2017 and December 31, 2016 the Company’s investment in PennyMac was excluded from investments in the table above and included in other assets on the condensed consolidated statements of financial condition. The carrying value and fair value of the Company’s interest (approximately 20% or 16 million shares and units) was approximately $333 million and $277 million, respectively, at September 30, 2017 and approximately $301 million and $259 million, respectively, at December 31, 2016. The fair value of the Company’s interest reflected the PennyMac stock price at September 30, 2017 and December 31, 2016, respectively (a Level 1 input).  The Company performed an other-than-temporary impairment analysis as of September 30, 2017 and determined the difference in fair value below the carrying value to be temporary.

4.   Consolidated Voting Rights Entities

The Company consolidates certain sponsored investment funds accounted for as VREsvoting rights entities (“VREs”) because it is deemed to control such funds. The investments owned by these consolidated VREs are classified as trading investments. The following table presents the balances related to these consolidated VREs that were recorded on the condensed consolidated statements of financial condition, including BlackRock’s net interest in these funds:

 

 

September 30,

 

 

December 31,

 

(in millions)

 

2017

 

 

2016

 

Cash and cash equivalents

 

$

73

 

 

$

53

 

Trading investments

 

 

507

 

 

 

465

 

Other assets

 

 

28

 

 

 

15

 

Other liabilities

 

 

(61

)

 

 

(50

)

Noncontrolling interests ("NCI")

 

 

(68

)

 

 

(39

)

BlackRock’s net interests in consolidated VREs

 

$

479

 

 

$

444

 

BlackRock’s total exposure to consolidated VREs represents the value of its economic ownership interest in these sponsored investment funds. Valuation changes associated with investments held at fair value by these consolidated VREs are reflected in nonoperating income (expense) and partially offset in net income (loss) attributable to noncontrolling interests for the portion not attributable to BlackRock.

The Company cannot readily access cash and cash equivalents held by consolidated VREs to use in its operating activities.

12


5.   Variable Interest Entities

In the normal course of business, the Company is the manager of various types of sponsored investment vehicles, which may be considered variable interest entities (“VIEs”).VIEs. The Company may from time to time own equity or debt securities or enter into derivatives or loan arrangements with the vehicles, each of which are considered variable interests. The Company’s involvement in financing the operations of the VIEs is generally limited to its investmentseconomic interest in the entity. The Company consolidates entities when it is determined to be the primary beneficiary (“PB”).  

Consolidated VIEs.    The Company’s consolidated VIEs include certain sponsored investment fundsproducts in which BlackRock has an investmenteconomic interest and as the investment manager, is deemed to have both the power to direct the most significant activities of the fundsproducts and the right to receive benefits (or the obligation to absorb losses) that could potentially be significant to these sponsored investment funds.products. The assets of these VIEs are not available to creditors of the Company. In addition, the investors in these VIEs have no recourse to the credit of the Company.

The following table presents the balances related to these CIPs accounted for as VIEs and VREs that were recorded on the condensed consolidated statements of financial condition, including BlackRock’s net interest in these products:

 

 

September 30, 2023

 

 

December 31, 2022

 

(in millions)

 

VIEs

 

 

VREs

 

 

Total

 

 

VIEs

 

 

VREs

 

 

Total

 

Cash and cash equivalents(1)

 

$

246

 

 

$

76

 

 

$

322

 

 

$

234

 

 

$

31

 

 

$

265

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading debt securities

 

 

1,665

 

 

 

394

 

 

 

2,059

 

 

 

949

 

 

 

330

 

 

 

1,279

 

Equity securities at FVTNI

 

 

945

 

 

 

387

 

 

 

1,332

 

 

 

821

 

 

 

268

 

 

 

1,089

 

Loans

 

 

214

 

 

 

328

 

 

 

542

 

 

 

234

 

 

 

120

 

 

 

354

 

Other investments

 

 

431

 

 

 

105

 

 

 

536

 

 

 

373

 

 

 

77

 

 

 

450

 

Carried interest

 

 

1,880

 

 

 

 

 

 

1,880

 

 

 

1,497

 

 

 

 

 

 

1,497

 

Total investments

 

 

5,135

 

 

 

1,214

 

 

 

6,349

 

 

 

3,874

 

 

 

795

 

 

 

4,669

 

Other assets

 

 

83

 

 

 

72

 

 

 

155

 

 

 

68

 

 

 

29

 

 

 

97

 

Other liabilities(2)

 

 

(2,207

)

 

 

(294

)

 

 

(2,501

)

 

 

(1,876

)

 

 

(48

)

 

 

(1,924

)

Noncontrolling interest - CIPs

 

 

(1,686

)

 

 

(271

)

 

 

(1,957

)

 

 

(857

)

 

 

(125

)

 

 

(982

)

BlackRock's net interest in CIPs

 

$

1,571

 

 

$

797

 

 

$

2,368

 

 

$

1,443

 

 

$

682

 

 

$

2,125

 

(1)
The Company generally cannot readily access cash and cash equivalents held by CIPs to use in its operating activities.
(2)
At September 30, 2023, other liabilities of VIEs primarily include deferred carried interest liabilities, borrowings of a consolidated CLO of $201 million and borrowings of other CIPs of $115 million. At December 31, 2022, other liabilities of VIEs primarily included deferred carried interest liabilities and borrowings of a consolidated CLO. Borrowings of other CIPs are recorded at amortized cost, which approximates fair value (a Level 3 input).

12


Consolidated VIE assetsBlackRock’s total exposure to CIPs represents the value of its economic ownership interest in these CIPs. Valuation changes associated with investments held at fair value by these CIPs are reflected in nonoperating income (expense) and liabilities are presented after intercompany eliminationspartially offset in net income (loss) attributable to NCI for the following table:

portion not attributable to BlackRock.

 

 

September 30,

 

 

December 31,

 

(in millions)

 

2017

 

 

2016

 

Assets of consolidated VIEs:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

82

 

 

$

84

 

Investments

 

 

1,286

 

 

 

1,008

 

Other assets

 

 

46

 

 

 

63

 

Total investments and other assets

 

 

1,332

 

 

 

1,071

 

Liabilities of consolidated VIEs

 

 

(319

)

 

 

(216

)

Noncontrolling interests

 

 

(307

)

 

 

(207

)

BlackRock's net interests in consolidated VIEs

 

$

788

 

 

$

732

 

Net gain (loss) related to consolidated VIEs is presented in the following table:

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in millions)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Nonoperating net gain (loss) on consolidated VIEs

 

$

(26

)

 

$

(89

)

 

$

113

 

 

$

(405

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to NCI on consolidated VIEs

 

$

(8

)

 

$

(35

)

 

$

65

 

 

$

(218

)

 

 

 

 

 

 

 

 

 

 

 

 

 

6. Variable Interest Entities

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in millions)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonoperating net gain (loss) on consolidated VIEs

 

$

29

 

 

$

19

 

 

$

95

 

 

$

34

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain (loss) attributable to NCI on consolidated VIEs

 

$

10

 

 

$

1

 

 

$

28

 

 

$

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-ConsolidatedNonconsolidated VIEs. At September 30, 20172023 and December 31, 2016,2022, the Company’s carrying value of assets and liabilities included on the condensed consolidated statements of financial condition pertaining to nonconsolidated VIEs and its maximum risk of loss related to VIEs for which it held a variable interest, but for which it was not the PB,primary beneficiary, was as follows:

(in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At September 30, 2017

 

Investments

 

 

Advisory Fee Receivables

 

 

Other Net Assets (Liabilities)

 

 

Maximum Risk of Loss(1)

 

Sponsored investment products

 

$

227

 

 

$

15

 

 

$

(7

)

 

$

259

 

At December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sponsored investment products

 

$

171

 

 

$

9

 

 

$

(8

)

 

$

197

 

 

 

 

 

Advisory Fee

 

 

Other Net Assets

 

 

Maximum

 

(in millions)

Investments

 

Receivables

 

(Liabilities)

 

Risk of Loss(1)

 

September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 Sponsored investment
   products

$

2,193

 

$

89

 

$

(11

)

$

2,299

 

December 31, 2022

 

 

 

 

 Sponsored investment
   products

$

1,060

 

$

95

 

$

(12

)

$

1,172

 

(1)
At both September 30, 2023 and December 31, 2022, BlackRock’s maximum risk of loss associated with these VIEs primarily related to BlackRock’s investments and the collection of advisory fee receivables.

(1)

At both September 30, 2017 and December 31, 2016, BlackRock’s maximum risk of loss associated with these VIEs primarily related to BlackRock’s investments and the collection of advisory fee receivables.

The net assets of sponsored investment products that are nonconsolidated VIEs approximated $5$33 billion and $4$19 billion at September 30, 20172023 and December 31, 2016,2022, respectively.

13


6.7. Fair Value Disclosures

Fair Value Hierarchy

Assets and liabilities measured at fair value on a recurring basis and other assets not held at fair value

September 30, 2023
(in millions)

Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

 

Investments
Measured at
NAV
(1)

 

 

Other(2)

 

 

September 30,
 2023

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading securities

$

 

 

$

2,060

 

 

$

40

 

 

$

 

 

$

 

 

$

2,100

 

Held-to-maturity investments

 

 

 

 

 

 

 

 

 

 

 

 

 

595

 

 

 

595

 

Total debt securities

 

 

 

 

2,060

 

 

 

40

 

 

 

 

 

 

595

 

 

 

2,695

 

Equity securities at FVTNI:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities/mutual funds

 

1,449

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,449

 

Equity method:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity, fixed income, and multi-asset
   mutual funds

 

231

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

231

 

Hedge funds/funds of hedge
   funds/other

 

 

 

 

 

 

 

 

 

 

495

 

 

 

 

 

 

495

 

Private equity funds

 

 

 

 

 

 

 

 

 

 

1,200

 

 

 

 

 

 

1,200

 

Real assets funds

 

 

 

 

 

 

 

 

 

 

380

 

 

 

 

 

 

380

 

Investments related to deferred
   cash compensation plans

 

 

 

 

 

 

 

 

 

 

228

 

 

 

 

 

 

228

 

Total equity method

 

231

 

 

 

 

 

 

 

 

 

2,303

 

 

 

 

 

 

2,534

 

Loans

 

 

 

 

161

 

 

 

381

 

 

 

 

 

 

 

 

 

542

 

Federal Reserve Bank Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

92

 

 

 

92

 

Carried interest

 

 

 

 

 

 

 

 

 

 

 

 

 

1,945

 

 

 

1,945

 

Other investments

 

18

 

 

 

 

 

 

 

 

 

405

 

 

 

155

 

 

 

578

 

Total investments

 

1,698

 

 

 

2,221

 

 

 

421

 

 

 

2,708

 

 

 

2,787

 

 

 

9,835

 

Other assets(3)

 

104

 

 

 

5

 

 

 

107

 

 

 

 

 

 

 

 

 

216

 

Separate account assets

 

33,308

 

 

 

17,524

 

 

 

 

 

 

 

 

 

774

 

 

 

51,606

 

Separate account collateral held under
securities lending agreements:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities

 

1,906

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,906

 

Debt securities

 

 

 

 

2,834

 

 

 

 

 

 

 

 

 

 

 

 

2,834

 

Total separate account collateral held
   under securities lending agreements

 

1,906

 

 

 

2,834

 

 

 

 

 

 

 

 

 

 

 

 

4,740

 

Total

$

37,016

 

 

$

22,584

 

 

$

528

 

 

$

2,708

 

 

$

3,561

 

 

$

66,397

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Separate account collateral
   liabilities under securities
   lending agreements

$

1,906

 

 

$

2,834

 

 

$

 

 

$

 

 

$

 

 

$

4,740

 

Other liabilities(4)

 

 

 

 

41

 

 

 

295

 

 

 

 

 

 

 

 

 

336

 

Total

$

1,906

 

 

$

2,875

 

 

$

295

 

 

$

 

 

$

 

 

$

5,076

 

September 30, 2017

 

Quoted

Prices in

Active

Markets for

Identical

Assets

 

 

Significant

Other

Observable

Inputs

 

 

Significant

Unobservable

Inputs

 

 

Investments

Measured at

 

 

Other Assets

Not Held at

 

 

September 30,

 

(in millions)

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

NAV(1)

 

 

Fair Value(2)

 

 

2017

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale

 

$

8

 

 

$

73

 

 

$

23

 

 

$

 

 

$

 

 

$

104

 

Held-to-maturity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

76

 

 

 

76

 

Trading:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation plan mutual funds

 

 

54

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

54

 

Equity securities/Multi-asset mutual funds

 

 

353

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

353

 

Debt securities / fixed income mutual funds

 

 

1

 

 

 

282

 

 

 

2

 

 

 

 

 

 

 

 

 

285

 

Total trading

 

 

408

 

 

 

282

 

 

 

2

 

 

 

 

 

 

 

 

 

692

 

Other investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity method:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity and fixed income mutual funds

 

 

314

 

 

 

 

 

 

 

 

 

10

 

 

 

 

 

 

324

 

Other

 

 

 

 

 

 

 

 

 

 

 

608

 

 

 

12

 

 

 

620

 

Total equity method

 

 

314

 

 

 

 

 

 

 

 

 

618

 

 

 

12

 

 

 

944

 

Cost method investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

92

 

 

 

92

 

Carried interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20

 

 

 

20

 

Total investments

 

 

730

 

 

 

355

 

 

 

25

 

 

 

618

 

 

 

200

 

 

 

1,928

 

Separate account assets

 

 

112,957

 

 

 

34,268

 

 

 

 

 

 

 

 

 

713

 

 

 

147,938

 

Separate account collateral held under securities lending

   agreements:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities

 

 

19,093

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19,093

 

Debt securities

 

 

 

 

 

8,338

 

 

 

 

 

 

 

 

 

 

 

 

8,338

 

Total separate account collateral held under securities

   lending agreements

 

 

19,093

 

 

 

8,338

 

 

 

 

 

 

 

 

 

 

 

 

27,431

 

Investments of consolidated VIEs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private / public equity(3)

 

 

5

 

 

 

3

 

 

 

114

 

 

 

69

 

 

 

83

 

 

 

274

 

Equity securities

 

 

338

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

338

 

Debt securities

 

 

 

 

 

350

 

 

 

 

 

 

 

 

 

 

 

 

350

 

Other

 

 

 

 

 

 

 

 

 

 

 

64

 

 

 

 

 

 

64

 

Carried interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

260

 

 

 

260

 

Total investments of consolidated VIEs

 

 

343

 

 

 

353

 

 

 

114

 

 

 

133

 

 

 

343

 

 

 

1,286

 

Total

 

$

133,123

 

 

$

43,314

 

 

$

139

 

 

$

751

 

 

$

1,256

 

 

$

178,583

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Separate account collateral liabilities under securities

   lending agreements

 

$

19,093

 

 

$

8,338

 

 

$

 

 

$

 

 

$

 

 

$

27,431

 

Other liabilities(4)

 

 

 

 

 

7

 

 

 

228

 

 

 

 

 

 

 

 

 

235

 

Total

 

$

19,093

 

 

$

8,345

 

 

$

228

 

 

$

 

 

$

 

 

$

27,666

 

(1)

(1)

Amounts are comprised of certain investments measured at fair value using NAV (or its equivalent) as a practical expedient.

(2)

Amounts are comprised of investments held at cost or amortized cost, carried interest and certain equity method investments, which include sponsored investment funds and other assets, which are not accounted for under a fair value measure. In accordance with GAAP, certain equity method investees do not account for both their financial assets and liabilities under fair value measures; therefore, the Company’s investment in such equity method investees may not represent fair value.

(3)

Level 3 amounts primarily include direct investments in private equity companies held by private equity funds.

(4)

Amounts primarily include contingent liabilities related to certain acquisitions (see Note 11, Commitments and Contingencies, for more information).

14


Assets and liabilities measured at fair value onusing NAV (or its equivalent) as a recurring basispractical expedient.

(2)
Amounts are comprised of investments held at amortized cost and cost, adjusted for observable price changes, carried interest, certain equity method investments and other assets, which are not accounted for under a fair value measure. In accordance with GAAP, certain equity method investees do not account for both their financial assets and liabilities under fair value measures; therefore, the Company’s investment in such equity method investees may not represent fair value.
(3)
Level 1 amount includes a minority investment in a publicly traded company. Level 3 amount includes a strategic private debt investment with changes in fair value recorded in AOCI, net of tax.
(4)
Level 2 amount primarily includes fair value of derivatives (See Note 8, Derivatives and Hedging, for more information). Level 3 amount primarily includes borrowings of a consolidated CLO classified based on the significance of unobservable inputs used for calculating the fair value of consolidated CLO assets, and contingent liabilities related to acquisitions.

14


December 31, 2022
(in millions)

Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

 

Investments
Measured at
NAV
(1)

 

 

Other(2)

 

 

December 31,
2022

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading securities

$

 

 

$

1,279

 

 

$

52

 

 

$

 

 

$

 

 

$

1,331

 

Held-to-maturity investments

 

 

 

 

 

 

 

 

 

 

 

 

 

544

 

 

 

544

 

Total debt securities

 

 

 

 

1,279

 

 

 

52

 

 

 

 

 

 

544

 

 

 

1,875

 

Equity securities at FVTNI:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities/mutual funds

 

1,211

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,211

 

Equity method:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity, fixed income, and multi-asset
   mutual funds

 

181

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

181

 

Hedge funds/funds of hedge
   funds/other

 

 

 

 

 

 

 

 

 

 

525

 

 

 

 

 

 

525

 

Private equity funds

 

 

 

 

 

 

 

 

 

 

885

 

 

 

 

 

 

885

 

Real assets funds

 

 

 

 

 

 

 

 

 

 

304

 

 

 

 

 

 

304

 

Total equity method

 

181

 

 

 

 

 

 

 

 

 

1,714

 

 

 

 

 

 

1,895

 

Loans

 

 

 

 

106

 

 

 

248

 

 

 

 

 

 

 

 

 

354

 

Federal Reserve Bank Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

91

 

 

 

91

 

Carried interest

 

 

 

 

 

 

 

 

 

 

 

 

 

1,550

 

 

 

1,550

 

Other investments

 

28

 

 

 

 

 

 

 

 

 

316

 

 

 

146

 

 

 

490

 

Total investments

 

1,420

 

 

 

1,385

 

 

 

300

 

 

 

2,030

 

 

 

2,331

 

 

 

7,466

 

Other assets(3)

 

145

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

146

 

Separate account assets

 

34,823

 

 

 

18,544

 

 

 

 

 

 

 

 

 

699

 

 

 

54,066

 

Separate account collateral held under
securities lending agreements:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities

 

2,163

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,163

 

Debt securities

 

 

 

 

3,602

 

 

 

 

 

 

 

 

 

 

 

 

3,602

 

Total separate account collateral held
   under securities lending agreements

 

2,163

 

 

 

3,602

 

 

 

 

 

 

 

 

 

 

 

 

5,765

 

Total

$

38,551

 

 

$

23,532

 

 

$

300

 

 

$

2,030

 

 

$

3,030

 

 

$

67,443

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Separate account collateral
   liabilities under securities
   lending agreements

$

2,163

 

 

$

3,602

 

 

$

 

 

$

 

 

$

 

 

$

5,765

 

Other liabilities(4)

 

 

 

 

31

 

 

 

280

 

 

 

 

 

 

 

 

 

311

 

Total

$

2,163

 

 

$

3,633

 

 

$

280

 

 

$

 

 

$

 

 

$

6,076

 

(1)
Amounts are comprised of certain investments measured at fair value using NAV (or its equivalent) as a practical expedient.
(2)
Amounts are comprised of investments held at amortized cost and cost, adjusted for observable price changes, carried interest and certain equity method investments, which include sponsored investment funds and other assets, which are not accounted for under a fair value

measure. In accordance with GAAP, certain equity method investees do not account for both their financial assets and liabilities under fair value measures; therefore, the Company’s investment in such equity method investees may not represent fair value.

December 31, 2016

(in millions)

 

Quoted Prices in

Active

Markets for

Identical Assets

(Level 1)

 

 

Significant Other

Observable Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

 

Investments Measured at NAV(1)

 

 

Other Assets

Not Held at Fair

Value(2)

 

 

December 31,

2016

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale

 

$

7

 

 

$

49

 

 

$

24

 

 

$

 

 

$

 

 

$

80

 

Held-to-maturity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

51

 

 

 

51

 

Trading:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation plan mutual funds

 

 

59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

59

 

Equity/Multi-asset mutual funds

 

 

308

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

308

 

Debt securities / fixed income mutual funds

 

 

1

 

 

 

250

 

 

 

7

 

 

 

 

 

 

 

 

 

258

 

Total trading

 

 

368

 

 

 

250

 

 

 

7

 

 

 

 

 

 

 

 

 

625

 

Other investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity method:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity and fixed income mutual funds

 

 

323

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

328

 

Other

 

 

 

 

 

 

 

 

 

 

 

394

 

 

 

8

 

 

 

402

 

Total equity method

 

 

323

 

 

 

 

 

 

 

 

 

399

 

 

 

8

 

 

 

730

 

Cost method investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

91

 

 

 

91

 

Carried interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18

 

 

 

18

 

Total investments

 

 

698

 

 

 

299

 

 

 

31

 

 

 

399

 

 

 

168

 

 

 

1,595

 

Separate account assets

 

 

109,663

 

 

 

38,542

 

 

 

 

 

 

 

 

 

884

 

 

 

149,089

 

Separate account collateral held under securities lending agreements:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities

 

 

22,173

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22,173

 

Debt securities

 

 

 

 

 

5,619

 

 

 

 

 

 

 

 

 

 

 

 

5,619

 

Total separate account collateral held under securities lending agreements

 

 

22,173

 

 

 

5,619

 

 

 

 

 

 

 

 

 

 

 

 

27,792

 

Investments of consolidated VIEs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private / public equity(3)

 

 

3

 

 

 

2

 

 

 

112

 

 

 

89

 

 

 

79

 

 

 

285

 

Equity securities

 

 

278

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

278

 

Debt securities

 

 

 

 

 

274

 

 

 

 

 

 

 

 

 

 

 

 

274

 

Other

 

 

 

 

 

 

 

 

 

 

 

63

 

 

 

 

 

 

63

 

Carried interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

108

 

 

 

108

 

Total investments of consolidated VIEs

 

 

281

 

 

 

276

 

 

 

112

 

 

 

152

 

 

 

187

 

 

 

1,008

 

Total

 

$

132,815

 

 

$

44,736

 

 

$

143

 

 

$

551

 

 

$

1,239

 

 

$

179,484

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Separate account collateral liabilities under securities lending agreements

 

$

22,173

 

 

$

5,619

 

 

$

 

 

$

 

 

$

 

 

$

27,792

 

Other liabilities(4)

 

 

 

 

 

7

 

 

 

115

 

 

 

 

 

 

 

 

 

122

 

Total

 

$

22,173

 

 

$

5,626

 

 

$

115

 

 

$

 

 

$

 

 

$

27,914

 

(3)
Level 1 amount includes a minority investment in a publicly traded company. Level 2 amount primarily includes fair value of derivatives (See Note 8, Derivatives and Hedging, for more information).
(4)
Level 2 amount primarily includes fair value of derivatives (See Note 8, Derivatives and Hedging, for more information). Level 3 amount primarily includes borrowings of a consolidated CLO classified based on the significance of unobservable inputs used for calculating the fair value of consolidated CLO assets, and a contingent liability related to an acquisition.

(1)

Amounts are comprised of certain investments measured at fair value using NAV (or its equivalent) as a practical expedient.

(2)

Amounts are comprised of investments held at cost or amortized cost, carried interest and certain equity method investments, which include sponsored investment funds and other assets, which are not accounted for under a fair value measure. In accordance with GAAP, certain equity method investees do not account for both their financial assets and liabilities under fair value measures; therefore, the Company’s investment in such equity method investees may not represent fair value.

(3)

Level 3 amounts include direct investments in private equity companies held by private equity funds.

(4)

Amounts primarily include contingent liabilities related to certain acquisitions (see Note 11, Commitments and Contingencies, for more information).


15


Level 3 Assets.Level 3 assets predominantly include investments in CLOs, loans of consolidated VIEs of $114 millionCIPs, and $112 million at September 30, 2017a strategic private debt investment. Investments in CLOs and December 31, 2016, respectively, related to direct investments in private equity companies held by consolidated private equity funds.

Direct investments in private equity companies may be valued using the market approach or the income approach, or a combination thereof, andloans were valued based on an assessment of each underlyingsingle-broker nonbinding quotes or quotes from pricing services which use significant unobservable inputs. BlackRock's strategic private debt investment incorporating evaluation of additional significant third-party financing, changes in valuations of comparable peer companies, the business environment of the companies, market indices, assumptions relating to appropriate risk adjustments for nonperformance and legal restrictions on disposition, among other factors. The fair value derived from the methods used is evaluated and weighted, as appropriate, considering the reasonableness of the range of values indicated. Under the market approach, fair value may be determined by reference to multiples of market-comparable companies or transactions, including earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiples. Underwas valued using the income approach fair value may be determined by discounting the expected cash flows to a single present value amount using current expectations about those future amounts. Unobservable inputs used in a discounted cash flow model may include projections of operating performance generally covering a five-year period and a terminal value of the private equity direct investment.value. For investments utilizing thea discounted cash flowcashflow valuation technique, a significantan increase (decrease) in the discount rate or risk premium or discount for lack of marketability in isolation could resulthave resulted in a significantly lower (higher) fair value measurement. For investments utilizing the market-comparable valuation technique, a significant increase (decrease) in the EBITDA multiple in isolation could result in a significantly higher (lower) fair value measurement.measurement as of September 30, 2023.

Level 3 assets mayLiabilities. Level 3 liabilities primarily include investments in CLOsborrowings of a consolidated CLO, which were valued based on single-broker nonbinding quotes and direct private equity investments valued using the market approach orfair value of the income approachassets of the consolidated CLO less the fair value of the Company’s economic interest in the CLO, as described above.

Level 3 Liabilities. Level 3 other liabilities primarily include recordedwell as contingent liabilities related to certain acquisitions, which were valued based upon discounted cash flow analyses, using unobservable market data inputs. inputs, or other valuation techniques.

16


Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Three Months Ended September 30, 20172023

(in millions)

 

June 30,
 2023

 

 

Realized
and
Unrealized
Gains
(Losses)

 

 

Purchases

 

 

Sales and
Maturities

 

 

Issuances and
Other
Settlements
(1)

 

 

Transfers
into
Level 3

 

 

Transfers
out of
Level 3

 

 

September 30,
 2023

 

 

Total Net
Unrealized
Gains (Losses)
Included in
Earnings
(2)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading

 

$

41

 

 

$

(1

)

 

$

2

 

 

$

(2

)

 

$

 

 

$

 

 

$

 

 

$

40

 

 

$

(1

)

Total debt securities

 

 

41

 

 

 

(1

)

 

 

2

 

 

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

40

 

 

 

(1

)

Loans

 

 

266

 

 

 

(17

)

 

 

117

 

 

 

 

 

 

 

 

 

23

 

 

 

(8

)

 

 

381

 

 

 

(17

)

Total investments

 

 

307

 

 

 

(18

)

 

 

119

 

 

 

(2

)

 

 

 

 

 

23

 

 

 

(8

)

 

 

421

 

 

 

(18

)

Other assets

 

 

109

 

 

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

107

 

 

 

(2

)

Total assets

 

$

416

 

 

$

(20

)

 

$

119

 

 

$

(2

)

 

$

 

 

$

23

 

 

$

(8

)

 

$

528

 

 

$

(20

)

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other liabilities

 

$

254

 

 

$

3

 

 

$

 

 

$

 

 

$

44

 

 

$

 

 

$

 

 

$

295

 

 

$

3

 

(in millions)

 

June 30, 2017

 

 

Realized

and

Unrealized

Gains

(Losses) in

Earnings

and OCI

 

 

Purchases

 

 

Sales and

Maturities

 

 

Issuances and

other

Settlements(1)

 

 

Transfers

into

Level 3

 

 

Transfers

out of

Level 3

 

 

September 30, 2017

 

 

Total Net

Unrealized

Gains (Losses)

Included in

Earnings(2)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities(3)

 

$

23

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

23

 

 

 

 

 

Trading

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

2

 

 

 

 

 

Total investments

 

 

27

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

25

 

 

 

 

 

Assets of consolidated VIEs - Private equity

 

 

113

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

114

 

 

$

1

 

Total Level 3 assets

 

$

140

 

 

$

1

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

(2

)

 

$

139

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other liabilities(4)

 

$

218

 

 

$

(7

)

 

$

 

 

$

 

 

$

3

 

 

$

 

 

$

 

 

$

228

 

 

$

(7

)

(1)  (1)

Issuance and other settlements amount includes a contingent liability of $9 million in connection with the acquisition of CachematrixKreos Capital in July 2017 (“CachematrixAugust 2023 (the “Kreos Transaction”), partially offset by repayments of borrowings of a consolidated CLO.
(2)
Earnings attributable to the change in unrealized gains (losses) relating to assets and a contingent liability payment in connection with a prior acquisition.

(2)      Earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at the reporting date.

(3)

Amounts include investments in CLOs.

(4) 

Other liabilities amount includes contingent liabilities in connection with certain acquisitions.

17


Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Nine Months Ended September 30, 20172023

(in millions)

 

December 31,
2022

 

 

Realized
and
Unrealized
Gains
(Losses)

 

 

Purchases

 

 

Sales and
Maturities

 

 

Issuances and
Other
Settlements
(1)

 

 

Transfers
into
Level 3

 

 

Transfers
out of
Level 3

 

 

September 30,
2023

 

 

Total Net
Unrealized
Gains (Losses)
Included in
Earnings
(2)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading

 

$

52

 

 

$

(1

)

 

$

8

 

 

$

(19

)

 

$

 

 

$

 

 

$

 

 

$

40

 

 

$

(1

)

Total debt securities

 

 

52

 

 

 

(1

)

 

 

8

 

 

 

(19

)

 

 

 

 

 

 

 

 

 

 

 

40

 

 

 

(1

)

Loans

 

 

248

 

 

 

6

 

 

 

129

 

 

 

(21

)

 

 

 

 

 

33

 

 

 

(14

)

 

 

381

 

 

 

6

 

Total investments

 

 

300

 

 

 

5

 

 

 

137

 

 

 

(40

)

 

 

 

 

 

33

 

 

 

(14

)

 

 

421

 

 

 

5

 

Other assets

 

 

 

 

 

(2

)

 

 

109

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

107

 

 

 

(2

)

Total assets

 

$

300

 

 

$

3

 

 

$

246

 

 

$

(40

)

 

$

 

 

$

33

 

 

$

(14

)

 

$

528

 

 

$

3

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other liabilities

 

$

280

 

 

$

7

 

 

$

 

 

$

 

 

$

22

 

 

$

 

 

$

 

 

$

295

 

 

$

7

 

(in millions)

 

December 31, 2016

 

 

Realized

and

Unrealized

Gains

(Losses) in

Earnings

and OCI

 

 

Purchases

 

 

Sales and

Maturities

 

 

Issuances and

other

Settlements(1)

 

 

Transfers

into

Level 3

 

 

Transfers

out of

Level 3(2)

 

 

September 30, 2017

 

 

Total Net

Unrealized

Gains (Losses)

Included in

Earnings(3)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities(4)

 

$

24

 

 

$

 

 

$

23

 

 

$

 

 

$

 

 

$

 

 

$

(24

)

 

$

23

 

 

 

 

 

Trading

 

 

7

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

(9

)

 

 

2

 

 

 

 

 

Total investments

 

 

31

 

 

 

 

 

 

27

 

 

 

 

 

 

 

 

 

 

 

 

(33

)

 

 

25

 

 

 

 

 

Assets of consolidated VIEs - Private equity

 

 

112

 

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

114

 

 

$

2

 

Total Level 3 assets

 

$

143

 

 

$

2

 

 

$

27

 

 

$

 

 

$

 

 

$

 

 

$

(33

)

 

$

139

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other liabilities(5)

 

$

115

 

 

$

(2

)

 

$

 

 

$

 

 

$

111

 

 

$

 

 

$

 

 

$

228

 

 

$

(2

)

(1)

Issuance and other settlements amount includes $120 million and $9 million ofa contingent liabilitiesliability in connection with the acquisitionKreos Transaction, partially offset by repayments of the equity infrastructure franchiseborrowings of First Reserve in June 2017 (“First Reserve Transaction”) and the Cachematrix Transaction, respectively, and contingent liability payments in connection with certain prior acquisitions.

a consolidated CLO.

(2)      Amounts include transfers out of Level 3 due to availability of observable market inputs from pricing vendors.

(3)

Earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at the reporting date.

(4)

Amounts include investments in CLOs.

(5) 

Other liabilities amount includes contingent liabilities in connection with certain acquisitions.

1816


Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Three Months Ended September 30, 20162022

(in millions)

 

June 30,
2022

 

 

Realized
and
Unrealized
Gains
(Losses)

 

 

Purchases

 

 

Sales and
Maturities

 

 

Issuances and
Other
Settlements

 

 

Transfers
into
Level 3

 

 

Transfers
out of
Level 3

 

 

September 30,
2022

 

 

Total Net
Unrealized
Gains (Losses)
Included in
Earnings
(1)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading

 

$

16

 

 

$

(1

)

 

$

14

 

 

$

(5

)

 

$

 

 

$

25

 

 

$

 

 

$

49

 

 

$

(1

)

Total debt securities

 

 

16

 

 

 

(1

)

 

 

14

 

 

 

(5

)

 

 

 

 

 

25

 

 

 

 

 

 

49

 

 

 

(1

)

Private equity

 

 

4

 

 

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

 

 

 

 

Loans

 

 

252

 

 

 

(1

)

 

 

 

 

 

(16

)

 

 

 

 

 

4

 

 

 

(3

)

 

 

236

 

 

 

(1

)

Total investments

 

$

272

 

 

$

(4

)

 

$

14

 

 

$

(21

)

 

$

 

 

$

29

 

 

$

(5

)

 

$

285

 

 

$

(2

)

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other liabilities

 

$

314

 

 

$

8

 

 

$

 

 

$

 

 

$

(3

)

 

$

 

 

$

 

 

$

303

 

 

$

8

 

(in millions)

 

June 30,

2016

 

 

Realized

and

Unrealized

Gains

(Losses) in

Earnings

and OCI

 

 

Purchases

 

 

Sales and

Maturities

 

 

Issuances and

other

Settlements

 

 

Transfers

into

Level 3

 

 

Transfers

out of

Level 3

 

 

September 30, 2016

 

 

Total Net

Unrealized

Gains (Losses)

Included in

Earnings(1)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities(2)

 

$

 

 

$

 

 

$

24

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

24

 

 

 

 

 

Trading

 

 

3

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

Total investments

 

 

3

 

 

 

 

 

 

26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29

 

 

 

 

 

Assets of consolidated VIEs - Private equity

 

 

189

 

 

 

11

 

 

 

 

 

 

(6

)

 

 

 

 

 

 

 

 

 

 

 

194

 

 

$

11

 

Total Level 3 assets

 

$

192

 

 

$

11

 

 

$

26

 

 

$

(6

)

 

$

 

 

$

 

 

$

 

 

$

223

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other liabilities(3)

 

$

121

 

 

$

(2

)

 

$

 

 

$

 

 

$

(5

)

 

$

 

 

$

 

 

$

118

 

 

$

(2

)

(1)
Earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at the reporting date.

(1) 

Earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at the reporting date.

(2)

Amounts include investments in CLOs.

(3) 

Other liabilities amount includes contingent liabilities in connection with certain acquisitions.

19


Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Nine Months Ended September 30, 20162022

(in millions)

 

December 31,
2021

 

 

Realized
and
Unrealized
Gains
(Losses)

 

 

Purchases

 

 

Sales and
Maturities

 

 

Issuances and
Other
Settlements
(1)

 

 

Transfers
into
Level 3

 

 

Transfers
out of
Level 3

 

 

September 30,
2022

 

 

Total Net
Unrealized
Gains (Losses)
Included in
Earnings
(2)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading

 

$

17

 

 

$

(4

)

 

$

33

 

 

$

(18

)

 

$

 

 

$

25

 

 

$

(4

)

 

$

49

 

 

$

(4

)

Total debt securities

 

 

17

 

 

 

(4

)

 

 

33

 

 

 

(18

)

 

 

 

 

 

25

 

 

 

(4

)

 

 

49

 

 

 

(4

)

Private equity

 

 

5

 

 

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

 

Loans

 

 

270

 

 

 

(4

)

 

 

16

 

 

 

(34

)

 

 

 

 

 

8

 

 

 

(20

)

 

 

236

 

 

 

(4

)

Total investments

 

$

292

 

 

$

(10

)

 

$

49

 

 

$

(52

)

 

$

 

 

$

33

 

 

$

(27

)

 

$

285

 

 

$

(8

)

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other liabilities

 

$

342

 

 

$

7

 

 

$

 

 

$

 

 

$

(32

)

 

$

 

 

$

 

 

$

303

 

 

$

7

 

 

 

December 31,

 

 

Realized

and

Unrealized

Gains

(Losses) in

Earnings

 

 

 

 

 

 

Sales and

 

 

Issuances and

other

 

 

Transfers

into

 

 

Transfers

out of

 

 

September 30,

 

 

Total Net

Unrealized

Gains (Losses)

Included in

 

(in millions)

 

2015

 

 

and OCI

 

 

Purchases

 

 

Maturities

 

 

Settlements(1)

 

 

Level 3

 

 

Level 3

 

 

2016

 

 

Earnings(2)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities(3)

 

$

23

 

 

$

 

 

$

47

 

 

$

 

 

$

 

 

$

 

 

$

(46

)

 

$

24

 

 

 

 

 

Trading

 

 

2

 

 

 

 

 

 

6

 

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

5

 

 

 

 

 

Total investments

 

 

25

 

 

 

 

 

 

53

 

 

 

 

 

 

 

 

 

 

 

 

(49

)

 

 

29

 

 

 

 

 

Assets of consolidated VIEs - Private equity

 

 

196

 

 

 

13

 

 

 

 

 

 

(15

)

 

 

 

 

 

 

 

 

 

 

 

194

 

 

$

13

 

Total Level 3 assets

 

$

221

 

 

$

13

 

 

$

53

 

 

$

(15

)

 

$

 

 

$

 

 

$

(49

)

 

$

223

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other liabilities(4)

 

$

48

 

 

$

 

 

$

 

 

$

 

 

$

70

 

 

$

 

 

$

 

 

$

118

 

 

$

 

(1)     Issuances

Amounts include proceeds from borrowings of a consolidated CLO and other settlements amount includes a contingent liability payment related to a prior acquisition.
(2)
Earnings attributable to the BofA® Global Capital Management transactionchange in April 2016.

(2) 

Earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at the reporting date.

(3)

Amounts include investments in CLOs.

(4) 

Other liabilities amount includes contingent liabilities in connection with certain acquisitions.


Realized and Unrealized Gains (Losses) for Level 3 Assets and Liabilities.Realized and unrealized gains (losses) recorded for Level 3 assets and liabilities are primarily reported in nonoperating income (expense) on the condensed consolidated statements of income. A portion of net income (loss) for consolidated sponsored investment funds arerelated to securities held by CIPs is allocated to noncontrolling interestsNCI to reflect net income (loss) not attributable to the Company.

Transfers in and/or out of Levels.Transfers in and/or out of levels are reflected when significant inputs, including market inputs or performance attributes, used for the fair value measurement become observable/unobservable, or when the carrying value of certain equity method investments no longer represents fair value as determined under valuation methodologies.unobservable.

17


Disclosures of Fair Value for Financial Instruments Not Held at Fair Value. At September 30, 20172023 and December 31, 2016,2022, the fair value of the Company’s financial instruments not held at fair value are categorized in the table below:

 

September 30, 2023

 

 

December 31, 2022

 

 

 

 

(in millions)

Carrying
Amount

 

 

Estimated
Fair Value

 

 

Carrying
Amount

 

 

Estimated
Fair Value

 

 

Fair Value
Hierarchy

 

Financial Assets(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

7,316

 

 

$

7,316

 

 

$

7,416

 

 

$

7,416

 

 

Level 1

(2)(3)

Other assets

$

103

 

 

$

103

 

 

$

86

 

 

$

86

 

 

Level 1

(2)(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term borrowings

$

7,884

 

 

$

7,007

 

 

$

6,654

 

 

$

5,949

 

 

Level 2

(5)

 

 

September 30, 2017

 

 

December 31, 2016

 

 

 

 

(in millions)

 

Carrying

Amount

 

 

Estimated

Fair Value

 

 

Carrying

Amount

 

 

Estimated

Fair Value

 

 

Fair Value

Hierarchy

 

Financial Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

6,165

 

 

$

6,165

 

 

$

6,091

 

 

$

6,091

 

 

Level 1

(1) (2)

Accounts receivable

 

 

3,183

 

 

 

3,183

 

 

 

2,350

 

 

 

2,350

 

 

Level 1

(3)

Cash and cash equivalents of consolidated VIEs

 

 

82

 

 

 

82

 

 

 

84

 

 

 

84

 

 

Level 1

(1) (2)

Other assets

 

 

62

 

 

 

62

 

 

 

25

 

 

 

25

 

 

Level 1

(1) (4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

 

1,652

 

 

 

1,652

 

 

 

1,094

 

 

 

1,094

 

 

Level 1

(3)

Long-term borrowings

 

 

5,000

 

 

 

5,248

 

 

 

4,915

 

 

 

5,165

 

 

Level 2

(5)

(1)
See Note 4, Investments, for further information on investments not held at fair value.
(2)
Cash and cash equivalents are carried at either cost or amortized cost, which approximates fair value due to their short-term maturities.
(3)
At September 30, 2023 and December 31, 2022, approximately $2.5 billion and $2.2 billion, respectively, of money market funds were recorded within cash and cash equivalents on the condensed consolidated statements of financial condition. Money market funds are valued based on quoted market prices, or $1.00 per share, which generally is the NAV of the fund.
(4)
At September 30, 2023 and December 31, 2022, other assets included cash collateral of approximately $86 million and $69 million, respectively. See Note 8, Derivatives and Hedging for further information on derivatives held by the Company. In addition, other assets included $17 million of restricted cash at both September 30, 2023 and December 31, 2022.
(5)
Long-term borrowings are recorded at amortized cost, net of debt issuance costs. The fair value of the long-term borrowings, including the current portion of long-term borrowings, is determined using market prices and the EUR/USD foreign exchange rate at the end of September 2023 and December 2022, respectively. See Note 13, Borrowings, for the fair value of each of the Company’s long-term borrowings.

(1)

Cash and cash equivalents are carried at either cost or amortized cost, which approximates fair value due to their short-term maturities.

(2)

At September 30, 2017 and December 31, 2016, approximately $137 million and $132 million, respectively, of money market funds were recorded within cash and cash equivalents on the condensed consolidated statements of financial condition. In addition, at September 30, 2017 and December 31, 2016, approximately $14 million and $13 million, respectively, of money market funds were recorded within cash and cash equivalents of consolidated VIEs.  Money market funds are valued based on quoted market prices, or $1.00 per share, which generally is the NAV of the fund.

(3)

The carrying amounts of accounts receivable, accounts payable and accrued liabilities approximate fair value due to their short-term nature.

(4)

Other assets primarily include restricted cash.  

(5)

Long-term borrowings are recorded at amortized cost net of debt issuance costs. The fair value of the long-term borrowings, including the current portion of long-term borrowings, is estimated using market prices at the end of September 2017 and December 2016, respectively. See Note 10, Borrowings, for the fair value of each of the Company’s long-term borrowings.

2118


Investments in Certain Entities that Calculate Net Asset ValueNAV Per Share.Share

As a practical expedient to value certain investments that do not have a readily determinable fair value and have attributes of an investment company, the Company uses NAV as the fair value. The following tables list information regarding all investments that use a fair value measurement to account for both their financial assets and financial liabilities in their calculation of a NAV per share (or equivalent).

September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

 

Ref

 

Fair Value

 

 

Total
Unfunded
Commitments

 

 

Redemption
Frequency

 

Redemption
Notice Period

Equity method(1):

 

 

 

 

 

 

 

 

 

 

 

 

Hedge funds/funds of hedge
  funds/other

 

(a)

 

$

495

 

 

$

142

 

 

Daily/Monthly (15%)
Quarterly (
9%)
N/R (
76%)

 

1 – 90 days

Private equity funds

 

(b)

 

 

1,200

 

 

 

184

 

 

N/R

 

N/R

Real assets funds

 

(c)

 

 

380

 

 

 

247

 

 

Quarterly (12%)
N/R (
88%)

 

60 days

Investments related to deferred
   cash compensation plan

 

(e)

 

 

228

 

 

 

 

 

Monthly

 

1 90 days

Consolidated sponsored
   investment products:

 

 

 

 

 

 

 

 

 

 

 

 

Real assets funds

 

(c)

 

 

150

 

 

 

67

 

 

N/R

 

N/R

Private equity funds

 

(d)

 

 

94

 

 

 

38

 

 

N/R

 

N/R

Hedge funds/other

 

(a)

 

 

161

 

 

 

68

 

 

Quarterly (88%)
N/R (
12%)

 

90 days

Total

 

 

 

$

2,708

 

 

$

746

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

 

Ref

 

Fair Value

 

 

Total
Unfunded
Commitments

 

 

Redemption
Frequency

 

Redemption
Notice Period

Equity method(1):

 

 

 

 

 

 

 

 

 

 

 

 

Hedge funds/funds of hedge
  funds/other

 

(a)

 

$

525

 

 

$

149

 

 

Daily/Monthly (23%)
Quarterly (
13%)
N/R (
64%)

 

1 – 90 days

Private equity funds

 

(b)

 

 

885

 

 

 

174

 

 

N/R

 

N/R

Real assets funds

 

(c)

 

 

304

 

 

 

304

 

 

Quarterly (17%)
N/R (
83%)

 

60 days

Consolidated sponsored
   investment products:

 

 

 

 

 

 

 

 

 

 

 

 

Real assets funds

 

(c)

 

 

116

 

 

 

94

 

 

N/R

 

N/R

Private equity funds

 

(d)

 

 

183

 

 

 

37

 

 

N/R

 

N/R

Other funds

 

 

 

 

17

 

 

 

31

 

 

Quarterly

 

90 days

Total

 

 

 

$

2,030

 

 

$

789

 

 

 

 

 

September 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

 

Ref

 

Fair Value

 

 

Total

Unfunded

Commitments

 

 

Redemption

Frequency

 

Redemption

Notice Period

Equity method:(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hedge funds/funds of hedge funds

 

(a)

 

$

249

 

 

$

42

 

 

Daily/Monthly (19%)

Quarterly (55%)

N/R (26%)

 

1 – 90 days

Private equity funds

 

(b)

 

 

89

 

 

 

92

 

 

N/R

 

N/R

Real assets funds

 

(c)

 

 

265

 

 

 

111

 

 

Quarterly (85%)

N/R (15%)

 

60 days

Other

 

 

 

 

15

 

 

 

13

 

 

Daily/Monthly (66%)

N/R (34%)

 

3 – 5 days

Consolidated VIEs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private equity funds of funds

 

(d)

 

 

69

 

 

 

20

 

 

N/R

 

N/R

Hedge fund

 

(a)

 

 

23

 

 

 

 

 

Quarterly

 

90 days

Real assets funds

 

(c)

 

 

41

 

 

 

54

 

 

N/R

 

N/R

Total

 

 

 

$

751

 

 

$

332

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

 

Ref

 

Fair Value

 

 

Total

Unfunded

Commitments

 

 

Redemption

Frequency

 

Redemption

Notice Period

Equity method:(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hedge funds/funds of hedge funds

 

(a)

 

$

237

 

 

$

14

 

 

Daily/Monthly (21%)

Quarterly (51%)

N/R (28%)

 

1 – 90 days

Private equity funds

 

(b)

 

 

90

 

 

 

62

 

 

N/R

 

N/R

Real assets funds

 

(c)

 

 

60

 

 

 

35

 

 

Quarterly (41%)

N/R (59%)

 

60 days

Other

 

 

 

 

12

 

 

 

9

 

 

Daily/Monthly (42%)

N/R (58%)

 

3 – 5 days

Consolidated VIEs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private equity funds of funds

 

(d)

 

 

89

 

 

 

16

 

 

N/R

 

N/R

Hedge fund

 

(a)

 

 

36

 

 

 

 

 

Quarterly

 

90 days

Real assets funds

 

(c)

 

 

27

 

 

 

21

 

 

N/R

 

N/R

Total

 

 

 

$

551

 

 

$

157

 

 

 

 

 

N/R – Not Redeemable

(1)
Comprised of equity method investments, which include investment companies that account for their financial assets and most financial liabilities under fair value measures; therefore, the Company’s investment in such equity method investees approximates fair value.
(a)
This category includes hedge funds, funds of hedge funds, and other funds that invest primarily in equities, fixed income securities, private credit, opportunistic and mortgage instruments and other third-party hedge funds. The fair values of the investments have been estimated using the NAV of the Company’s ownership interest in partners’ capital. The liquidation period for the investments in the funds that are not redeemablesubject to redemption is unknown at both September 30, 2023 and December 31, 2022.
(b)
This category includes private equity funds that initially invest in nonmarketable securities of private companies, which ultimately may become public in the future. The fair values of these investments have been estimated using capital accounts representing the Company’s ownership interest in the funds and may also include other performance inputs. The Company’s investment in each fund is not subject to redemption and is normally returned through distributions as a result of the liquidation of the underlying assets of the private equity funds. The liquidation period for the investments in these funds is unknown at both September 30, 2023 and December 31, 2022.

19


(1)

Comprised of equity method investments, which include investments in investment companies, which account for their financial assets and most financial liabilities under fair value measures; therefore, the Company’s investment in such equity method investees approximates fair value.

(c)
This category includes several real assets funds that invest directly and indirectly in real estate or infrastructure. The fair values of the investments have been estimated using capital accounts representing the Company’s ownership interest in the funds. The Company’s investments that are not subject to redemption or are not currently redeemable are normally returned through distributions and realizations of the underlying assets of the funds. The liquidation period for the investments in the funds that are not subject to redemptions is unknown at both September 30, 2023 and December 31, 2022. The total remaining unfunded commitments were $314 million and $398 million at September 30, 2023 and December 31, 2022, respectively. The Company’s portion of the total remaining unfunded commitments was $289 million and $364 million at September 30, 2023 and December 31, 2022, respectively.

(a)

This category includes hedge funds and funds of hedge funds that invest primarily in equities, fixed income securities, distressed credit, opportunistic and mortgage instruments and other third-party hedge funds. The fair values of the investments have been estimated using the NAV of the Company’s ownership interest in partners’ capital. It was estimated that the investments in the funds that are not subject to redemption will be liquidated over a weighted-average period of seven years at September 30, 2017 and approximately one year at December 31, 2016.

(b)

This category includes several private equity funds that initially invest in nonmarketable securities of private companies, which ultimately may become public in the future. The fair values of these investments have been estimated using capital accounts representing the Company’s ownership interest in the funds as well as other performance inputs. The Company’s investment in each fund is not subject to redemption and is normally returned through distributions as a result of the liquidation of the underlying assets of the private equity funds. It was estimated that the investments in these funds will be liquidated over a weighted-average period of approximately five years at both September 30, 2017 and December 31, 2016.  


(d)

(c)

This category includes several real assets funds that invest directly in real estate, real estate related assets and infrastructure. The fair values of the investments have been estimated using capital accounts representing the Company’s ownership interest in the funds. The Company’s investments that are not subject to redemption or are not currently redeemable are normally returned through distributions as a result of the liquidation of the underlying assets of the funds. It is estimated that the investments in these funds not subject to redemptions will be liquidated over a weighted-average period of approximately eight years at September 30, 2017 and six years at December 31, 2016. The total remaining unfunded commitments to other third-party funds were $165 million and $56 million at September 30, 2017 and December 31, 2016, respectively. The Company had contractual obligations to the consolidated funds of $136 million at September 30, 2017 and $56 million at December 31, 2016.

(d)This category includes the underlying third-party private equity funds within consolidated BlackRock sponsored private equity funds of funds. The fair values of the investments in the third-party funds have been estimated using capital accounts representing the Company’s ownership interest in each fund in the portfolio as well as other performance inputs. These investments are not subject to redemption;redemption or are not currently redeemable; however, for certain funds, the Company may sell or transfer its interest, which may need approval by the general partner of the underlying funds. Due to the nature of the investments in this category, the Company reduces its investment by distributions that are received through the realization of the underlying assets of the funds. It is estimated thatThe liquidation period for the underlying assets of these funds is unknown.

(e)
This category includes hedge funds and funds of hedge funds that invest primarily in equities, fixed income securities, mortgage instruments and other third-party hedge funds. The fair values of the investments have been estimated using the NAV of the Company's ownership interest in partners' capital. The investments in hedge funds will be liquidated over a weighted-average periodredeemed upon settlement of approximately five years at bothcertain deferred cash compensation liabilities.

Fair Value Option

At September 30, 20172023 and December 31, 2016. The total remaining unfunded commitments to other third-party funds were $202022, the Company elected the fair value option for certain investments in CLOs of approximately $41 million and $16$52 million, respectively, reported within investments.

In addition, the Company elected the fair value option for bank loans and borrowings of a consolidated CLO, recorded within investments and other liabilities, respectively. The following table summarizes the information related to these bank loans and borrowings at September 30, 20172023 and December 31, 2016, respectively. The Company had contractual obligations2022:

 

 

September 30,

 

 

December 31,

 

(in millions)

 

2023

 

 

2022

 

CLO Bank loans:

 

 

 

 

 

 

Aggregate principal amounts outstanding

 

$

224

 

 

$

238

 

Fair value

 

 

213

 

 

 

234

 

Aggregate unpaid principal balance in excess of (less than) fair value

 

$

11

 

 

$

4

 

 

 

 

 

 

 

CLO Borrowings:

 

 

 

 

 

 

Aggregate principal amounts outstanding

 

$

221

 

 

$

245

 

Fair value

 

$

201

 

 

$

245

 

At September 30, 2023, the principal amounts outstanding of the borrowings issued by the CLO mature in 2030 and may be repaid prior to maturity at any time.

During the three and nine months ended September 30, 2023 and 2022, the net gains (losses) from the change in fair value of the bank loans and borrowings held by the consolidated fundsCLO were not material and were recorded in net gain (loss) on the condensed consolidated statements of $24 million at both September 30, 2017income. The change in fair value of the assets and December 31, 2016.liabilities included interest income and expense, respectively.

7.8. Derivatives and Hedging

The Company maintains a program to enter into swapsexchange traded futures as a macro hedging strategy to hedge against market price and interest rate exposures with respect to certainits total portfolio of seed investments in sponsored investment products. At September 30, 2017,2023 and December 31, 2022, the Company had outstanding total return swapsexchange traded futures related to this macro hedging strategy with aggregate notional values of approximately $538 million.$1.6 billion and $1.5 billion, with expiration dates during the fourth and first quarter of 2023, respectively.

In addition, beginning in the first quarter of 2023, the Company entered into futures to economically hedge the exposure to market movements on certain deferred cash compensation plans. At December 31, 2016,September 30, 2023, the Company had outstanding total return swaps and interest rate swapsexchange traded futures with aggregate notional values related to its deferred cash compensation hedging program of approximately $572$182 million, and $42 million, respectively.with expiration dates during the fourth quarter of 2023.

Gains (losses) onChanges in the total return swapsvalue of the futures contracts are recorded inrecognized as gains or losses within nonoperating income (expense). Variation margin payments, which represent settlements of profit/loss, are generally received or made daily, and were $(26) millionare reflected in other assets and $(90) million for the three and nine months ended September 30, 2017, respectively, and $(25) million and $(33) million for the three and nine months ended September 30, 2016, respectively.

Gains (losses)other liabilities on the interest rate swaps are recorded in nonoperating income (expense) andcondensed consolidated statements of financial condition. These amounts were not material for the three and nine months endedas of September 30, 20172023 and 2016.  December 31, 2022.

The Company has entered into a derivative providing credit protection to a counterparty of approximately $17 million, representing the Company’s maximum risk of loss with respect to the provision of credit protection. The Company carries the derivative at fair value based on the expected discounted future cash outflows under the arrangement.20


The Company executes forward foreign currency exchange contracts to mitigate the risk of certain foreign exchange movements. At September 30, 20172023 and December 31, 2016,2022, the Company had outstanding forward foreign currency exchange contracts with aggregate notional values of approximately $1.3$2.4 billion and $107$2.2 billion, with expiration dates in October 2023 and January 2023, respectively.

At both September 30, 2023 and December 31, 2022, the Company had a derivative providing credit protection with a notional amount of approximately $17 million respectively.   

Gains (losses)to a counterparty, representing the Company’s maximum risk of loss with respect to the derivative. The Company carries the derivative at fair value based on the forward foreign currency exchange contracts are recordedexpected discounted future cash outflows under the arrangement.

The following table presents the fair values of derivative instruments recognized in other generalthe condensed consolidated statements of financial condition at September 30, 2023 and administration expenseDecember 31, 2022:

 

Assets

 

 

Liabilities

 

(in millions)

Statement of
Financial
Condition
Classification

 

September 30, 2023

 

 

December 31, 2022

 

 

Statement of
Financial
Condition
Classification

 

September 30, 2023

 

 

December 31, 2022

 

Derivative Instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forward foreign currency
   exchange contracts

Other assets

 

$

5

 

 

$

1

 

 

Other liabilities

 

$

30

 

 

$

19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table presents realized and were $29unrealized gains (losses) recognized in the condensed consolidated statements of income on derivative instruments:

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

 

 

September 30,

 

 

September 30,

 

 

 

Statement of Income

 

2023

 

 

2022

 

 

2023

 

 

2022

 

(in millions)

 

Classification

 

Gains (Losses)

 

 

Gains (Losses)

 

Derivative Instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchange traded futures(1)

 

Nonoperating income (expense)

 

$

72

 

 

$

 

 

$

14

 

 

$

 

Forward foreign currency
   exchange contracts

 

General and administration expense

 

 

(66

)

 

 

(124

)

 

 

29

 

 

 

(295

)

Total return swaps

 

Nonoperating income (expense)

 

 

 

 

 

44

 

 

 

 

 

 

147

 

Total gain (loss) from derivative
   instruments

 

 

 

$

6

 

 

$

(80

)

 

$

43

 

 

$

(148

)

(1)
Amounts include $81 million and $58$6 million of gains on futures used as a macro hedging strategy of seed investments for the three and nine months ended September 30, 2017,2023, respectively. Gains (losses)In addition amounts include $9 million of losses and $8 million of gains on the forward foreign currency exchange contracts were not materialfutures used to economically hedge certain deferred cash compensation plans for the three and nine months ended September 30, 2016.

2023, respectively.

The Company consolidates certain sponsored investment funds, whichCompany's CIPs may utilize derivative instruments as a part of the funds’funds' investment strategies. The change in fair value of such derivatives, which is recorded in nonoperating income (expense), was not material for the three and nine months ended September 30, 20172023 and 2016.2022.

The fair value of the outstanding derivatives mentioned above were not material at September 30, 2017 and December 31, 2016.

See Note 12, 15, Borrowings, in the 20162022 Form 10-K for more information on the Company’s net investment hedge.

9. Goodwill

23


8.  Goodwill

Goodwill activity during the nine months ended September 30, 20172023 was as follows:

 (in millions)

 

 

 December 31, 2022

$

15,341

 

Acquisition(1)

 

184

 

Other

 

(9

)

 September 30, 2023

$

15,516

 

(in millions)

 

 

 

 

December 31, 2016

 

$

13,118

 

Acquisitions (1)

 

 

123

 

Goodwill adjustments related to Quellos (2)

 

 

(15

)

September 30, 2017

 

$

13,226

 

(1)
Amount represents goodwill in connection with the Kreos Transaction. The Company believes this acquisition will add to the Company's position as a leading global credit asset manager and advance its ambitions to provide clients with a diverse range of private market investment products and solutions. Total consideration for the transaction was approximately $250 million, which included contingent consideration.

21


(1)

Amount includes $91 million of goodwill related to the First Reserve Transaction, which expanded the Company’s energy and power infrastructure platform and $32 million of goodwill related to the Cachematrix Transaction, which enhanced the Company’s technology and cash management capabilities.  The total consideration paid for these acquisitions was approximately $231 million, including $129 million of contingent consideration at fair value at time of close.

(2)

The decrease in goodwill during the nine months ended September 30, 2017 primarily resulted from a decline related to tax benefits realized from tax-deductible goodwill in excess of book goodwill from the acquisition of the fund-of-funds business of Quellos Group, LLC in October 2007 (the “Quellos Transaction”). Goodwill related to the Quellos Transaction will continue to be reduced in future periods by the amount of tax benefits realized from tax-deductible goodwill in excess of book goodwill from the Quellos Transaction. The balance of the Quellos tax-deductible goodwill in excess of book goodwill was approximately $176 million and $200 million at September 30, 2017 and December 31, 2016, respectively.

9.10. Intangible Assets

The carrying amounts of identifiable intangible assets are summarized as follows:

 (in millions)

Indefinite-lived

 

 

Finite-lived

 

 

Total

 

 December 31, 2022

$

17,578

 

 

$

724

 

 

$

18,302

 

Acquisition(1)

 

 

 

 

106

 

 

 

106

 

Amortization expense

 

 

 

 

(113

)

 

 

(113

)

Other

 

 

 

 

(4

)

 

 

(4

)

 September 30, 2023

$

17,578

 

 

$

713

 

 

$

18,291

 

(in millions)

 

Indefinite-lived

 

 

Finite-lived

 

 

Total

 

December 31, 2016

 

$

17,178

 

 

$

185

 

 

$

17,363

 

Amortization expense

 

 

 

 

 

(77

)

 

 

(77

)

Acquisitions (1)

 

 

 

 

 

114

 

 

 

114

 

September 30, 2017

 

$

17,178

 

 

$

222

 

 

$

17,400

 

(1) The amount represents $110

In connection with the Kreos Transaction, the Company acquired approximately $67 million of finite-lived assets related to the First Reserve Transactionmanagement contracts and $4$39 million of finite-lived investor relationships with weighted-average estimated lives of approximately five and ten years, respectively.

11. Leases

The following table presents components of lease cost included in general and administration expense on the condensed consolidated statements of income:

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

(in millions)

2023

 

 

2022

 

 

2023

 

 

2022

 

Lease cost:

 

 

 

 

 

 

 

 

 

 

 

Operating lease cost(1)

$

43

 

 

$

55

 

 

$

144

 

 

$

160

 

Variable lease cost(2)

 

15

 

 

 

10

 

 

 

35

 

 

 

32

 

Total lease cost

$

58

 

 

$

65

 

 

$

179

 

 

$

192

 

(1)
Amounts include short-term leases, which are immaterial for the three and nine months ended September 30, 2023 and 2022.
(2)
Amounts include operating lease payments, which may be adjusted based on usage, changes in an index or market rate, as well as common area maintenance charges and other variable costs not included in the measurement of right-of-use (“ROU”) assets and operating lease liabilities.

Supplemental information related to operating leases is summarized below:

 

 

Nine Months Ended

 

 

 

September 30,

 

(in millions)

 

2023

 

 

2022

 

Supplemental cash flow information:

 

 

 

 

 

 

Operating cash flows from operating leases included in the measurement
   of operating lease liabilities

 

$

109

 

 

$

122

 

 

 

 

 

 

 

 

Supplemental noncash information:

 

 

 

 

 

 

ROU assets in exchange for operating lease liabilities

 

$

20

 

 

$

45

 

 

September 30,

 

December 31,

 

2023

 

2022

Lease term and discount rate:

 

 

 

 

 

 

 

Weighted-average remaining lease term

 

15

 

years

 

 

16

 

years

Weighted-average discount rate

 

3

 

%

 

 

3

 

%

22


12. Other Assets

At September 30, 2023 and December 31, 2022, the Cachematrix TransactionCompany had $771 million and $809 million of equity method investments, respectively, recorded within other assets on the condensed consolidated statements of financial condition,since such investees are considered to be an extension of BlackRock’s core business. BlackRock’s share of these investees’ underlying net income or loss is based upon the most currently available information and is recorded within advisory and other revenue. In accordance with GAAP, certain equity method investees do not account for both their financial assets and liabilities under fair value measures; therefore, the Company’s investment in such equity method investees may not represent fair value.

At September 30, 2023 and December 31, 2022, the Company had $443 million and $375 million, respectively, of other nonequity method corporate minority investments recorded within other assets on the condensed consolidated statements of financial condition, since such investees are considered to be an extension of BlackRock’s core business. These investments included equity securities, generally measured at fair value or under the measurement alternative to fair value for nonmarketable securities, and a weighted average estimated lifestrategic private debt investment measured at fair value. Changes in value of approximately ninethe equity securities are recorded in nonoperating income (expense) and 10 years, respectively.  changes in value of the debt security is recorded in AOCI, net of tax. See Note 2, Significant Accounting Policies, in the notes to the consolidated financial statements contained in the 2022 Form 10-K for further information.

13. Borrowings

10.  Borrowings

Short-Term Borrowings

20172023 Revolving Credit Facility. The Company’sCompany maintains an unsecured revolving credit facility has anwhich is available for working capital and general corporate purposes (the “2023 credit facility”). In March 2023, the 2023 credit facility was amended to, among other things, (1) increase the aggregate commitment amount of $4.0by $300 million to $5 billion, and was amended in April 2017 to(2) extend the maturity date to April 2022(March 2028 and (3) change the “2017 credit facility”secured overnight financing rate (“SOFR”). adjustment to 10 bps per annum for all SOFR-based borrowings. The 20172023 credit facility permits the Company to request up to an additional $1.0$1.0 billion of borrowing capacity, subject to lender credit approval, increasingwhich could increase the overall size of the 20172023 credit facility to an aggregate principal amount notof up to exceed $5.0$6 billion. Interest on borrowings outstanding accrues at a rate based on the applicable London Interbank Offered Rate plus a spread. The 20172023 credit facility requires the Company not to exceed a maximum leverage ratio (ratio of net debt to earnings before interest, taxes, depreciation and amortization, where net debt equals total debt less unrestricted cash) of 3 to 1, which was satisfied with a ratio of less than 1 to 1 at September 30, 2017. The 2017 credit facility provides back-up liquidity to fund ongoing working capital for general corporate purposes and various investment opportunities.2023. At September 30, 2017,2023, the Company had no amount outstanding under the 20172023 credit facility.

Commercial Paper Program.The Company can issue unsecured commercial paper notes (the “CP Notes”) on a private-placement basis up to a maximum aggregate amount outstanding at any time of $4.0$4 billion. The commercial paper program is currently supported by the 20172023 credit facility. At September 30, 2017,2023, BlackRock had no CP Notes outstanding.

24


Long-Term Borrowings

The carrying value and fair value of long-term borrowings estimated using market prices and foreign exchange rates at September 30, 2017 included the following:

(in millions)

 

Maturity Amount

 

 

Unamortized

Discount

and Debt

Issuance Costs

 

 

Carrying Value

 

 

Fair Value

 

5.00% Notes due 2019

 

$

1,000

 

 

$

(1

)

 

$

999

 

 

$

1,067

 

4.25% Notes due 2021

 

 

750

 

 

 

(4

)

 

 

746

 

 

 

802

 

3.375% Notes due 2022

 

 

750

 

 

 

(4

)

 

 

746

 

 

 

781

 

3.50% Notes due 2024

 

 

1,000

 

 

 

(6

)

 

 

994

 

 

 

1,044

 

1.25% Notes due 2025

 

 

828

 

 

 

(6

)

 

 

822

 

 

 

846

 

3.20% Notes due 2027

 

 

700

 

 

 

(7

)

 

 

693

 

 

 

708

 

Total Long-term Borrowings

 

$

5,028

 

 

$

(28

)

 

$

5,000

 

 

$

5,248

 

Long-term borrowings at December 31, 2016 had a carrying value of $4.9 billion and a fair value of $5.2 billion determined using market prices at the end of December 2016.           

20272033 Notes. In March 2017,May 2023, the Company issued $700 million$1.25 billion in aggregate principal amount of 3.20%4.75% senior unsecured and unsubordinated notes maturing on March 15, 2027May 25, 2033 (the “2027“2033 Notes”). The net proceeds of the 2033 Notes are being used for general corporate purposes, which may include the future repayment of all or a portion of the $1.0 billion 3.50% Notes due March 2024. Interest of approximately $59 million per year is payable semi-annually on March 15May 25 and September 15November 25 of each year, commencing September 15, 2017, and is approximately $22 million per year.on November 25, 2023. The 20272033 Notes may be redeemed prior to maturity at any timethe option of the Company, in whole or in part, at the optionany time prior to February 25, 2033 at a "make-whole" redemption price, or thereafter at 100% of the Company at a “make-whole” redemption price.principal amount of the 2033 Notes, in each case plus accrued but unpaid interest. The unamortized discount and debt issuance costs are being amortized over the remaining term of the 20272033 Notes.

In April 2017,23


The carrying value and fair value of long-term borrowings determined using market prices and EUR/USD foreign exchange rate at the net proceedsend of September 2023 included the following:

(in millions)

Maturity
Amount

 

 

Unamortized
Discount
and Debt
Issuance Costs
(1)

 

 

Carrying Value

 

 

Fair Value

 

3.50% Notes due 2024

$

1,000

 

 

$

 

 

$

1,000

 

 

$

989

 

1.25% Notes due 2025

 

741

 

 

 

(1

)

 

 

740

 

 

 

707

 

3.20% Notes due 2027

 

700

 

 

 

(3

)

 

 

697

 

 

 

655

 

3.25% Notes due 2029

 

1,000

 

 

 

(8

)

 

 

992

 

 

 

898

 

2.40% Notes due 2030

 

1,000

 

 

 

(5

)

 

 

995

 

 

 

831

 

1.90% Notes due 2031

 

1,250

 

 

 

(8

)

 

 

1,242

 

 

 

985

 

2.10% Notes due 2032

 

1,000

 

 

 

(12

)

 

 

988

 

 

 

772

 

4.75% Notes due 2033

 

1,250

 

 

 

(20

)

 

 

1,230

 

 

 

1,170

 

Total long-term borrowings

$

7,941

 

 

$

(57

)

 

$

7,884

 

 

$

7,007

 

(1)
The unamortized discount and debt issuance costs are being amortized over the term of the 2027 Notes were used to fully repay $700 million in aggregate principal amount outstandingnotes.

Long-term borrowings at December 31, 2022 had a carrying value of 6.25% notes prior to their maturity in September 2017.$6.7 billion and a fair value of $5.9 billion, determined using market prices at the end of December 2022.

See Note 12, 15, Borrowings, in the 20162022 Form 10-K for more information regarding the Company’s borrowings.

11.14. Commitments and Contingencies

Investment Commitments.At September 30, 2017,2023, the Company had $328$774 million of various capital commitments to fund sponsored investment funds,products, including consolidated VIEs.CIPs. These fundsproducts include private equity funds, real assets funds and opportunistic funds. This amount excludes additional commitments made by consolidated funds of funds to underlying third-party funds as third-party noncontrolling interest holders have the legal obligation to fund the respective commitments of such funds of funds. Generally, the timing of the funding of these commitments is unknown and the commitments are callable on demand at any time prior to the expiration of the commitment. These unfunded commitments are not recorded on the condensed consolidated statements of financial condition. These commitments do not include potential future commitments approved by the Company that are not yet legally binding. The Company intends to make additional capital commitments from time to time to fund additional investment products for, and with, its clients.

25


Lease Commitment.In May 2017, the Company entered into an agreement with 50 HYMC Owner LLC, for the lease of approximately 847,000 square feet of office space located at 50 Hudson Yards, New York, New York. The term of the lease is twenty years from the date that rental payments begin, expected to occur in May 2023, with the option to renew for a specified term.Contingencies

Future minimum commitments of annual base rental payments under this operating lease are as follows:

(in millions)

 

 

 

Year

Amount

 

2023

$

34

 

2024

 

51

 

2025

 

51

 

2026

 

51

 

2027

 

51

 

Thereafter

 

1,007

 

Total

$

1,245

 

Contingencies

Contingent Payments Related to Business Acquisitions.    In connection with certain acquisitions, BlackRock is required to make contingent payments, subject to achieving specified performance targets, which may include revenue related to acquired contracts or new capital commitments for certain products.  The fair value of the remaining aggregate contingent payments at September 30, 2017 totaled $228 million, including $125 million related to the First Reserve Transaction, and is included in other liabilities on the condensed consolidated statements of financial condition.

Other Contingent Payments.    The Company acts as the portfolio manager in a series of derivative transactions and has a maximum potential exposure of $17 million between the Company and counterparty. See Note 7, Derivatives and Hedging, for further discussion.

Legal Proceedings.From time to time, BlackRock receives subpoenas or other requests for information from various U.S.US federal and state governmental and domesticregulatory authorities and international governmental and regulatory authorities in connection with certain industry-wide or other investigations or proceedings. It is BlackRock’s policy to cooperate fully with such inquiries. matters. BlackRock is currently responding to requests from the SEC in connection with a publicly reported, industry-wide investigation of investment advisers’ compliance with record retention requirements relating to certain types of electronic communications. BlackRock is cooperating with the SEC’s investigation.

The Company, and certain of its subsidiaries and employees have been named as defendants in various legal actions, including arbitrations and other litigation arising in connection with BlackRock’s activities. Additionally, BlackRock advisedBlackRock-advised investment portfolios may be subject to lawsuits, any of which potentially could harm the investment returns of the applicable portfolio or result in the Company being liable to the portfolios for any resulting damages.

On May 27, 2014, certain purported investors in the BlackRock Global Allocation Fund, Inc. and the BlackRock Equity Dividend Fund (collectively, the “Funds”) filed a consolidated complaint (the “Consolidated Complaint”) in the U.S. District Court for the District of New Jersey against BlackRock Advisors, LLC, BlackRock Investment Management, LLC and BlackRock International Limited under the caption In re BlackRock Mutual Funds Advisory Fee Litigation. The Consolidated Complaint, which purports to be brought derivatively on behalf of the Funds, alleges that the defendants violated Section 36(b) of the Investment Company Act by receiving allegedly excessive investment advisory fees from the Funds. On February 24, 2015, the same plaintiffs filed another complaint in the same court against BlackRock Investment Management, LLC and BlackRock Advisors, LLC. The allegations and legal claims in both complaints are substantially similar, with the new complaint purporting to challenge fees received by defendants after the plaintiffs filed their prior complaint. Both complaints seek, among other things, to recover on behalf of the Funds all allegedly excessive advisory fees received by defendants in the twelve month period preceding the start of each lawsuit, along with purported lost investment returns on those amounts, plus interest. The defendants believe the claims in both lawsuits are without merit and intend to vigorously defend the actions.  On September 25, 2017, the defendants filed a motion for summary judgment to dismiss the lawsuit.

Between November 12, 2015 and November 16, 2015, BlackRock, Inc., BlackRock Realty Advisors, Inc. (“BRA”), BlackRock US Core Property Fund, Inc. (formerly known as BlackRock Granite Property Fund, Inc.) (“Granite Fund”), and certain other Granite Fund related entities (collectively, the “BlackRock Parties”) were named as defendants in thirteen lawsuits filed in the Superior Court of the State of California for the County of Alameda arising out of the June

26


16, 2015 collapse of a balcony at the Library Gardens apartment complex in Berkeley, California (the “Property”). The Property is indirectly owned by the Granite Fund, which is managed by BRA. The plaintiffs also named as defendants in the lawsuits Greystar, which manages the Property, and certain other non-BlackRock related entities, including the developer of the Property, building contractors and building materials suppliers. The plaintiffs allege, among other things, that the BlackRock Parties were negligent in their ownership, control and maintenance of the Property’s balcony, and seek monetary, including punitive, damages. Additionally, on March 16, 2016, three former tenants of the Library Gardens apartment unit that experienced the balcony collapse sued the BlackRock Parties. The former tenants, who witnessed (but were not physically injured in) the accident make allegations virtually identical to those in the other previously filed actions and claim that, as a result of the collapse, they suffered unspecified emotional damage. Several defendants also filed cross-complaints alleging a variety of claims, including claims against the BlackRock Parties for contribution, negligence, and declaratory relief. BlackRock, Inc. believes the claims against it are without merit and intends to vigorously defend the actions. A trial on all claims is scheduled to begin on February 5, 2018.  

On June 16, 2016, iShares Trust, BlackRock, Inc. and certain of its advisory affiliates, and the directors and certain officers of the iShares ETFs were named as defendants in a purported class action lawsuit filed in California state court.  The lawsuit was filed by investors in certain iShares ETFs (the "ETFs"), and alleges the defendants violated the federal securities laws, purportedly by failing to adequately disclose in prospectuses issued by the ETFs the risks to the ETFs’ shareholders in the event of a "flash crash."  Plaintiffs seek unspecified monetary damages. The Plaintiffs’ complaint was dismissed in December 2016 and on January 6, 2017, plaintiffs filed an amended complaint. The defendants filed a motion for judgment on the pleadings dismissing that complaint. On September 18, 2017, the court dismissed the lawsuit.

On April 5, 2017, BlackRock, Inc., BlackRock Institutional Trust Company, N.A. (“BTC”), the BlackRock, Inc. Retirement Committee and various sub-committees, and a BlackRock employee were named as defendants in a purported class action lawsuit brought in the U.S. District Court for the Northern District of California by a former employee on behalf of all BlackRock employee 401(k) Plan (the “Plan”) participants and beneficiaries in the Plan from April 5, 2011, to the present.  The lawsuit generally alleges that the defendants breached their duties towards Plan participants in violation of the Employee Retirement Income Security Act of 1974 by, among other things, offering investment options that were overly expensive, underperformed peer funds, focused disproportionately on active versus passive strategies, and were unduly concentrated with investment options managed by BlackRock.  While the complaint does not contain any specific amount in alleged damages, it claims that the purported underperformance and hidden fees cost Plan participants more than $60 million.  On October 10, 2017, the plaintiffs filed an Amended Complaint, which, among other things, adds as defendants certain current and former members of the BlackRock Retirement and Investment Committees.  The Amended Complaint also includes a new purported class claim on behalf of investors in certain Collective Trust Funds (“CTFs”) managed by BTC.  Specifically, the plaintiffs allege that BTC exercised fiduciary authority over its compensation for securities lending services to the CTFs.  The defendants believe the claims in this lawsuit are without merit and intend to vigorously defend the action.

Management, after consultation with legal counsel, currently does not anticipate that the aggregate liability arising out of regulatory matters or lawsuits will have a material effect on BlackRock’s results of operations, financial position, or cash flows. However, there is no assurance as to whether any such pending or threatened matters will have a material effect on BlackRock’s results of operations, financial position or cash flows in any future reporting period. Due to uncertainties surrounding the outcome of these matters, management cannot reasonably estimate the possible loss or range of loss that may arise from these matters.

24


Indemnifications.In the ordinary course of business or in connection with certain acquisition agreements, BlackRock enters into contracts pursuant to which it may agree to indemnify third parties in certain circumstances. The terms of these indemnities vary from contract to contract and the amount of indemnification liability, if any, cannot be determined or the likelihood of any liability is considered remote. Consequently, no liability has been recorded on the condensed consolidated statements of financial condition.

27


In connection with securities lending transactions, BlackRock has issued certain indemnificationsagreed to indemnify certain securities lending clients against potential loss resulting from a borrower’s failure to fulfill its obligations under the securities lending agreement should the value of the collateral pledged by the borrower at the time of default be insufficient to cover the borrower’s obligation under the securities lending agreement. AtThe amount of securities on loan as of September 30, 2017,2023 and subject to this type of indemnification was approximately $246 billion. In the Company indemnified certain of its clients for their securitiesCompany’s capacity as lending loan balances of approximately $197.6 billion. The Company held, as agent, cash and securities totaling $210.6approximately $262 billion were held as collateral for indemnified securities on loan at September 30, 2017.2023. The fair value of these indemnifications was not material at September 30, 2017.2023.

25


15. Revenue

The table below presents detail of revenue for the three and nine months ended September 30, 2023 and 2022 and includes the product mix of investment advisory, administration fees and securities lending revenue, and performance fees.

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

(in millions)

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

Investment advisory, administration fees and
   securities lending revenue:

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

 

 

 

Active

$

510

 

 

$

503

 

 

$

1,516

 

 

$

1,669

 

ETFs

 

1,136

 

 

 

1,063

 

 

 

3,316

 

 

 

3,324

 

Non-ETF index

 

186

 

 

 

179

 

 

 

560

 

 

 

552

 

Equity subtotal

 

1,832

 

 

 

1,745

 

 

 

5,392

 

 

 

5,545

 

Fixed income:

 

 

 

 

 

 

 

 

 

 

 

Active

 

479

 

 

 

478

 

 

 

1,429

 

 

 

1,515

 

ETFs

 

315

 

 

 

276

 

 

 

919

 

 

 

839

 

Non-ETF index

 

93

 

 

 

91

 

 

 

268

 

 

 

311

 

Fixed income subtotal

 

887

 

 

 

845

 

 

 

2,616

 

 

 

2,665

 

Multi-asset

 

308

 

 

 

316

 

 

 

904

 

 

 

1,006

 

Alternatives:

 

 

 

 

 

 

 

 

 

 

 

Illiquid alternatives

 

231

 

 

 

184

 

 

 

638

 

 

 

547

 

Liquid alternatives

 

143

 

 

 

155

 

 

 

434

 

 

 

483

 

Currency and commodities(1)

 

46

 

 

 

51

 

 

 

141

 

 

 

169

 

Alternatives subtotal

 

420

 

 

 

390

 

 

 

1,213

 

 

 

1,199

 

Long-term

 

3,447

 

 

 

3,296

 

 

 

10,125

 

 

 

10,415

 

Cash management

 

234

 

 

 

235

 

 

 

669

 

 

 

637

 

Total investment advisory, administration fees
   and securities lending revenue

 

3,681

 

 

 

3,531

 

 

 

10,794

 

 

 

11,052

 

Investment advisory performance fees:

 

 

 

 

 

 

 

 

 

 

 

Equity

 

17

 

 

 

(2

)

 

 

38

 

 

 

13

 

Fixed income

 

1

 

 

 

(3

)

 

 

2

 

 

 

19

 

Multi-asset

 

5

 

 

 

2

 

 

 

23

 

 

 

14

 

Alternatives:

 

 

 

 

 

 

 

 

 

 

 

Illiquid alternatives

 

24

 

 

 

79

 

 

 

124

 

 

 

181

 

Liquid alternatives

 

23

 

 

 

6

 

 

 

56

 

 

 

59

 

Alternatives subtotal

 

47

 

 

 

85

 

 

 

180

 

 

 

240

 

Total investment advisory performance fees

 

70

 

 

 

82

 

 

 

243

 

 

 

286

 

Technology services revenue

 

407

 

 

 

338

 

 

 

1,106

 

 

 

1,011

 

Distribution fees

 

321

 

 

 

325

 

 

 

959

 

 

 

1,067

 

Advisory and other revenue:

 

 

 

 

 

 

 

 

 

 

 

Advisory

 

21

 

 

 

8

 

 

 

66

 

 

 

39

 

Other

 

22

 

 

 

27

 

 

 

60

 

 

 

81

 

Total advisory and other revenue

 

43

 

 

 

35

 

 

 

126

 

 

 

120

 

Total revenue

$

4,522

 

 

$

4,311

 

 

$

13,228

 

 

$

13,536

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)
Amounts include commodity ETFs.

26


The tables below present the investment advisory, administration fees and securities lending revenue by client type and investment style:

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

(in millions)

2023

 

 

2022

 

 

2023

 

 

2022

 

By client type:

 

 

 

 

 

 

 

 

 

 

 

Retail

$

1,046

 

 

$

1,058

 

 

$

3,122

 

 

$

3,421

 

ETFs

 

1,498

 

 

 

1,385

 

 

 

4,376

 

 

 

4,322

 

Institutional:

 

 

 

 

 

 

 

 

 

 

 

Active

 

670

 

 

 

623

 

 

 

1,932

 

 

 

1,934

 

Index

 

233

 

 

 

230

 

 

 

695

 

 

 

738

 

Total institutional

 

903

 

 

 

853

 

 

 

2,627

 

 

 

2,672

 

Long-term

 

3,447

 

 

 

3,296

 

 

 

10,125

 

 

 

10,415

 

Cash management

 

234

 

 

 

235

 

 

 

669

 

 

 

637

 

Total

$

3,681

 

 

$

3,531

 

 

$

10,794

 

 

$

11,052

 

 

 

 

 

 

 

 

 

 

 

 

 

By investment style:

 

 

 

 

 

 

 

 

 

 

 

Active

$

1,662

 

 

$

1,635

 

 

$

4,903

 

 

$

5,213

 

Index and ETFs

 

1,785

 

 

 

1,661

 

 

 

5,222

 

 

 

5,202

 

Long-term

 

3,447

 

 

 

3,296

 

 

 

10,125

 

 

 

10,415

 

Cash management

 

234

 

 

 

235

 

 

 

669

 

 

 

637

 

Total

$

3,681

 

 

$

3,531

 

 

$

10,794

 

 

$

11,052

 

 

 

 

 

 

 

 

 

 

 

 

 

12.27


Investment Advisory and Administration Fees – Remaining Performance Obligation

The tables below present estimated investment advisory and administration fees expected to be recognized in the future related to the unsatisfied portion of the performance obligations at September 30, 2023 and 2022:

September 30, 2023

 

Remainder of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

2023

 

 

2024

 

 

2025

 

 

2026

 

 

Thereafter

 

 

Total

 

Investment advisory and
   administration fees:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alternatives(1)(2)

$

51

 

 

$

173

 

 

$

141

 

 

$

119

 

 

$

89

 

 

$

573

 

September 30, 2022

 

Remainder of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

2022

 

 

2023

 

 

2024

 

 

2025

 

 

Thereafter

 

 

Total

 

Investment advisory and
   administration fees:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alternatives(1)(2)

$

47

 

 

$

176

 

 

$

112

 

 

$

73

 

 

$

53

 

 

$

461

 

(1)
Investment advisory and administration fees include management fees related to certain alternative products, which are based on contractual committed capital outstanding at September 30, 2023 and 2022. Actual management fees could be higher to the extent additional committed capital is raised. These fees are generally billed on a quarterly basis in arrears.
(2)
The Company elected the following practical expedients and therefore does not include amounts related to (a) performance obligations with an original duration of one year or less, and (b) variable consideration related to future service periods.

Change in Deferred Carried Interest Liability

The table below presents changes in the deferred carried interest liability, which is included in other liabilities on the condensed consolidated statements of financial condition, for the three and nine months ended September 30, 2023 and 2022:

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

(in millions)

2023

 

 

2022

 

 

2023

 

 

2022

 

Beginning balance

$

1,651

 

 

$

1,592

 

 

$

1,420

 

 

$

1,508

 

Net increase (decrease) in unrealized allocations

 

250

 

 

 

(58

)

 

 

569

 

 

 

119

 

Performance fee revenue recognized

 

(12

)

 

 

(72

)

 

 

(100

)

 

 

(165

)

Ending balance

$

1,889

 

 

$

1,462

 

 

$

1,889

 

 

$

1,462

 

28


Technology Services Revenue – Remaining Performance Obligation

The tables below present estimated technology services revenue expected to be recognized in the future related to the unsatisfied portion of the performance obligations at September 30, 2023 and 2022:

September 30, 2023

 

Remainder of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

2023

 

 

2024

 

 

2025

 

 

2026

 

 

Thereafter

 

 

Total

 

Technology services revenue(1)(2)

$

34

 

 

$

90

 

 

$

55

 

 

$

39

 

 

$

30

 

 

$

248

 

September 30, 2022

 

Remainder of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

2022

 

 

2023

 

 

2024

 

 

2025

 

 

Thereafter

 

 

Total

 

Technology services revenue(1)(2)

$

29

 

 

$

79

 

 

$

45

 

 

$

29

 

 

$

26

 

 

$

208

 

(1)
Technology services revenue primarily includes upfront payments from customers, which the Company generally recognizes as services are performed.
(2)
The Company elected the following practical expedients and therefore does not include amounts related to (a) performance obligations with an original duration of one year or less, and (b) variable consideration related to future service periods.

In addition to amounts disclosed in the tables above, certain technology services contracts require fixed minimum fees, which are billed on a monthly or quarterly basis in arrears. The Company recognizes such revenue as services are performed. As of September 30, 2023, the estimated fixed minimum fees for the remainder of the year approximated $255 million. The term for these contracts, which are either in their initial or renewal period, ranges from one to five years.

The table below presents changes in the technology services deferred revenue liability for the three and nine months ended September 30, 2023 and 2022, which is included in other liabilities on the condensed consolidated statements of financial condition:

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

(in millions)

2023

 

 

2022

 

 

2023

 

 

2022

 

Beginning balance

$

122

 

 

$

108

 

 

$

125

 

 

$

122

 

Additions(1)

 

21

 

 

 

25

 

 

 

58

 

 

 

74

 

Revenue recognized that was included
   in the beginning balance

 

(28

)

 

 

(32

)

 

 

(68

)

 

 

(95

)

Ending balance

$

115

 

 

$

101

 

 

$

115

 

 

$

101

 

(1)
Amounts are net of revenue recognized.

29


16. Stock-Based Compensation

Restricted Stock and RSUs.Units ("RSUs")

Restricted stock and restricted stock units (“RSUs”)RSU activity for the nine months ended September 30, 20172023 is summarized below.

Outstanding at

RSUs

 

 

Weighted-
Average
Grant Date
Fair Value

 

December 31, 2022

 

2,009,207

 

 

$

710.67

 

Granted

 

732,750

 

 

$

734.02

 

Converted

 

(895,044

)

 

$

633.55

 

Forfeited

 

(53,098

)

 

$

772.82

 

September 30, 2023

 

1,793,815

 

 

$

756.85

 

Outstanding at

 

Restricted

Stock and

RSUs

 

 

Weighted-

Average

Grant Date

Fair Value

 

December 31, 2016

 

 

2,987,588

 

 

$

318.04

 

Granted

 

 

1,061,915

 

 

$

377.36

 

Converted

 

 

(1,363,701

)

 

$

320.27

 

Forfeited

 

 

(39,164

)

 

$

338.57

 

September 30, 2017(1)

 

 

2,646,638

 

 

$

340.39

 

(1)

At September 30, 2017, approximately 2.3 million awards are expected to vest and 0.3 million awards have vested but have not been converted.

In January 2017,2023, pursuant to the BlackRock, Inc. Second Amended and Restated 1999 Stock Award and Incentive Plan (the “Award Plan”), the Company granted 699,991 RSUs or shares of restricted stock to employees as part of 2016the 2022 annual incentive compensation342,706 RSUs to employees that vest ratably over three years from the grant date of grant and 277,313259,465 RSUs or shares of restricted stock to employees that cliff vest 100%100% on January 31, 2020.2026. On May 30, 2023, pursuant to the Award Plan, the Company granted 71,267 RSUs that cliff vest 100% on May 30, 2027. The Company values restricted stock and RSUs at their grant-date fair value as measured by BlackRock’s common stock price. The total fair market value of RSUs/restricted stockRSUs granted to employees during the nine months ended September 30, 20172023 was $401$538 million.

At September 30, 2017,2023, the intrinsic value of outstanding RSUs was $1.2$1.2 billion, reflecting a closing stock price of $447.09.$646.49.

At September 30, 2017,2023, total unrecognized stock-based compensation expense related to unvested RSUs was $351$547 million. The unrecognized compensation cost is expected to be recognized over the remaining weighted-average period of 1.11.3 years.

Performance-Based RSUs.

Performance-based RSU activity for the nine months ended September 30, 20172023 is summarized below.

Outstanding at

Performance-
Based RSUs

 

 

Weighted-
Average
Grant Date
Fair Value

 

December 31, 2022

 

531,054

 

 

$

672.47

 

Granted

 

169,938

 

 

$

743.60

 

Additional shares due to attainment of performance measures

 

29,194

 

 

$

532.15

 

Converted

 

(262,797

)

 

$

534.00

 

Forfeited

 

(11,005

)

 

$

756.51

 

September 30, 2023

 

456,384

 

 

$

767.69

 

Outstanding at

 

Performance-

Based RSUs

 

 

Weighted-

Average

Grant Date

Fair Value

 

December 31, 2016

 

 

610,371

 

 

$

315.65

 

Granted

 

 

294,584

 

 

$

375.27

 

Forfeited

 

 

(1,430

)

 

$

296.12

 

September 30, 2017

 

 

903,525

 

 

$

335.12

 

In January 2017,2023, pursuant to the Award Plan, the Company granted 293,385169,938 performance-based RSUs to certain employees that cliff vest 100%100% on January 31, 2020.2026. These awards are amortized over a service period of three years.years. The number of shares distributed at vesting could be higher or lower than the original grant based on the level of attainment of predetermined Company performance measures. In January 2023, the Company granted 29,194 additional RSUs based on the attainment of Company performance measures during the performance period.

28


The Company values performance-based RSUs at their grant-date fair value as measured by BlackRock’s common stock price. The total grant-date fair market value of performance-based RSUs granted to employees during the nine months ended September 30, 20172023 was $111$142 million.

At September 30, 2017,2023, the intrinsic value of outstanding performance-based RSUs was $404$295 million, reflecting a closing stock price of $447.09.$646.49.

At September 30, 2017,2023, total unrecognized stock-based compensation expense related to unvested performance-based awards was $137$112 million. The unrecognized compensation cost is expected to be recognized over the remaining weighted-average period of 1.4 years.

Market Performance-basedSee Note 18, Stock-Based Compensation, in the 2022 Form 10-K for more information on performance-based RSUs.

Market performance-based RSUs30


Stock Options

Stock option activity and ending balance for the nine months ended September 30, 20172023 is summarized below.

 

2017 Performance-based
Options

 

 

2023 Performance-based
Options

 

 

2023 Time-based
Options

 

 

Shares
Under
Option

 

 

Weighted
Average
Exercise
Price

 

 

Shares
Under
Option

 

 

Weighted
Average
Exercise
Price

 

 

Shares
Under
Option

 

 

Weighted
Average
Exercise
Price

 

Outstanding at December 31, 2022

 

1,735,898

 

 

$

513.50

 

 

 

 

 

$

 

 

 

 

 

$

 

Granted

 

 

 

$

 

 

 

814,482

 

 

$

673.58

 

 

 

326,391

 

 

$

673.58

 

Exercised

 

(99,145

)

 

$

513.50

 

 

 

 

 

$

 

 

 

 

 

$

 

Forfeited

 

(2,577

)

 

$

513.50

 

 

 

(6,787

)

 

$

673.58

 

 

 

 

 

$

 

Outstanding at September 30, 2023

 

1,634,176

 

 

$

513.50

 

 

 

807,695

 

 

$

673.58

 

 

 

326,391

 

 

$

673.58

 

 

 

Options Outstanding

 

 

Options Exercisable

 

Option Type

 

Exercise Prices

 

 

Options Outstanding(1)

 

 

Weighted Average Remaining Life (years)

 

 

Aggregate
Intrinsic
Value
(in millions)

 

 

Exercise Prices

 

 

Options
Exercisable

 

 

Weighted Average Remaining Life (years)

 

 

Aggregate
Intrinsic
Value
(in millions)

 

2017 Performance-based

 

$

513.50

 

 

 

1,634,176

 

 

 

3.2

 

 

$

217

 

 

$

513.50

 

 

 

495,510

 

 

 

3.2

 

 

$

66

 

2023 Performance-based

 

$

673.58

 

 

 

807,695

 

 

 

8.7

 

 

 

 

 

$

673.58

 

 

 

 

 

 

 

 

 

 

2023 Time-based

 

$

673.58

 

 

 

326,391

 

 

 

8.7

 

 

 

 

 

$

673.58

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,768,262

 

 

 

5.4

 

 

$

217

 

 

 

 

 

 

495,510

 

 

 

3.2

 

 

$

66

 

Outstanding at

 

Market

Performance-

Based RSUs

 

 

Weighted-

Average

Grant Date

Fair Value

 

December 31, 2016

 

 

803,474

 

 

$

151.20

 

Converted

 

 

(517,138

)

 

$

126.76

 

September 30, 2017(1)

 

 

286,336

 

 

$

195.33

 

(1)   The market performance-based RSUs require that separate 15%, 25% and 35% share price appreciation targets be achieved during the six-year term of the awards. The awards are split into three tranches and each tranche may vest if the specified target increase in share price is met.  

At September 30, 2023, 1.1 million 2017 approximately 0.3performance-based options, 0.8 million awards are2023 performance-based options and 0.3 million 2023 time-based options were expected to vest.

See Note 14, Stock-Based Compensation, in the 2016 Form 10-K for more information on market performance-based RSUs.

At September 30, 2017, the intrinsic value of outstanding market performance-based RSUs was $128 million reflecting a closing stock price of $447.09.

At September 30, 2017,2023, total unrecognized stock-based compensation expense related to unvested market performance-based awardsand time-based stock options was $4$171 million. The unrecognized compensation cost is expected to be recognized over the remaining weighted-average period of less than one year.2.8 years.

Long-Term Incentive Plans Funded by PNC.    Under a share surrender agreement, PNC committedPerformance-based stock options

In 2017, pursuant to provide upthe Award Plan, the Company awarded performance-based stock option grants to 4 millioncertain employees ("2017 Performance-based Options"). Vesting of 2017 Performance-based Options was contingent upon the achievement of obtaining 125% of BlackRock's grant-date stock price within five years from the grant date and the attainment of Company performance measures during the four-year performance period. Both hurdles have been achieved, and the first tranche of the awards vested at the end of 2022 with two subsequent equal installments vesting at the end of 2023 and 2024, respectively. The aggregate intrinsic value of 2017 Performance-based Options exercised during the nine months ended September 30, 2023 was $22 million. See Note 18, Stock-Based Compensation, in the 2022 Form 10-K for more information on 2017 Performance-based Options.

On May 30, 2023, pursuant to the Award Plan, the Company awarded performance-based options to purchase 814,482 shares of BlackRock common stock held by PNC, to fund certain BlackRockemployees as long-term incentive plans (“LTIP”compensation ("2023 Performance-based Options"). Vesting of 2023 Performance-based Options is contingent upon the achievement of obtaining 130% of grant-date stock price over 60 calendar days within four years from the grant date and attainment of Company performance measures during the three-year performance period. If both hurdles are achieved, the award will vest in three tranches of 25%, including performance-based25% and market performance-based RSUs.50% in May of 2027, 2028 and 2029, respectively. Vested options are exercisable for up to nine years following the grant date, and the awards are forfeited if the employee resigns before the respective vesting date. The current share surrender agreement commits PNCexpense for each tranche is amortized over the respective requisite service period.

The 2023 Performance-based Options have a strike price of $673.58 which was the closing price of the shares on the grant date. The grant-date fair value of the 2023 Performance-based Options was $120 million and was estimated using a Monte Carlo simulation with an embedded lattice model using the assumptions included in the following table:

Grant Year

Expected Term (Years)(1)

 

Expected Stock Volatility(2)

 

 

Expected Dividend Yield(3)

 

 

Risk-Free Interest Rate(4)

 

2023

6.02

 

 

27.73

%

 

 

3.02

%

 

 

3.61

%

(1)
The expected term was derived using a Monte Carlo simulation with the embedded lattice model and represents the period of time that options granted are expected to providebe outstanding.
(2)
The expected stock volatility was based upon an average of historical stock price fluctuations of BlackRock’s common stock and an implied volatility at the grant date.
(3)
The expected dividend yield was calculated as the most recent quarterly dividend divided by the average three-month stock price as of the grant date.
(4)
The risk-free interest rate is based on the US Treasury Constant Maturities yield curve at grant date.

31


Time-based stock options

On May 30, 2023, pursuant to the Award Plan, the Company awarded time-based stock options to purchase 326,391 shares of BlackRock Series C nonvoting participating preferredcommon stock to fundcertain employees as long-term incentive compensation ("2023 Time-based Options"). These awards will vest in three tranches of 25%, 25% and 50% in May 2027, 2028 and 2029, respectively. Vested options can be exercised up to nine years following the remaining committed shares. Asgrant date, and the awards are forfeited if the employee resigns before the respective vesting date.

The 2023 Time-based Options have a strike price of September 30, 2017, 3.8$673.58 which was the closing price of the shares on the grant date. The grant-date fair value of the 2023 Time-based Options was $55 million shares had been surrendered by PNC.

517,138 shares were surrendered by PNCand was estimated using a Black-Scholes-Merton model using the assumptions included in the first quarterfollowing table:

Grant Year

Expected Term (Years)(1)

 

 

Expected Stock Volatility(2)

 

 

Expected Dividend Yield(3)

 

 

Risk-Free Interest Rate(4)

 

2023

 

7.13

 

 

 

28.29

%

 

 

3.02

%

 

 

3.65

%

(1)
The expected term represents the period of 2017.

At September 30, 2017,time that options granted are expected to be outstanding, and was calculated as the remaining shares committedmidpoint between the weighted average time to vest and expiration.

(2)
The expected stock volatility was based upon an average of historical stock price fluctuations of BlackRock’s common stock and an implied volatility at the grant date.
(3)
The expected dividend yield was calculated as the most recent quarterly dividend divided by PNCthe average three-month stock price as of 0.2 million were available to fund certain future long-term incentive awards.

the grant date.
(4)
The risk-free interest rate is based on the US Treasury Constant Maturities yield curve at grant date.

13.17. Net Capital Requirements

The Company is required to maintain net capital in certain regulated subsidiaries within a number of jurisdictions, which is partially maintained by retaining cash and cash equivalent investments in those subsidiaries or jurisdictions. As a result, such subsidiaries of the Company may be restricted in their ability to transfer cash between different jurisdictions and to their parents. Additionally, transfers of cash between international jurisdictions including repatriation to the United States, may have adverse tax consequences that could discourage such transfers.

29


At September 30, 2017,2023, the Company was required to maintain approximately $1.7$1.8 billion in net capital in certain regulated subsidiaries, including BlackRock Institutional Trust Company, N.A. (a wholly owned subsidiary of the Company that is chartered as a national bank whosewith powers are limited to trust and other fiduciary activities and which is subject to regulatory capital requirements administered by the US Office of the Comptroller of the Currency), entities regulated by the Financial Conduct Authority and Prudential Regulation Authority in the United Kingdom,UK, and the Company’s broker-dealers. The Company was in compliance with all applicable regulatory net capital requirements.

32


14.18. Accumulated Other Comprehensive Income (Loss)

The following tables presenttable presents changes in accumulated other comprehensive income (loss) by componentAOCI for the three and nine months ended September 30, 20172023 and 2016:2022:

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 (in millions)

2023

 

 

2022

 

 

2023

 

 

2022

 

 Beginning balance

$

(880

)

 

$

(1,091

)

 

$

(1,101

)

 

$

(550

)

Foreign currency translation adjustments(1)

 

(221

)

 

 

(381

)

 

 

 

 

 

(922

)

 Ending balance

$

(1,101

)

 

$

(1,472

)

 

$

(1,101

)

 

$

(1,472

)

(in millions)

 

Foreign

currency

translation

adjustments(1)

 

 

Other(2)

 

 

Total

 

For the Three Months Ended September 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2017

 

$

(579

)

 

$

4

 

 

$

(575

)

Net other comprehensive income (loss) for

   the three months ended September 30, 2017

 

 

102

 

 

 

 

 

 

102

 

September 30, 2017

 

$

(477

)

 

$

4

 

 

$

(473

)

For the Nine Months Ended September 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2016

 

$

(721

)

 

$

5

 

 

$

(716

)

Net other comprehensive income (loss) for

   the nine months ended September 30, 2017

 

 

244

 

 

 

(1

)

 

 

243

 

September 30, 2017

 

$

(477

)

 

$

4

 

 

$

(473

)

(1)

(1)

AmountAmounts for the three and nine months ended September 30, 2017 includes a loss from a net investment hedge of $18 million (net of a tax benefit of $11 million) and $56 million (net of a tax benefit of $33 million), respectively.  

(2)  Other includes amounts related to benefit plans and available-for-sale investments.

(in millions)

 

Foreign

currency

translation

adjustments(1)

 

 

Other(2)

 

 

Total

 

 

For the Three Months Ended September 30, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2016

 

$

(565

)

 

$

5

 

 

$

(560

)

 

Net other comprehensive income (loss) for

   the three months ended September 30, 2016

 

 

(38

)

 

 

 

 

 

(38

)

 

September 30, 2016

 

$

(603

)

 

$

5

 

 

$

(598

)

 

For the Nine Months Ended September 30, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2015

 

$

(452

)

 

$

4

 

 

$

(448

)

 

Net other comprehensive income (loss) for

   the nine months ended September 30, 2016

 

 

(151

)

 

 

1

 

 

 

(150

)

 

September 30, 2016

 

$

(603

)

 

$

5

 

 

$

(598

)

 

(1) Amount for the three and nine months ended September 30, 2016 includes a loss2023 and 2022 include gains from a net investment hedge of $5$17 million (net of a tax benefitexpense of $4$5 million) and $16$35 million (net of a tax benefitexpense of $10$11 million), respectively.

(2) Other includes amounts related to benefit plans and available-for-sale investments.

30


15.  Capital Stock

Nonvoting Participating Preferred Stock.    The Company’s preferred shares authorized, issued and outstanding consisted of the following:

 

 

September 30,

 

 

December 31,

 

 

 

2017

 

 

2016

 

Series A

 

 

 

 

 

 

 

 

Shares authorized, $0.01 par value

 

 

20,000,000

 

 

 

20,000,000

 

Shares issued and outstanding

 

 

 

 

 

 

Series B

 

 

 

 

 

 

 

 

Shares authorized, $0.01 par value

 

 

150,000,000

 

 

 

150,000,000

 

Shares issued and outstanding(1)

 

 

823,188

 

 

 

823,188

 

Series C

 

 

 

 

 

 

 

 

Shares authorized, $0.01 par value

 

 

6,000,000

 

 

 

6,000,000

 

Shares issued and outstanding(1)

 

 

246,522

 

 

 

763,660

 

Series D

 

 

 

 

 

 

 

 

Shares authorized, $0.01 par value

 

 

20,000,000

 

 

 

20,000,000

 

Shares issued and outstanding

 

 

 

 

 

 

(1)

Shares held by PNC.

Share Repurchases.    The Company repurchased 2.1 million common shares in open market transactions under the share repurchase program Amounts for approximately $825 million during the nine months ended September 30, 2017.2023 and 2022 include gains from a net investment hedge of $5 million (net of tax expense of $1 million) and $84 million (net of tax expense of $26 million), respectively.

19. Capital Stock

Share Repurchases. In January 2023, the Company announced that the Board of Directors authorized the repurchase of an additional seven million shares under the Company's existing share repurchase program for a total of up to approximately 7.9 million shares of BlackRock common stock. The timing and actual number of shares repurchased will depend on a variety of factors, including legal limitations, price and market conditions.

During the nine months ended September 30, 2023, the Company repurchased 1.6 million common shares under the Company’s existing share repurchase program for approximately $1.1 billion. At September 30, 2017,2023, there were 6.9approximately 6.3 million shares still authorized to be repurchased.

PNC Capital Contribution.  Duringrepurchased under the three months ended March 31, 2017, PNC surrendered to BlackRock 517,138 shares of BlackRock Series C Preferred to fund certain LTIP awards.program.

16.20. Restructuring Charge

A restructuring charge of $76$91 million ($5369 million after-tax), comprised of $44$58 million of severance and $32$33 million of expense related to the accelerated amortization of previously granted deferred cash and equitystock-based compensation awards, was recorded in the firstfourth quarter of 20162022 in connection with an initiative to modify the workforce to align more closely with strategic priorities.

The table below presents a project to streamline and simplifyrollforward of the organization.  There was noCompany's restructuring liability outstanding atfor the nine months ended September 30, 2017.2023, which is included in other liabilities on the condensed consolidated statements of financial condition.

 

Nine Months Ended

 

(in millions)

September 30, 2023

 

 Liability as of December 31, 2022

$

58

 

 Cash payments

 

(56

)

 Liability as of September 30, 2023

$

2

 

21. Income Taxes

Income tax expense for the three months ended September 30, 2023 included $223 million of discrete tax benefits related to the resolution of certain outstanding tax matters. Income tax expense for the nine months ended September 30, 2023 included $185 million of discrete tax net benefits related to the resolution of certain outstanding tax matters and $41 million of discrete tax benefits related to stock-based compensation awards that vested in 2023.

Income tax expense for the three months ended September 30, 2022 included approximately $93 million of discrete tax benefits related to the resolution of certain outstanding tax matters. Income tax expense for the nine months ended September 30, 2022 included $139 million of discrete tax benefits related to the resolution of certain tax matters and $87 million of discrete tax benefits related to stock-based compensation awards that vested in 2022. In addition, GAAP income tax expense for the nine months ended September 30, 2022 included $18 million of net noncash tax benefit related to the revaluation of certain deferred income tax liabilities.

3133


17.

22. Earnings Per Share

Due to the similarities in terms between BlackRock nonvoting participating preferred stock and the Company’s common stock, the Company considers its participating preferred stock to be a common stock equivalent for purposes of earnings per share (“EPS”) calculations. As such, the Company has included the outstanding nonvoting participating preferred stock in the calculation of average basic and diluted shares outstanding.

The following table sets forth the computation of basic and diluted EPSearnings per share (“EPS”) for the three and nine months ended September 30, 20172023 and 20162022 under the treasury stock method:

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

(in millions, except shares and per share data)

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income attributable to BlackRock, Inc.

$

1,604

 

 

$

1,406

 

 

$

4,127

 

 

$

3,919

 

Basic weighted-average shares outstanding

 

149,155,258

 

 

 

150,644,985

 

 

 

149,553,652

 

 

 

151,219,485

 

Dilutive effect of:

 

 

 

 

 

 

 

 

 

 

 

   Nonparticipating RSUs

 

930,202

 

 

 

981,319

 

 

 

900,643

 

 

 

1,015,467

 

   Stock options

 

419,683

 

 

 

335,085

 

 

 

407,728

 

 

 

409,102

 

Total diluted weighted-average shares outstanding

 

150,505,143

 

 

 

151,961,389

 

 

 

150,862,023

 

 

 

152,644,054

 

Basic earnings per share

$

10.75

 

 

$

9.33

 

 

$

27.60

 

 

$

25.92

 

Diluted earnings per share

$

10.66

 

 

$

9.25

 

 

$

27.36

 

 

$

25.67

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in millions, except shares and per share data)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net income attributable to BlackRock

 

$

947

 

 

$

875

 

 

$

2,666

 

 

$

2,321

 

Basic weighted-average shares outstanding

 

 

161,872,716

 

 

 

164,129,214

 

 

 

162,459,737

 

 

 

164,756,355

 

Dilutive effect of nonparticipating RSUs and stock

   options

 

 

1,900,830

 

 

 

2,127,384

 

 

 

1,829,305

 

 

 

2,004,557

 

Total diluted weighted-average shares outstanding

 

 

163,773,546

 

 

 

166,256,598

 

 

 

164,289,042

 

 

 

166,760,912

 

Basic earnings per share

 

$

5.85

 

 

$

5.33

 

 

$

16.41

 

 

$

14.09

 

Diluted earnings per share

 

$

5.78

 

 

$

5.26

 

 

$

16.23

 

 

$

13.92

 

For the three and nine months ended September 30, 2023, 328,319 and 149,684 shares, primarily related to stock options, respectively, were excluded from the calculation of diluted EPS because to include them would have an anti-dilutive effect. For the three and nine months ended September 2022, 371,687 and 348,343 RSUs, respectively, were excluded from the calculation of diluted EPS because to include them would have an anti-dilutive effect. Certain performance-based RSUs and stock options were excluded from the diluted EPS calculation because the designated contingencies were not met for the three and nine months ended September 30, 2023 and 2022, respectively.

18.23. Segment Information

The Company’s management directs BlackRock’s operations as one business, the asset management business. The Company utilizes a consolidated approach to assess performance and allocate resources. As such, the Company operates in one business segment as defined in ASC 280-10.

The following table illustrates investment advisory, administration fees, securities lending revenue and performance fees by product type, technology and risk management revenue, distribution fees, and advisory and other revenue for the three and nine months ended September 30, 2017 and 2016.

segment.

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

 

September 30,

 

 

September 30,

 

 

(in millions)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

Equity

 

$

1,457

 

 

$

1,284

 

 

$

4,134

 

 

$

3,746

 

 

Fixed income

 

 

749

 

 

 

695

 

 

 

2,153

 

 

 

1,975

 

 

Multi-asset

 

 

291

 

 

 

286

 

 

 

857

 

 

 

866

 

 

Alternatives

 

 

342

 

 

 

221

 

 

 

754

 

 

 

633

 

 

Cash management

 

 

144

 

 

 

118

 

 

 

408

 

 

 

340

 

 

Total investment advisory, administration fees,

    securities lending revenue and performance fees

 

 

2,983

 

 

 

2,604

 

 

 

8,306

 

 

 

7,560

 

 

Technology and risk management revenue

 

 

175

 

 

 

152

 

 

 

497

 

 

 

439

 

 

Distribution fees

 

 

5

 

 

 

10

 

 

 

17

 

 

 

32

 

 

Advisory and other revenue

 

 

70

 

 

 

71

 

 

 

202

 

 

 

234

 

 

Total revenue

 

$

3,233

 

 

$

2,837

 

 

$

9,022

 

 

$

8,265

 

 

The following table illustrates total revenue for the three and nine months ended September 30, 20172023 and 20162022 by geographic region. These amounts are aggregated on a legal entity basis and do not necessarily reflect where the customer resides or affiliated services are provided.

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in millions)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

2,979

 

 

$

2,890

 

 

$

8,792

 

 

$

8,993

 

Europe

 

 

1,361

 

 

 

1,241

 

 

 

3,876

 

 

 

3,944

 

Asia-Pacific

 

 

182

 

 

 

180

 

 

 

560

 

 

 

599

 

Total revenue

 

$

4,522

 

 

$

4,311

 

 

$

13,228

 

 

$

13,536

 

See Note 15, Revenue, for further information on the Company’s sources of revenue.

 

 

Three Months Ended

 

 

Nine Months Ended

 

(in millions)

 

September 30,

 

 

September 30,

 

Revenue

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Americas

 

$

2,126

 

 

$

1,934

 

 

$

6,077

 

 

$

5,580

 

Europe

 

 

946

 

 

 

773

 

 

 

2,496

 

 

 

2,287

 

Asia-Pacific

 

 

161

 

 

 

130

 

 

 

449

 

 

 

398

 

Total revenue

 

$

3,233

 

 

$

2,837

 

 

$

9,022

 

 

$

8,265

 

32


The following table illustrates long-lived assets that consist of goodwill and property and equipment at September 30, 20172023 and December 31, 20162022 by geographic region. These amounts are aggregated on a legal entity basis and do not necessarily reflect where the asset is physically located.

 

 

September 30,

 

 

December 31,

 

(in millions)

 

2023

 

 

2022

 

Long-lived Assets

 

 

 

 

 

 

Americas

 

$

14,975

 

 

$

14,945

 

Europe

 

 

1,504

 

 

 

1,329

 

Asia-Pacific

 

 

95

 

 

 

98

 

Total long-lived assets

 

$

16,574

 

 

$

16,372

 

(in millions)

 

September 30,

 

 

December 31,

 

Long-lived Assets

 

2017

 

 

2016

 

Americas

 

$

13,546

 

 

$

13,424

 

Europe

 

 

166

 

 

 

163

 

Asia-Pacific

 

 

85

 

 

 

90

 

Total long-lived assets

 

$

13,797

 

 

$

13,677

 

Americas is primarily is comprised of the United StatesUS, Latin America and Canada, while Europe is primarily is comprised of the United KingdomUK, the Netherlands, Switzerland, France, Ireland and Luxembourg. Asia-Pacific is primarily is comprised of Hong Kong, Australia, Japan and Singapore.

34


19.24. Subsequent Events

In June 2017, the Company announced that it entered into an agreement for a minority investment in Scalable Capital, a digital investment manager in Europe.  The transaction is expected to be completed in the fourth quarter of 2017, subject to customary regulatory approvals and closing conditions. This transaction is not expected to be material to the Company’s condensed consolidated statements of financial condition or results of operations.  

The Company conducted a review for additional subsequent events and determined that no subsequent events had occurred that would require accrual or additional disclosures.

3335


Item

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 its Securities and Exchange Commission (“SEC”) 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) the introduction, withdrawal, success and timing of business initiatives and strategies; (2) 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”); (3) the relative and absolute investment performance of BlackRock’s investment products; (4) BlackRock’s ability to develop new products and services that address client preferences; (5) the impact of increased competition; (5)(6) the impact of future acquisitions or divestitures; (6)(7) BlackRock’s ability to integrate acquired businesses successfully; (8) the unfavorable resolution of legal proceedings; (7)(9) the extent and timing of any share repurchases; (8)(10) the impact, extent and timing of technological changes and the adequacy of intellectual property, data, information and cyber securitycybersecurity protection; (9)(11) attempts to circumvent BlackRock’s operational control environment or the potential for human error in connection with BlackRock’s operational systems; (10)(12) the impact of legislative and regulatory actions and reforms, and regulatory, supervisory or enforcement actions of government agencies and governmental scrutiny relating to BlackRock or The PNC Financial Services Group, Inc. (“PNC”); (11)BlackRock; (13) changes in law and policy and uncertainty pending any such changes; (12)(14) any failure to effectively manage conflicts of interest; (15) damage to BlackRock’s reputation; (16) geopolitical unrest, terrorist activities, civil or international hostilities, including the war between Russia and Ukraine, and natural disasters, which may adversely affect the general economy, domestic and local financial and capital markets, specific industries or BlackRock; (13)(17) a pandemic or health crisis, and related impact on BlackRock’s business, operations and financial condition; (18) climate-related risks to BlackRock's business, products, operations and clients; (19) the ability to attract, train and retain highly talentedqualified and diverse professionals; (14)(20) fluctuations in the carrying value of BlackRock’s economic investments; (15)(21) the impact of changes to tax legislation, including income, payroll and transaction taxes, and taxation on products or transactions, which could affect the value proposition to clients and, generally, the tax position of the Company; (16)(22) BlackRock’s success in negotiating distribution arrangements and maintaining distribution channels for its products; (17)(23) the failure by a key vendorthird-party providers of BlackRock to fulfill itstheir obligations to the Company; (18)(24) operational, technological and regulatory risks associated with BlackRock’s major technology partnerships; (25) any disruption to the operations of third parties whose functions are integral to BlackRock’s exchange-traded funds (“ETF”ETFs”) platform; (19)(26) the impact of BlackRock electing to provide support to its products from time to time and any potential liabilities related to securities lending or other indemnification obligations; and (20)(27) the impact of problems, atinstability or failure of other financial institutions or the failure or negative performance of products atoffered by other financial institutions.

3436


OVERVIEW

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 $5.977$9.1 trillion of AUM at September 30, 2017.2023. With approximately 13,70019,900 employees in more than 30 countries, BlackRock provides a broad range of investment management and risk managementtechnology services to institutional and retail clients worldwide.in more than 100 countries across the globe.

BlackRock’s diverse platform of alpha-seeking active, (alpha)index and index (beta)cash management investment strategies across asset classes enables the Company to offer choice and tailor investment outcomes and asset allocation solutions for clients. Product offerings include single- and multi-asset class 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 ETFs, separate accounts, collective investmenttrust funds and other pooled investment vehicles. BlackRock also offers technology services, including the investment and risk management technology platform, Aladdin®, risk analytics,Aladdin Wealth, eFront, and Cachematrix, as well as advisory and technology services and solutions to a broad base of institutional and wealth management investors.clients. The Company is highly regulated and manages its clients’ assets as a fiduciary. The Company does not engage in proprietary trading activities that could conflict with the interests of its 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 investors.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, and establishing third-party distribution relationships.consultants.

At September 30, 2017, PNC held 21.4% of the Company’s voting common stock and 21.9% of the Company’s capital stock, which includes outstanding common and nonvoting preferred stock.

Certain items previously reported have been reclassified to conform to the current period presentation.  For more information on the current period’s reclassification, see “Discussion of Financial Results – Revenue” herein.

OTHER DEVELOPMENTS

Acquisitions

Acquisition. In June 2017, the CompanyAugust 2023, BlackRock completed the acquisition of Kreos Capital, a provider of growth and venture debt financing to companies in the equity infrastructure franchisetechnology and healthcare industries (the "Kreos Transaction"). The Company believes this acquisition will add to the Company's position as a leading global credit asset manager and advance its ambitions to provide clients with a diverse range of First Reserve (“First Reserve Transaction”), expanding the Company’s energyprivate market investment products and power infrastructure platform.solutions. Total consideration for the transaction was approximately $193$250 million, including $120 millionwhich included contingent consideration.

37


EXECUTIVE SUMMARY

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

(in millions, except per share data)

2023

 

 

2022

 

 

2023

 

 

2022

 

GAAP basis(1):

 

 

 

 

 

 

 

 

 

 

 

Total revenue

$

4,522

 

 

$

4,311

 

 

$

13,228

 

 

$

13,536

 

Total expense

 

2,885

 

 

 

2,785

 

 

 

8,538

 

 

 

8,578

 

Operating income

$

1,637

 

 

$

1,526

 

 

$

4,690

 

 

$

4,958

 

Operating margin

 

36.2

%

 

 

35.4

%

 

 

35.5

%

 

 

36.6

%

Nonoperating income (expense), less net income
   (loss) attributable to noncontrolling interests

 

180

 

 

 

210

 

 

 

478

 

 

 

(88

)

Income tax expense

 

213

 

 

 

330

 

 

 

1,041

 

 

 

951

 

Net income attributable to BlackRock

$

1,604

 

 

$

1,406

 

 

$

4,127

 

 

$

3,919

 

Diluted earnings per common share

$

10.66

 

 

$

9.25

 

 

$

27.36

 

 

$

25.67

 

Effective tax rate

 

11.7

%

 

 

19.0

%

 

 

20.1

%

 

 

19.5

%

As adjusted(2):

 

 

 

 

 

 

 

 

 

 

 

Operating income

$

1,691

 

 

$

1,585

 

 

$

4,877

 

 

$

5,134

 

Operating margin

 

42.3

%

 

 

42.0

%

 

 

41.8

%

 

 

43.3

%

Nonoperating income (expense), less net income
   (loss) attributable to noncontrolling interests

$

184

 

 

$

210

 

 

$

449

 

 

$

(88

)

Net income attributable to BlackRock

$

1,642

 

 

$

1,451

 

 

$

4,241

 

 

$

4,035

 

Diluted earnings per common share

$

10.91

 

 

$

9.55

 

 

$

28.11

 

 

$

26.43

 

Effective tax rate

 

12.4

%

 

 

19.2

%

 

 

20.4

%

 

 

20.0

%

Other:

 

 

 

 

 

 

 

 

 

 

 

Assets under management (end of period)

$

9,100,825

 

 

$

7,961,373

 

 

$

9,100,825

 

 

$

7,961,373

 

Diluted weighted-average common shares outstanding

 

150.5

 

 

 

152.0

 

 

 

150.9

 

 

 

152.6

 

Shares outstanding (end of period)

 

148.9

 

 

 

150.5

 

 

 

148.9

 

 

 

150.5

 

Book value per share(3)

$

259.34

 

 

$

246.99

 

 

$

259.34

 

 

$

246.99

 

Cash dividends declared and paid per share

$

5.00

 

 

$

4.88

 

 

$

15.00

 

 

$

14.64

 

(1)
Accounting principles generally accepted in the United States (“GAAP”).
(2)
As adjusted items are described in more detail in Non-GAAP Financial Measures. Beginning in the first quarter of contingent consideration at fair value at time2023, BlackRock updated the definitions of close.

In July 2017,its non-GAAP financial measures to exclude the impact of market valuation changes on certain deferred cash compensation plans which the Company completed the acquisition of Cachematrix (“Cachematrix Transaction”), a leading provider of financial technology which simplifies the cash management process for banks and their corporate clientsbegan economically hedging in a streamlined, open-architecture platform.  2023.

(3)
Total consideration for the transaction was approximately $38 million.

In June 2017, the Company announced that it entered into an agreement for a minority investment in Scalable Capital, a digital investment manager in Europe.  The transaction is expected to be completed in the fourth quarter of 2017, subject to customary regulatory approvals and closing conditions. This transaction is not expected to be material to the Company’s condensed consolidated statements of financial condition or results of operations.  

United Kingdom Exit from European Union

Following the June 2016 vote to exit the European Union (“EU”), the United Kingdom served notice under Article 50BlackRock stockholders’ equity divided by total shares outstanding at September 30 of the Treaty on European Union on March 29, 2017 to initiate the process of exiting from the EU, commonly referred to as "Brexit". The outcome of the negotiations between the United Kingdom and the EU in connectionrespective period-end.

Three Months Ended September 30, 2023 Compared with Brexit is highly uncertain and information regarding the long-term consequences is expected to become clearer over time as negotiations progress. The Company continues to prepare for a range of potential outcomes in connection with Brexit.Three Months Ended September 30, 2022

35


EXECUTIVE SUMMARY

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in millions, except shares and per share data)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

GAAP basis:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$

3,233

 

 

$

2,837

 

 

$

9,022

 

 

$

8,265

 

Total expense

 

 

1,839

 

 

 

1,628

 

 

 

5,239

 

 

 

4,920

 

Operating income

 

 

1,394

 

 

 

1,209

 

 

 

3,783

 

 

 

3,345

 

Operating margin

 

 

43.1

%

 

 

42.6

%

 

 

41.9

%

 

 

40.5

%

Nonoperating income (expense), less net income (loss)

     attributable to noncontrolling interests

 

 

(2

)

 

 

(1

)

 

 

(27

)

 

 

(70

)

Income tax expense

 

 

(445

)

 

 

(333

)

 

 

(1,090

)

 

 

(954

)

Net income attributable to BlackRock

 

$

947

 

 

$

875

 

 

$

2,666

 

 

$

2,321

 

Diluted earnings per common share

 

$

5.78

 

 

$

5.26

 

 

$

16.23

 

 

$

13.92

 

Effective tax rate

 

 

32.0

%

 

 

27.6

%

 

 

29.0

%

 

 

29.1

%

As adjusted(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

1,398

 

 

$

1,216

 

 

$

3,795

 

 

$

3,442

 

Operating margin

 

 

45.0

%

 

 

44.8

%

 

 

43.9

%

 

 

43.5

%

Nonoperating income (expense), less net income (loss)

     attributable to noncontrolling interests

 

 

(2

)

 

 

(1

)

 

 

(27

)

 

 

(70

)

Net income attributable to BlackRock

 

$

969

 

 

$

854

 

 

$

2,694

 

 

$

2,362

 

Diluted earnings per common share

 

$

5.92

 

 

$

5.14

 

 

$

16.40

 

 

$

14.16

 

Effective tax rate

 

 

30.6

%

 

 

29.7

%

 

 

28.5

%

 

 

30.0

%

Other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets under management (end of period)

 

$

5,976,892

 

 

$

5,117,421

 

 

$

5,976,892

 

 

$

5,117,421

 

Diluted weighted-average common shares outstanding(2)

 

 

163,773,546

 

 

 

166,256,598

 

 

 

164,289,042

 

 

 

166,760,912

 

Common and preferred shares outstanding

    (end of period)

 

 

161,597,770

 

 

 

163,858,070

 

 

 

161,597,770

 

 

 

163,858,070

 

Book value per share(3)

 

$

185.91

 

 

$

176.40

 

 

$

185.91

 

 

$

176.40

 

Cash dividends declared and paid per share

 

$

2.50

 

 

$

2.29

 

 

$

7.50

 

 

$

6.87

 

(1)

As adjusted items are described in more detail in Non-GAAP Financial Measures.

(2)

Nonvoting participating preferred shares are considered to be common stock equivalents for purposes of determining basic and diluted earnings per share calculations.

(3)

Total BlackRock stockholders’ equity divided by total common and preferred shares outstanding at September 30 of the respective period-end.

THREE MONTHS ENDED SEPTEMBER 30, 2017 COMPARED WITH THREE MONTHS ENDED SEPTEMBER 30, 2016

GAAP.Operating income of $1,394 million$1.6 billion increased $185$111 million and operating margin of 43.1%36.2% increased 5080 bps from the third quarter of 2016. Operatingthree months ended September 30, 2022. Increases in operating income and operating margin growth reflected higher year-over-yearinvestment advisory and administration fees (collectively "base fees"), primarily driven by organic base fees, performance feesfee growth and the impact of market movements over the past twelve months on average AUM, and higher technology and risk management revenue,services revenue.

Nonoperating income (expense) less net income (loss) attributable to noncontrolling interests (“NCI”) decreased $30 million from the three months ended September 30, 2022, reflecting the impact of $267 million of noncash gains related to BlackRock's strategic minority investment in iCapital Network, Inc. ("iCapital") during 2022, partially offset by higher compensation and benefits expense,mark-to-market revaluation of the Company's seed capital portfolio, net of impact of certain hedges, higher direct fund expense,gains on private equity co-investment portfolios, and higher generalinterest and administration expense.        dividend income during the three months ended September 30, 2023.

Third quarter 2017Earnings per diluted common share increased $1.41, or 15%, from the three months ended September 30, 2022, primarily driven by higher operating income and a lower effective tax rate, partially offset by lower nonoperating income. Income tax expense for the three months ended September 30, 2023 and September 30, 2022 included net noncash expenseapproximately $223 million and $93 million, respectively, of $19 million related to the revaluation of certain deferred income tax liabilities as a result of domestic state and local changes. Third quarter 2016 income tax expense included a $26 million net noncash tax benefit, primarily related to the revaluation of certain deferred income tax liabilities as a result of legislation enacted in the United Kingdom, and domestic state and local income tax changes.  Third quarter 2016 income tax expense also included nonrecurringdiscrete tax benefits of $16 million primarily duerelated to the resolution of certain outstanding tax matters.  See Income Tax Expense within Discussion

As Adjusted. Operating income of Financial Results for more information.

$1.7 billion increased $106 million and operating margin of 42.3% increased 30 bps from the three months ended September 30, 2022. Earnings per diluted common share increased $0.52,$1.36, or 10%14%, from the third quarter of 2016, driventhree months ended September 30, 2022, primarily byreflecting higher operating income and the benefit of share repurchases,a lower effective tax rate, partially offset by higher income tax expense.lower nonoperating income.

3638


As Adjusted.

Nine Months Ended September 30, 2023 Compared with Nine Months Ended September 30, 2022

GAAP. Operating income of $1,398 million increased $182 million from the third quarter of 2016, and operating margin of 45.0% increased 20 bps from the third quarter of 2016.  Income tax expense for the third quarter of 2017 and 2016 excluded the $19 million net noncash expense and $26 million net noncash benefit, respectively, described above.  Earnings per diluted common share increased $0.78, or 15%, from the third quarter of 2016.

NINE MONTHS ENDED SEPTEMBER 30, 2017 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 2016

GAAP.    Operating income of $3,783 million increased $438$4.7 billion decreased $268 million and operating margin of 41.9% increased 14035.5% decreased 110 bps from the nine months ended September 30, 2016. Operating2022. Decreases in operating income and operating margin growth primarily reflected higher year-over-yearlower base fees, performance fees, and technology and risk management revenue,driven by the impact of lower markets, partially offset by higher compensation and benefits, higher direct fund expense, and higher general and administrationtechnology expense. The nine months ended September 30, 2017 also included approximately $22

Nonoperating income (expense) less net income (loss) attributable to NCI increased $566 million of expense associated with the strategic repositioning of the active equity platform.  Operating income forfrom the nine months ended September 30, 2016 included a restructuring charge of $76 million in connection with a project to streamline and simplify the organization.  Nonoperating income (expense), less net income (loss) attributable to noncontrolling interest (“NCI”), increased $43 million2022, driven primarily by higher netmark-to-market gains on investments.  Nonoperating results for the nine months ended September 30, 2017 included a “make-whole” redemption premiumCompany’s private equity co-investment portfolios, higher mark-to-market revaluation of $14Company's seed capital portfolio, net of impact of certain hedges, and higher interest and dividend income, partially offset by the impact of $267 million of noncash gains related to the refinancing of $700 million of 6.25% notes, which were paid prior to their September 2017 maturity.  BlackRock's strategic minority investment in iCapital during 2022.

Income tax expense for the nine months ended September 30, 20172023 included an $81$226 million discrete tax benefit reflectingnet benefits related to the adoptionresolution of new accounting guidance related tocertain outstanding tax matters and stock-based compensation awards that vested in the first quarter of 2017 and the $19 million net noncash expense mentioned above.2023. Income tax expense for the nine months ended September 30, 20162022 included $226 million of discrete tax benefits related to stock-based compensation awards that vested in 2022 and the $26resolution of certain outstanding tax matters, and $18 million of net noncash benefit mentioned above and nonrecurring tax benefits related to the revaluation of $35 million.  See Income Tax Expense within Discussion of Financial Results for more information.certain deferred income tax liabilities.

Earnings per diluted common share increased $2.31,$1.69 or 17%7%, from the nine months ended September 30, 2016, driven2022, primarily reflecting higher nonoperating income, partially offset by higher net income, and the benefit of share repurchases.lower operating income.

As Adjusted.Adjusted. Operating income of $3,795 million increased $353$4.9 billion decreased $257 million and operating margin of 43.9% increased 4041.8% decreased 150 bps from the nine months ended September 30, 2016.  The pre-tax restructuring charge of $76 million described above was excluded2022.

Earnings per diluted common share increased $1.68, or 6%, from as adjusted results for the nine months ended September 30, 2016.2022. Income tax expense for the nine months ended September 30, 2017 and 20162022 excluded the previously described net noncash expense of $19$18 million and net noncash benefit of $26 million, respectively, and included the nonrecurring tax benefits described above.  Earnings per diluted common share increased $2.24, or 16%

Beginning in the first quarter of 2023, BlackRock updated its definitions of operating income, as adjusted, operating margin, as adjusted, nonoperating income (expense), fromas adjusted, and net income attributable to BlackRock, Inc., as adjusted, to exclude the nine months ended September 30, 2016.

compensation expense related to the market valuation changes on certain deferred cash compensation plans, and the related nonoperating gain (loss) impact of an economic hedge of these deferred cash compensation plans. See Non-GAAP Financial Measures for further information on as adjusted items and the reconciliation to accounting principles generally accepted in the United States (“GAAP“).GAAP.

For further discussion of BlackRock’s revenue, expense, nonoperating results and income tax expense, see Discussion of Financial Results herein.

3739


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. 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. Management reviews non-GAAP financial measures, in addition to 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 financial 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 financial measures may not be comparable to other similarly titled measures of other companies.

Computations and reconciliations for all periods are derived from the condensed consolidated statements of income as follows:

40


(1) Operating income, as adjusted, and operating margin, as adjusted:

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

(in millions)

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating income, GAAP basis

$

1,637

 

 

$

1,526

 

 

$

4,690

 

 

$

4,958

 

Non-GAAP expense adjustments:

 

 

 

 

 

 

 

 

 

 

 

Compensation expense related to appreciation
   (depreciation) on deferred cash compensation plans (a)

 

(3

)

 

 

 

 

 

29

 

 

 

 

Amortization of intangible assets (b)

 

39

 

 

 

38

 

 

 

113

 

 

 

114

 

Acquisition-related compensation costs (b)

 

6

 

 

 

5

 

 

 

15

 

 

 

18

 

Acquisition-related transaction costs (b)(1)

 

4

 

 

 

 

 

 

7

 

 

 

 

Contingent consideration fair value adjustments (b)

 

 

 

 

1

 

 

 

1

 

 

 

2

 

Lease costs - New York (c)

 

 

 

 

15

 

 

 

14

 

 

 

42

 

Reduction of indemnification asset (d)(1)

 

8

 

 

 

 

 

 

8

 

 

 

 

Operating income, as adjusted

$

1,691

 

 

$

1,585

 

 

$

4,877

 

 

$

5,134

 

Revenue, GAAP basis

$

4,522

 

 

$

4,311

 

 

$

13,228

 

 

$

13,536

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

Distribution fees

 

(321

)

 

 

(325

)

 

 

(959

)

 

 

(1,067

)

Investment advisory fees

 

(205

)

 

 

(211

)

 

 

(590

)

 

 

(615

)

Revenue used for operating margin measurement

$

3,996

 

 

$

3,775

 

 

$

11,679

 

 

$

11,854

 

Operating margin, GAAP basis

 

36.2

%

 

 

35.4

%

 

 

35.5

%

 

 

36.6

%

Operating margin, as adjusted

 

42.3

%

 

 

42.0

%

 

 

41.8

%

 

 

43.3

%

 

 

 

 

 

 

 

 

 

 

 

 

(1)
Amount included within general and administration expense.

(2) Nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted:

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

(in millions)

2023

 

 

2022

 

 

2023

 

 

2022

 

Nonoperating income (expense), GAAP basis

$

171

 

 

$

165

 

 

$

538

 

 

$

(320

)

Less: Net income (loss) attributable to NCI

 

(9

)

 

 

(45

)

 

 

60

 

 

 

(232

)

Nonoperating income (expense), net of NCI

 

180

 

 

 

210

 

 

 

478

 

 

 

(88

)

Less: Hedge gain (loss) on deferred cash compensation
   plans (a)

 

(4

)

 

 

 

 

 

29

 

 

 

 

Nonoperating income (expense), less net income (loss)
   attributable to NCI, as adjusted

$

184

 

 

$

210

 

 

$

449

 

 

$

(88

)

(3) Net income attributable to BlackRock, Inc., as adjusted:

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

(in millions, except per share data)

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income attributable to BlackRock, Inc., GAAP basis

$

1,604

 

 

$

1,406

 

 

$

4,127

 

 

$

3,919

 

Non-GAAP adjustments(1):

 

 

 

 

 

 

 

 

 

 

 

Net impact of hedged deferred cash compensation plans (a)

 

1

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets (b)

 

30

 

 

 

29

 

 

 

86

 

 

 

87

 

Acquisition-related compensation costs (b)

 

4

 

 

 

4

 

 

 

11

 

 

 

14

 

Acquisition-related transaction costs (b)

 

3

 

 

 

 

 

 

5

 

 

 

 

Contingent consideration fair value adjustments (b)

 

 

 

 

1

 

 

 

1

 

 

 

2

 

Lease costs - New York (c)

 

 

 

 

11

 

 

 

11

 

 

 

31

 

Income tax matters

 

 

 

 

 

 

 

 

 

 

(18

)

Net income attributable to BlackRock, Inc., as adjusted

$

1,642

 

 

$

1,451

 

 

$

4,241

 

 

$

4,035

 

Diluted weighted-average common shares outstanding

 

150.5

 

 

 

152.0

 

 

 

150.9

 

 

 

152.6

 

Diluted earnings per common share, GAAP basis

$

10.66

 

 

$

9.25

 

 

$

27.36

 

 

$

25.67

 

Diluted earnings per common share, as adjusted

$

10.91

 

 

$

9.55

 

 

$

28.11

 

 

$

26.43

 

(1)
Non-GAAP adjustments, excluding income tax matters, are net of tax.

41


(1) Operating income, as adjusted, and operating margin, as adjusted: Management uses both GAAPbelieves operating income, as adjusted, and non-GAAP financial measures in evaluatingoperating margin, as adjusted, are effective indicators of BlackRock’s financial performance over time, and, therefore, provide useful disclosure to investors. Management believes that operating margin, as adjusted, reflects the Company’s long-term ability to manage ongoing costs in relation to its revenues. The Company uses operating margin, as adjusted, to assess the Company’s financial performance, to determine the long-term and annual compensation of the Company’s senior-level employees and to evaluate the Company’s relative performance against industry peers. Furthermore, this metric eliminates margin variability arising from the accounting of revenues and expenses related to distributing different product structures in multiple distribution channels utilized by asset managers.

Operating income, as adjusted, includes the following non-GAAP expense adjustments:
(a)
Compensation expense related to appreciation (depreciation) on deferred cash compensation plans. Beginning in the first quarter of 2023, the Company updated its definition of operating income, as adjusted, to exclude compensation expense related to the market valuation changes on certain deferred cash compensation plans, which the Company began hedging economically in 2023. For these deferred cash compensation plans, the final value of the deferred amount to be distributed to employees in cash upon vesting is determined based on the returns on specified investment funds. The Company recognizes compensation expense for the appreciation (depreciation) of the deferred cash compensation liability in proportion to the vested amount of the award during a respective period, while the gain (loss) to economically hedge these plans is immediately recognized in nonoperating income (expense), which creates a timing difference impacting net income. This timing difference will reverse and offset to zero over the life of the award at the end of the multi-year vesting period. Management believes excluding market valuation changes related to the deferred cash compensation plans in the calculation of operating income, as adjusted, provides useful disclosure to both management and investors of the Company’s financial performance over time as these amounts are economically hedged, while also increasing comparability with other companies.
(b)
Acquisition related costs. Acquisition related costs include adjustments related to amortization of intangible assets, other acquisition-related costs, including compensation costs for nonrecurring retention-related deferred compensation, and contingent consideration fair value adjustments incurred in connection with certain acquisitions. Management believes excluding the impact of these expenses when calculating operating income, as adjusted, provides a helpful indication of the Company’s financial performance over time, thereby providing helpful information for both management and investors while also increasing comparability with other companies.
(c)
Lease costs – New York. In 2022 and 2023, the Company continued to recognize lease expense within general and administration expense for both its current headquarters located at 50 Hudson Yards in New York and prior headquarters until the Company's lease on its prior headquarters expired in April 2023. The Company began lease payments related to its current headquarters in May 2023, but began recording lease expense in August 2021 when it obtained access to the building to begin its tenant improvements. Prior to the Company’s move to its current headquarters in February 2023, the impact of lease costs related to 50 Hudson Yards was excluded from operating income, as adjusted. In February 2023, the Company completed the majority of its move to 50 Hudson Yards and no longer excluded the impact of these lease costs. Subsequently, from February 2023 through April 2023, the Company excluded the impact of lease costs related to the Company's prior headquarters. Management believes excluding the impact of these respective New York lease costs (“Lease costs – New York”) when calculating operating income, as adjusted, is useful to assess the Company’s financial performance and ongoing operations, and enhances comparability among periods presented.
(d)
Reduction of indemnification asset. In connection with a previous acquisition, BlackRock recorded an $8 million indemnification asset. Due to the resolution of certain tax matters in the current quarter, BlackRock recorded $8 million of general and administration expense to reflect the reduction of the indemnification asset and an offsetting $8 million tax benefit. The $8 million general and administrative expense and $8 million tax benefit have been excluded from as adjusted results as there is no impact on BlackRock’s book value.

42


Revenue used for calculating operating margin, as adjusted, is reduced to exclude all of the Company’s distribution fees, which are recorded as a separate line item on the condensed consolidated statements of income, as well as a portion of investment advisory fees received that is used to pay distribution and servicing costs. For certain products, based on distinct arrangements, distribution fees are collected by the Company and then passed-through to third-party client intermediaries. For other products, investment advisory fees are collected by the Company and a portion is passed-through to third-party client intermediaries. However, in both structures, the third-party client intermediary similarly owns the relationship with the retail client and is responsible for distributing the product and servicing the client. The amount of distribution and investment advisory fees fluctuates each period primarily based on a predetermined percentage of the value of AUM during the period. These fees also vary based on the type of investment product sold and the geographic location where it is sold. In addition, the Company may waive fees on certain products that could result in the reduction of payments to the third-party intermediaries.

(2) Nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted: 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. Nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, excludes the gain (loss) on the economic hedge of certain deferred cash compensation plans. As the gain (loss) on investments and derivatives used to hedge these compensation plans over time substantially offsets the compensation expense related to the market valuation changes on these deferred cash compensation plans, which is included in operating income, GAAP basis, management believes excluding the gain (loss) on the economic hedge of the deferred cash compensation plans when calculating 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 that impact book value.

(3) Net income attributable to BlackRock, Inc., as adjusted: Management believes net income attributable to BlackRock, Inc., as adjusted, and diluted earnings per common share, as adjusted, are useful measures of BlackRock’s profitability and financial performance. AdjustmentsNet income attributable to BlackRock, Inc., as adjusted, equals net income attributable to BlackRock, Inc., GAAP financial measures (“non-GAAP adjustments”) includebasis, adjusted for 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:

See notes (1) Operating income, as adjusted, and operating margin, as adjusted:

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.

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in millions)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Operating income, GAAP basis

 

$

1,394

 

 

$

1,209

 

 

$

3,783

 

 

$

3,345

 

Non-GAAP expense adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring charge

 

 

 

 

 

 

 

 

 

 

 

76

 

PNC LTIP funding obligation

 

 

4

 

 

 

7

 

 

 

12

 

 

 

21

 

Operating income, as adjusted

 

$

1,398

 

 

$

1,216

 

 

$

3,795

 

 

$

3,442

 

Revenue, GAAP basis

 

$

3,233

 

 

$

2,837

 

 

$

9,022

 

 

$

8,265

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution and servicing costs

 

 

(123

)

 

 

(114

)

 

 

(361

)

 

 

(320

)

Amortization of deferred sales commissions

 

 

(4

)

 

 

(8

)

 

 

(13

)

 

 

(27

)

Revenue used for operating margin measurement

 

$

3,106

 

 

$

2,715

 

 

$

8,648

 

 

$

7,918

 

Operating margin, GAAP basis

 

 

43.1

%

 

 

42.6

%

 

 

41.9

%

 

 

40.5

%

Operating margin, as adjusted

 

 

45.0

%

 

 

44.8

%

 

 

43.9

%

 

 

43.5

%

Operating income, as adjusted, includes non-GAAP expense adjustments.  The portion of compensation expense associated with certain long-term incentive plans (“LTIP”) funded, or to be funded, through share distributions to participants of BlackRock stock held by PNC has been excluded because it ultimately does not impact BlackRock’s book value. For the nine months ended September 30, 2016, a restructuring charge comprised of severance and accelerated amortization expense of previously granted deferred compensation awards has been excluded to provide an analysis of BlackRock’s ongoing operations and to ensure comparability among periods presented.

Revenue used for operating margin, as adjusted, excludes distribution and servicing costs paid to related parties and other third parties. Management believes such costs represent a benchmark for the amount of revenue passed through to external parties who distribute the Company’s products.  In addition, management believes the exclusion of such costs is useful because it creates consistency in the treatment for certain contracts for similar services, which due to the terms of the contracts, are accounted for under GAAP on a net basis within investment advisory, administration fees and securities lending revenue. Amortization of deferred sales commissions is excluded from revenue used for operating margin measurement, as adjusted, because such costs, over time, substantially offset distribution fee revenue the

38


Company earns. For each of these items, BlackRock excludes from revenue used for operating margin, as adjusted, the costs related to each of these items as a proxy for such offsetting revenue.

(2) Net income attributable to BlackRock, as adjusted:

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in millions, except per share data)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net income attributable to BlackRock, Inc., GAAP basis

 

$

947

 

 

$

875

 

 

$

2,666

 

 

$

2,321

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring charge (including $23 tax benefit)

 

 

 

 

 

 

 

 

 

 

 

53

 

PNC LTIP funding obligation, net of tax

 

 

3

 

 

 

5

 

 

 

9

 

 

 

14

 

Income tax matters

 

 

19

 

 

 

(26

)

 

 

19

 

 

 

(26

)

Net income attributable to BlackRock, Inc., as adjusted

 

$

969

 

 

$

854

 

 

$

2,694

 

 

$

2,362

 

Diluted weighted-average common shares outstanding(3)

 

 

163.8

 

 

 

166.3

 

 

 

164.3

 

 

 

166.8

 

Diluted earnings per common share, GAAP basis(3)

 

$

5.78

 

 

$

5.26

 

 

$

16.23

 

 

$

13.92

 

Diluted earnings per common share, as adjusted(3)

 

$

5.92

 

 

$

5.14

 

 

$

16.40

 

 

$

14.16

 

Management believes net income attributable to BlackRock, Inc., as adjusted, and diluted earnings per common share, as adjusted, are useful measures of BlackRock’s profitability and financial performance. Net income attributable to BlackRock, Inc., as adjusted, equals net income attributable to BlackRock, 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 discussionabove regarding operating income, as adjusted, and operating margin, as adjusted, for information on the PNC LTIP funding obligation and the restructuring charge.

updated presentation of non-GAAP adjustments. For each period presented, the non-GAAP adjustment related to the restructuring charge and PNC LTIP funding obligation wasadjustments were tax effected at the respective blended rates applicable to the adjustments. Amounts for income tax matters represent net noncash (benefits)(benefit) expense primarily associated with the revaluation of certain deferred tax liabilities related to intangible assets and goodwill.  Amountsgoodwill 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 ensureenhance comparability among periods presented.

Per share amounts reflect net income attributable to BlackRock, Inc., as adjusted, divided by diluted weighted averageweighted-average common shares outstanding.

(3) Nonvoting participating preferred stock is considered to be a common stock equivalent for purposes of determining basic and diluted earnings per share calculations.

3943


ASSETS UNDER MANAGEMENT

AUM for reporting purposes generally is based upon how investment advisory and administration fees are calculated for each portfolio. Net asset values, total assets, committed assets or other measures may be used to determine portfolio AUM.

AUM and Net Inflows (Outflows) by Client Type and Product Type

 

 

AUM

 

 

Net inflows (outflows)

 

 

September 30,

 

 

June 30,

 

 

December 31,

 

 

September 30,

 

 

Three Months
Ended
September 30,

 

 

Nine Months
Ended
September 30,

 

 

Twelve Months
Ended
September 30,

 

(in millions)

2023

 

 

2023

 

 

2022

 

 

2022

 

 

2023

 

 

2023

 

 

2023

 

Retail

$

868,440

 

 

$

903,630

 

 

$

843,475

 

 

$

806,498

 

 

$

(3,585

)

 

$

487

 

 

$

(14,339

)

ETFs

 

3,118,409

 

 

 

3,215,932

 

 

 

2,909,610

 

 

 

2,621,410

 

 

 

28,521

 

 

 

98,221

 

 

 

187,872

 

Institutional:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active

 

1,753,262

 

 

 

1,812,719

 

 

 

1,641,591

 

 

 

1,487,285

 

 

 

(1,330

)

 

 

79,595

 

 

 

155,623

 

Index

 

2,637,033

 

 

 

2,782,790

 

 

 

2,528,615

 

 

 

2,352,061

 

 

 

(36,242

)

 

 

(31,550

)

 

 

(36,721

)

Institutional subtotal

 

4,390,295

 

 

 

4,595,509

 

 

 

4,170,206

 

 

 

3,839,346

 

 

 

(37,572

)

 

 

48,045

 

 

 

118,902

 

Long-term

 

8,377,144

 

 

 

8,715,071

 

 

 

7,923,291

 

 

 

7,267,254

 

 

 

(12,636

)

 

 

146,753

 

 

 

292,435

 

Cash management

 

723,681

 

 

 

710,141

 

 

 

671,194

 

 

 

694,119

 

 

 

15,205

 

 

 

46,295

 

 

 

14,337

 

Total

$

9,100,825

 

 

$

9,425,212

 

 

$

8,594,485

 

 

$

7,961,373

 

 

$

2,569

 

 

$

193,048

 

 

$

306,772

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AUM and Net Inflows (Outflows) by Investment Style and Product Type

 

 

AUM

 

 

Net inflows (outflows)

 

 

September 30,

 

 

June 30,

 

 

December 31,

 

 

September 30,

 

 

Three Months
Ended
September 30,

 

 

Nine Months
Ended
September 30,

 

 

Twelve Months
Ended
September 30,

 

(in millions)

2023

 

 

2023

 

 

2022

 

 

2022

 

 

2023

 

 

2023

 

 

2023

 

Active

$

2,426,322

 

 

$

2,516,396

 

 

$

2,317,560

 

 

$

2,141,066

 

 

$

(7,742

)

 

$

64,982

 

 

$

126,357

 

Index and ETFs

 

5,950,822

 

 

 

6,198,675

 

 

 

5,605,731

 

 

 

5,126,188

 

 

 

(4,894

)

 

 

81,771

 

 

 

166,078

 

Long-term

 

8,377,144

 

 

 

8,715,071

 

 

 

7,923,291

 

 

 

7,267,254

 

 

 

(12,636

)

 

 

146,753

 

 

 

292,435

 

Cash management

 

723,681

 

 

 

710,141

 

 

 

671,194

 

 

 

694,119

 

 

 

15,205

 

 

 

46,295

 

 

 

14,337

 

Total

$

9,100,825

 

 

$

9,425,212

 

 

$

8,594,485

 

 

$

7,961,373

 

 

$

2,569

 

 

$

193,048

 

 

$

306,772

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AUM and Net Inflows (Outflows) by Product Type

 

 

AUM

 

 

Net inflows (outflows)

 

 

September 30,

 

 

June 30,

 

 

December 31,

 

 

September 30,

 

 

Three Months
Ended
September 30,

 

 

Nine Months
Ended
September 30,

 

 

Twelve Months
Ended
September 30,

 

(in millions)

2023

 

 

2023

 

 

2022

 

 

2022

 

 

2023

 

 

2023

 

 

2023

 

Equity

$

4,741,291

 

 

$

4,961,344

 

 

$

4,435,354

 

 

$

4,020,312

 

 

$

(34,467

)

 

$

(45,575

)

 

$

(15,858

)

Fixed income

 

2,576,205

 

 

 

2,668,851

 

 

 

2,536,823

 

 

 

2,350,263

 

 

 

13,211

 

 

 

110,906

 

 

 

226,421

 

Multi-asset

 

788,872

 

 

 

811,927

 

 

 

684,904

 

 

 

637,445

 

 

 

12,797

 

 

 

83,837

 

 

 

85,950

 

Alternatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Illiquid alternatives

 

131,937

 

 

 

127,678

 

 

 

117,751

 

 

 

111,729

 

 

 

2,623

 

 

 

10,105

 

 

 

14,513

 

Liquid alternatives

 

75,139

 

 

 

78,056

 

 

 

80,654

 

 

 

81,418

 

 

 

(3,472

)

 

 

(8,082

)

 

 

(9,937

)

Currency and commodities(1)

 

63,700

 

 

 

67,215

 

 

 

67,805

 

 

 

66,087

 

 

 

(3,328

)

 

 

(4,438

)

 

 

(8,654

)

Alternatives subtotal

 

270,776

 

 

 

272,949

 

 

 

266,210

 

 

 

259,234

 

 

 

(4,177

)

 

 

(2,415

)

 

 

(4,078

)

Long-term

 

8,377,144

 

 

 

8,715,071

 

 

 

7,923,291

 

 

 

7,267,254

 

 

 

(12,636

)

 

 

146,753

 

 

 

292,435

 

Cash management

 

723,681

 

 

 

710,141

 

 

 

671,194

 

 

 

694,119

 

 

 

15,205

 

 

 

46,295

 

 

 

14,337

 

Total

$

9,100,825

 

 

$

9,425,212

 

 

$

8,594,485

 

 

$

7,961,373

 

 

$

2,569

 

 

$

193,048

 

 

$

306,772

 

AUM and Net Inflows (Outflows) by Client Type

 

 

 

AUM

 

 

Net inflows (outflows)

 

 

 

September 30,

 

 

June 30,

 

 

December 31,

 

 

September 30,

 

 

Three

Months

Ended

September 30,

 

 

Nine

Months

Ended

September 30,

 

 

Twelve

Months

Ended

September 30,

 

(in millions)

 

2017

 

 

2017

 

 

2016

 

 

2016

 

 

2017

 

 

2017

 

 

2017

 

Retail

 

$

608,521

 

 

$

586,756

 

 

$

541,952

 

 

$

554,778

 

 

$

7,367

 

 

$

18,501

 

 

$

16,055

 

iShares ETFs

 

 

1,640,437

 

 

 

1,528,236

 

 

 

1,287,879

 

 

 

1,246,166

 

 

 

52,306

 

 

 

190,541

 

 

 

239,841

 

Institutional:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active

 

 

1,105,224

 

 

 

1,075,855

 

 

 

1,009,974

 

 

 

1,039,653

 

 

 

155

 

 

 

3,735

 

 

 

10,043

 

Index

 

 

2,194,701

 

 

 

2,093,193

 

 

 

1,901,681

 

 

 

1,877,501

 

 

 

15,976

 

 

 

36,883

 

 

 

71,486

 

Total institutional

 

 

3,299,925

 

 

 

3,169,048

 

 

 

2,911,655

 

 

 

2,917,154

 

 

 

16,131

 

 

 

40,618

 

 

 

81,529

 

Long-term

 

 

5,548,883

 

 

 

5,284,040

 

 

 

4,741,486

 

 

 

4,718,098

 

 

 

75,804

 

 

 

249,660

 

 

 

337,425

 

Cash management

 

 

425,423

 

 

 

402,575

 

 

 

403,584

 

 

 

388,982

 

 

 

20,381

 

 

 

14,854

 

 

 

32,526

 

Advisory(1)

 

 

2,586

 

 

 

2,658

 

 

 

2,782

 

 

 

10,341

 

 

 

(73

)

 

 

(188

)

 

 

(7,573

)

Total

 

$

5,976,892

 

 

$

5,689,273

 

 

$

5,147,852

 

 

$

5,117,421

 

 

$

96,112

 

 

$

264,326

 

 

$

362,378

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AUM and Net Inflows (Outflows) by Product Type

 

 

 

AUM

 

 

Net inflows (outflows)

 

 

 

September 30,

 

 

June 30,

 

 

December 31,

 

 

September 30,

 

 

Three

Months

Ended

September 30,

 

 

Nine

Months

Ended

September 30,

 

 

Twelve

Months

Ended

September 30,

 

(in millions)

 

2017

 

 

2017

 

 

2016

 

 

2016

 

 

2017

 

 

2017

 

 

2017

 

Equity

 

$

3,172,465

 

 

$

3,014,696

 

 

$

2,657,176

 

 

$

2,566,039

 

 

$

11,935

 

 

$

94,362

 

 

$

152,328

 

Fixed income

 

 

1,788,420

 

 

 

1,704,624

 

 

 

1,572,365

 

 

 

1,628,268

 

 

 

59,549

 

 

 

135,837

 

 

 

161,144

 

Multi-asset

 

 

457,027

 

 

 

436,736

 

 

 

395,007

 

 

 

402,261

 

 

 

4,334

 

 

 

15,406

 

 

 

20,262

 

Alternatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core

 

 

99,168

 

 

 

97,551

 

 

 

88,630

 

 

 

88,731

 

 

 

(504

)

 

 

2,353

 

 

 

3,569

 

Currency and

   commodities(2)

 

 

31,803

 

 

 

30,433

 

 

 

28,308

 

 

 

32,799

 

 

 

490

 

 

 

1,702

 

 

 

122

 

Subtotal

 

 

130,971

 

 

 

127,984

 

 

 

116,938

 

 

 

121,530

 

 

 

(14

)

 

 

4,055

 

 

 

3,691

 

Long-term

 

 

5,548,883

 

 

 

5,284,040

 

 

 

4,741,486

 

 

 

4,718,098

 

 

 

75,804

 

 

 

249,660

 

 

 

337,425

 

Cash management

 

 

425,423

 

 

 

402,575

 

 

 

403,584

 

 

 

388,982

 

 

 

20,381

 

 

 

14,854

 

 

 

32,526

 

Advisory(1)

 

 

2,586

 

 

 

2,658

 

 

 

2,782

 

 

 

10,341

 

 

 

(73

)

 

 

(188

)

 

 

(7,573

)

Total

 

$

5,976,892

 

 

$

5,689,273

 

 

$

5,147,852

 

 

$

5,117,421

 

 

$

96,112

 

 

$

264,326

 

 

$

362,378

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AUM and Net Inflows (Outflows) by Investment Style

 

 

 

AUM

 

 

Net inflows (outflows)

 

 

 

September 30,

 

 

June 30,

 

 

December 31,

 

 

September 30,

 

 

Three

Months

Ended

September 30,

 

 

Nine

Months

Ended

September 30,

 

 

Twelve

Months

Ended

September 30,

 

(in millions)

 

2017

 

 

2017

 

 

2016

 

 

2016

 

 

2017

 

 

2017

 

 

2017

 

Active

 

$

1,645,352

 

 

$

1,598,591

 

 

$

1,501,052

 

 

$

1,547,473

 

 

$

5,796

 

 

$

11,489

 

 

$

10,946

 

Index and iShares ETFs

 

 

3,903,531

 

 

 

3,685,449

 

 

 

3,240,434

 

 

 

3,170,625

 

 

 

70,008

 

 

 

238,171

 

 

 

326,479

 

Long-term

 

 

5,548,883

 

 

 

5,284,040

 

 

 

4,741,486

 

 

 

4,718,098

 

 

 

75,804

 

 

 

249,660

 

 

 

337,425

 

Cash management

 

 

425,423

 

 

 

402,575

 

 

 

403,584

 

 

 

388,982

 

 

 

20,381

 

 

 

14,854

 

 

 

32,526

 

Advisory(1)

 

 

2,586

 

 

 

2,658

 

 

 

2,782

 

 

 

10,341

 

 

 

(73

)

 

 

(188

)

 

 

(7,573

)

Total

 

$

5,976,892

 

 

$

5,689,273

 

 

$

5,147,852

 

 

$

5,117,421

 

 

$

96,112

 

 

$

264,326

 

 

$

362,378

 

(1)
Amounts include commodity ETFs.

(1)

Advisory AUM represents long-term portfolio liquidation assignments.

(2)

Amounts include commodity iShares ETFs.

4044


Component Changes in AUM for the Three Months Ended September 30, 20172023

The following table presents the component changes in AUM by client type and product type for the three months ended September 30, 2017.2023.

 

June 30,

 

 

Net
inflows

 

 

 

 

 

Market

 

 

FX

 

 

September 30,

 

 

Average

 

(in millions)

2023

 

 

(outflows)

 

 

Acquisition(1)

 

 

change

 

 

impact(2)

 

 

2023

 

 

AUM(3)

 

Retail:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

$

415,475

 

 

$

(815

)

 

$

 

 

$

(15,248

)

 

$

(3,382

)

 

$

396,030

 

 

$

413,957

 

Fixed income

 

309,449

 

 

 

(701

)

 

 

 

 

 

(6,668

)

 

 

(1,848

)

 

 

300,232

 

 

 

307,480

 

Multi-asset

 

133,546

 

 

 

395

 

 

 

 

 

 

(4,352

)

 

 

(412

)

 

 

129,177

 

 

 

133,226

 

Alternatives

 

45,160

 

 

 

(2,464

)

 

 

 

 

 

567

 

 

 

(262

)

 

 

43,001

 

 

 

44,179

 

Retail subtotal

 

903,630

 

 

 

(3,585

)

 

 

 

 

 

(25,701

)

 

 

(5,904

)

 

 

868,440

 

 

 

898,842

 

ETFs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

2,309,054

 

 

 

19,228

 

 

 

 

 

 

(87,140

)

 

 

(6,867

)

 

 

2,234,275

 

 

 

2,322,220

 

Fixed income

 

837,759

 

 

 

12,477

 

 

 

 

 

 

(27,962

)

 

 

(3,530

)

 

 

818,744

 

 

 

838,179

 

Multi-asset

 

7,892

 

 

 

159

 

 

 

 

 

 

(286

)

 

 

(49

)

 

 

7,716

 

 

 

7,898

 

Alternatives

 

61,227

 

 

 

(3,343

)

 

 

 

 

 

(167

)

 

 

(43

)

 

 

57,674

 

 

 

60,922

 

ETFs subtotal

 

3,215,932

 

 

 

28,521

 

 

 

 

 

 

(115,555

)

 

 

(10,489

)

 

 

3,118,409

 

 

 

3,229,219

 

Institutional:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

178,057

 

 

 

(3,883

)

 

 

 

 

 

(3,874

)

 

 

(2,383

)

 

 

167,917

 

 

 

176,861

 

Fixed income

 

807,167

 

 

 

(12,349

)

 

 

 

 

 

(18,514

)

 

 

(4,723

)

 

 

771,581

 

 

 

794,925

 

Multi-asset

 

664,069

 

 

 

13,392

 

 

 

 

 

 

(23,497

)

 

 

(6,971

)

 

 

646,993

 

 

 

665,094

 

Alternatives

 

163,426

 

 

 

1,510

 

 

 

2,177

 

 

 

989

 

 

 

(1,331

)

 

 

166,771

 

 

 

165,936

 

Active subtotal

 

1,812,719

 

 

 

(1,330

)

 

 

2,177

 

 

 

(44,896

)

 

 

(15,408

)

 

 

1,753,262

 

 

 

1,802,816

 

Index:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

2,058,758

 

 

 

(48,997

)

 

 

 

 

 

(47,733

)

 

 

(18,959

)

 

 

1,943,069

 

 

 

2,035,665

 

Fixed income

 

714,476

 

 

 

13,784

 

 

 

 

 

 

(26,213

)

 

 

(16,399

)

 

 

685,648

 

 

 

710,937

 

Multi-asset

 

6,420

 

 

 

(1,149

)

 

 

 

 

 

(241

)

 

 

(44

)

 

 

4,986

 

 

 

5,970

 

Alternatives

 

3,136

 

 

 

120

 

 

 

 

 

 

94

 

 

 

(20

)

 

 

3,330

 

 

 

3,307

 

Index subtotal

 

2,782,790

 

 

 

(36,242

)

 

 

 

 

 

(74,093

)

 

 

(35,422

)

 

 

2,637,033

 

 

 

2,755,879

 

Institutional subtotal

 

4,595,509

 

 

 

(37,572

)

 

 

2,177

 

 

 

(118,989

)

 

 

(50,830

)

 

 

4,390,295

 

 

 

4,558,695

 

Long-term

 

8,715,071

 

 

 

(12,636

)

 

 

2,177

 

 

 

(260,245

)

 

 

(67,223

)

 

 

8,377,144

 

 

 

8,686,756

 

Cash management

 

710,141

 

 

 

15,205

 

 

 

 

 

 

2,258

 

 

 

(3,923

)

 

 

723,681

 

 

 

709,841

 

Total

$

9,425,212

 

 

$

2,569

 

 

$

2,177

 

 

$

(257,987

)

 

$

(71,146

)

 

$

9,100,825

 

 

$

9,396,597

 

 

 

June 30,

 

 

Net

inflows

 

 

Market

 

 

FX

 

 

September 30,

 

 

Average

 

(in millions)

 

2017

 

 

(outflows)

 

 

change

 

 

impact(1)

 

 

2017

 

 

AUM(2)

 

Retail:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

$

215,808

 

 

$

1,734

 

 

$

6,110

 

 

$

2,016

 

 

$

225,668

 

 

$

220,944

 

Fixed income

 

 

240,932

 

 

 

4,613

 

 

 

1,569

 

 

 

1,234

 

 

 

248,348

 

 

 

245,193

 

Multi-asset

 

 

113,903

 

 

 

1,046

 

 

 

2,796

 

 

 

317

 

 

 

118,062

 

 

 

116,183

 

Alternatives

 

 

16,113

 

 

 

(26

)

 

 

224

 

 

 

132

 

 

 

16,443

 

 

 

17,198

 

Retail subtotal

 

 

586,756

 

 

 

7,367

 

 

 

10,699

 

 

 

3,699

 

 

 

608,521

 

 

 

599,518

 

iShares ETFs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

1,139,850

 

 

 

33,102

 

 

 

50,806

 

 

 

4,637

 

 

 

1,228,395

 

 

 

1,184,488

 

Fixed income

 

 

364,991

 

 

 

17,526

 

 

 

1,055

 

 

 

2,695

 

 

 

386,267

 

 

 

376,880

 

Multi-asset

 

 

3,240

 

 

 

169

 

 

 

77

 

 

 

5

 

 

 

3,491

 

 

 

3,359

 

Alternatives

 

 

20,155

 

 

 

1,509

 

 

 

576

 

 

 

44

 

 

 

22,284

 

 

 

21,283

 

iShares ETFs subtotal

 

 

1,528,236

 

 

 

52,306

 

 

 

52,514

 

 

 

7,381

 

 

 

1,640,437

 

 

 

1,586,010

 

Institutional:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

126,446

 

 

 

(3,296

)

 

 

5,866

 

 

 

1,350

 

 

 

130,366

 

 

 

128,842

 

Fixed income

 

 

553,652

 

 

 

496

 

 

 

4,513

 

 

 

3,366

 

 

 

562,027

 

 

 

559,121

 

Multi-asset

 

 

311,921

 

 

 

3,477

 

 

 

7,827

 

 

 

4,508

 

 

 

327,733

 

 

 

320,619

 

Alternatives

 

 

83,836

 

 

 

(522

)

 

 

1,161

 

 

 

623

 

 

 

85,098

 

 

 

83,851

 

Active subtotal

 

 

1,075,855

 

 

 

155

 

 

 

19,367

 

 

 

9,847

 

 

 

1,105,224

 

 

 

1,092,433

 

Index:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

1,532,592

 

 

 

(19,605

)

 

 

65,291

 

 

 

9,758

 

 

 

1,588,036

 

 

 

1,562,897

 

Fixed income

 

 

545,049

 

 

 

36,914

 

 

 

(1,451

)

 

 

11,266

 

 

 

591,778

 

 

 

572,049

 

Multi-asset

 

 

7,672

 

 

 

(358

)

 

 

389

 

 

 

38

 

 

 

7,741

 

 

 

7,824

 

Alternatives

 

 

7,880

 

 

 

(975

)

 

 

156

 

 

 

85

 

 

 

7,146

 

 

 

7,544

 

Index subtotal

 

 

2,093,193

 

 

 

15,976

 

 

 

64,385

 

 

 

21,147

 

 

 

2,194,701

 

 

 

2,150,314

 

Institutional subtotal

 

 

3,169,048

 

 

 

16,131

 

 

 

83,752

 

 

 

30,994

 

 

 

3,299,925

 

 

 

3,242,747

 

Long-term

 

 

5,284,040

 

 

 

75,804

 

 

 

146,965

 

 

 

42,074

 

 

 

5,548,883

 

 

 

5,428,275

 

Cash management

 

 

402,575

 

 

 

20,381

 

 

 

224

 

 

 

2,243

 

 

 

425,423

 

 

 

415,082

 

Advisory(3)

 

 

2,658

 

 

 

(73

)

 

 

(98

)

 

 

99

 

 

 

2,586

 

 

 

2,621

 

Total

 

$

5,689,273

 

 

$

96,112

 

 

$

147,091

 

 

$

44,416

 

 

$

5,976,892

 

 

$

5,845,978

 

(1)
Amounts include AUM attributable to the Kreos Transaction.

(1)

(2)
Foreign exchange reflects the impact of translating non-U.S.non-US dollar denominated AUM into U.S.United States ('US") dollars for reporting purposes.

(2)

(3)
Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing four months.

(3) Advisory AUM represents long-term portfolio liquidation assignments.

4145


The following table presents the component changes in AUM by investment style and product type for the three months ended September 30, 2017.2023.

 

June 30,

 

 

Net
inflows

 

 

 

 

 

Market

 

 

FX

 

 

September 30,

 

 

Average

 

(in millions)

2023

 

 

(outflows)

 

 

Acquisition(1)

 

 

change

 

 

impact(2)

 

 

2023

 

 

AUM(3)

 

Active:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

$

418,663

 

$

(6,461

)

 

$

 

 

$

(14,556

)

 

$

(3,956

)

$

393,690

 

$

414,619

 

Fixed income

 

1,091,544

 

 

(14,111

)

 

 

 

 

 

(24,907

)

 

 

(5,821

)

 

 

1,046,705

 

 

 

1,076,883

 

Multi-asset

 

797,605

 

 

13,784

 

 

 

 

 

 

(27,848

)

 

 

(7,383

)

 

 

776,158

 

 

 

798,311

 

Alternatives

 

208,584

 

 

(954

)

 

 

2,177

 

 

 

1,555

 

 

 

(1,593

)

 

 

209,769

 

 

 

210,114

 

Active subtotal

 

2,516,396

 

 

(7,742

)

 

 

2,177

 

 

(65,756

)

 

 

(18,753

)

 

 

2,426,322

 

 

 

2,499,927

 

Index and ETFs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ETFs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

2,309,054

 

 

19,228

 

 

 

 

 

 

(87,140

)

 

 

(6,867

)

 

 

2,234,275

 

 

 

2,322,220

 

Fixed income

 

837,759

 

 

12,477

 

 

 

 

 

 

(27,962

)

 

 

(3,530

)

 

 

818,744

 

 

 

838,179

 

Multi-asset

 

7,892

 

 

159

 

 

 

 

 

 

(286

)

 

 

(49

)

 

 

7,716

 

 

 

7,898

 

Alternatives

 

61,227

 

 

(3,343

)

 

 

 

 

 

(167

)

 

 

(43

)

 

 

57,674

 

 

 

60,922

 

ETFs subtotal

 

3,215,932

 

 

28,521

 

 

 

 

 

 

(115,555

)

 

 

(10,489

)

 

 

3,118,409

 

 

 

3,229,219

 

Non-ETF Index:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

2,233,627

 

 

(47,234

)

 

 

 

 

 

(52,299

)

 

 

(20,768

)

 

 

2,113,326

 

 

 

2,211,864

 

Fixed income

 

739,548

 

 

14,845

 

 

 

 

 

 

(26,488

)

 

 

(17,149

)

 

 

710,756

 

 

 

736,459

 

Multi-asset

 

6,430

 

 

(1,146

)

 

 

 

 

 

(242

)

 

 

(44

)

 

 

4,998

 

 

 

5,979

 

Alternatives

 

3,138

 

 

120

 

 

 

 

 

 

95

 

 

 

(20

)

 

 

3,333

 

 

 

3,308

 

Non-ETF Index subtotal

 

2,982,743

 

 

(33,415

)

 

 

 

 

 

(78,934

)

 

 

(37,981

)

 

 

2,832,413

 

 

 

2,957,610

 

Index & ETFs subtotal

 

6,198,675

 

 

(4,894

)

 

 

 

 

 

(194,489

)

 

 

(48,470

)

 

 

5,950,822

 

 

 

6,186,829

 

Long-term

 

8,715,071

 

 

(12,636

)

 

 

2,177

 

 

 

(260,245

)

 

 

(67,223

)

 

 

8,377,144

 

 

 

8,686,756

 

Cash management

 

710,141

 

 

 

15,205

 

 

 

 

 

 

2,258

 

 

 

(3,923

)

 

 

723,681

 

 

 

709,841

 

Total

$

9,425,212

 

 

$

2,569

 

 

$

2,177

 

 

$

(257,987

)

 

$

(71,146

)

 

$

9,100,825

 

 

$

9,396,597

 

 

June 30,

 

 

Net

inflows

 

 

Market

 

 

FX

 

 

September 30,

 

 

Average

 

(in millions)

2017

 

 

(outflows)

 

 

change

 

 

impact(1)

 

 

2017

 

 

AUM(2)

 

Active:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

$

290,196

 

 

$

(3,015

)

 

$

10,433

 

 

$

2,562

 

 

$

300,176

 

 

$

295,895

 

Fixed income

 

782,622

 

 

 

4,836

 

 

 

6,079

 

 

 

4,303

 

 

 

797,840

 

 

 

792,042

 

Multi-asset

 

425,824

 

 

 

4,523

 

 

 

10,623

 

 

 

4,825

 

 

 

445,795

 

 

 

436,802

 

Alternatives

 

99,949

 

 

 

(548

)

 

 

1,385

 

 

 

755

 

 

 

101,541

 

 

 

101,049

 

Active subtotal

 

1,598,591

 

 

 

5,796

 

 

 

28,520

 

 

 

12,445

 

 

 

1,645,352

 

 

 

1,625,788

 

Index and iShares ETFs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

iShares ETFs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

1,139,850

 

 

 

33,102

 

 

 

50,806

 

 

 

4,637

 

 

 

1,228,395

 

 

 

1,184,488

 

Fixed income

 

364,991

 

 

 

17,526

 

 

 

1,055

 

 

 

2,695

 

 

 

386,267

 

 

 

376,880

 

Multi-asset

 

3,240

 

 

 

169

 

 

 

77

 

 

 

5

 

 

 

3,491

 

 

 

3,359

 

Alternatives

 

20,155

 

 

 

1,509

 

 

 

576

 

 

 

44

 

 

 

22,284

 

 

 

21,283

 

iShares ETFs subtotal

 

1,528,236

 

 

 

52,306

 

 

 

52,514

 

 

 

7,381

 

 

 

1,640,437

 

 

 

1,586,010

 

Non-ETF Index:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

1,584,650

 

 

 

(18,152

)

 

 

66,834

 

 

 

10,562

 

 

 

1,643,894

 

 

 

1,616,788

 

Fixed income

 

557,011

 

 

 

37,187

 

 

 

(1,448

)

 

 

11,563

 

 

 

604,313

 

 

 

584,321

 

Multi-asset

 

7,672

 

 

 

(358

)

 

 

389

 

 

 

38

 

 

 

7,741

 

 

 

7,824

 

Alternatives

 

7,880

 

 

 

(975

)

 

 

156

 

 

 

85

 

 

 

7,146

 

 

 

7,544

 

Non-ETF Index subtotal

 

2,157,213

 

 

 

17,702

 

 

 

65,931

 

 

 

22,248

 

 

 

2,263,094

 

 

 

2,216,477

 

Index & iShares ETFs subtotal

 

3,685,449

 

 

 

70,008

 

 

 

118,445

 

 

 

29,629

 

 

 

3,903,531

 

 

 

3,802,487

 

Long-term

 

5,284,040

 

 

 

75,804

 

 

 

146,965

 

 

 

42,074

 

 

 

5,548,883

 

 

 

5,428,275

 

Cash management

 

402,575

 

 

 

20,381

 

 

 

224

 

 

 

2,243

 

 

 

425,423

 

 

 

415,082

 

Advisory(3)

 

2,658

 

 

 

(73

)

 

 

(98

)

 

 

99

 

 

 

2,586

 

 

 

2,621

 

Total

$

5,689,273

 

 

$

96,112

 

 

$

147,091

 

 

$

44,416

 

 

$

5,976,892

 

 

$

5,845,978

 

The following table presents the component changes in AUM by product type for the three months ended September 30, 2017.2023.

 

June 30,

 

 

Net
inflows

 

 

 

 

 

Market

 

 

FX

 

 

September 30,

 

 

Average

 

(in millions)

2023

 

 

(outflows)

 

 

Acquisition(1)

 

 

change

 

 

impact(2)

 

 

2023

 

 

AUM(3)

 

Equity

$

4,961,344

 

 

$

(34,467

)

 

$

 

 

$

(153,995

)

 

$

(31,591

)

$

4,741,291

 

$

4,948,703

 

Fixed income

 

2,668,851

 

 

 

13,211

 

 

 

 

 

 

(79,357

)

 

 

(26,500

)

 

2,576,205

 

 

2,651,521

 

Multi-asset

 

811,927

 

 

 

12,797

 

 

 

 

 

 

(28,376

)

 

 

(7,476

)

 

788,872

 

 

812,188

 

Alternatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Illiquid alternatives

 

127,678

 

 

 

2,623

 

 

 

2,177

 

 

 

606

 

 

 

(1,147

)

 

131,937

 

 

130,523

 

Liquid alternatives

 

78,056

 

 

 

(3,472

)

 

 

 

 

 

966

 

 

 

(411

)

 

75,139

 

 

76,795

 

Currency and commodities(4)

 

67,215

 

 

 

(3,328

)

 

 

 

 

 

(89

)

 

 

(98

)

 

63,700

 

 

67,026

 

Alternatives subtotal

 

272,949

 

 

(4,177

)

 

 

2,177

 

 

1,483

 

 

(1,656

)

 

270,776

 

 

274,344

 

Long-term

 

8,715,071

 

 

(12,636

)

 

 

2,177

 

 

(260,245

)

 

(67,223

)

 

8,377,144

 

 

8,686,756

 

Cash management

 

710,141

 

 

 

15,205

 

 

 

 

 

 

2,258

 

 

 

(3,923

)

 

 

723,681

 

 

 

709,841

 

Total

$

9,425,212

 

 

$

2,569

 

 

$

2,177

 

 

$

(257,987

)

 

$

(71,146

)

 

$

9,100,825

 

 

$

9,396,597

 

 

June 30,

 

 

Net

inflows

 

 

Market

 

 

FX

 

 

September 30,

 

 

Average

 

(in millions)

2017

 

 

(outflows)

 

 

change

 

 

impact(1)

 

 

2017

 

 

AUM(2)

 

Equity

$

3,014,696

 

 

$

11,935

 

 

$

128,073

 

 

$

17,761

 

 

$

3,172,465

 

 

$

3,097,171

 

Fixed income

 

1,704,624

 

 

 

59,549

 

 

 

5,686

 

 

 

18,561

 

 

 

1,788,420

 

 

 

1,753,243

 

Multi-asset

 

436,736

 

 

 

4,334

 

 

 

11,089

 

 

 

4,868

 

 

 

457,027

 

 

 

447,985

 

Alternatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core

 

97,551

 

 

 

(504

)

 

 

1,355

 

 

 

766

 

 

 

99,168

 

 

 

98,746

 

Currency and commodities(4)

 

30,433

 

 

 

490

 

 

 

762

 

 

 

118

 

 

 

31,803

 

 

 

31,130

 

Alternatives subtotal

 

127,984

 

 

 

(14

)

 

 

2,117

 

 

 

884

 

 

 

130,971

 

 

 

129,876

 

Long-term

 

5,284,040

 

 

 

75,804

 

 

 

146,965

 

 

 

42,074

 

 

 

5,548,883

 

 

 

5,428,275

 

Cash management

 

402,575

 

 

 

20,381

 

 

 

224

 

 

 

2,243

 

 

 

425,423

 

 

 

415,082

 

Advisory(3)

 

2,658

 

 

 

(73

)

 

 

(98

)

 

 

99

 

 

 

2,586

 

 

 

2,621

 

Total

$

5,689,273

 

 

$

96,112

 

 

$

147,091

 

 

$

44,416

 

 

$

5,976,892

 

 

$

5,845,978

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)
Amounts include AUM attributable to the Kreos Transaction.

(1)

(2)
Foreign exchange reflects the impact of translating non-U.S.non-US dollar denominated AUM into U.S.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 long-term portfolio liquidation assignments.

(3)
Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing four months.

(4)

Amounts include commodity iShares ETFs.

(4)
Amounts include commodity ETFs.

46


AUM increased $287.6decreased $324 billion or 5%, to $6.0$9.1 trillion at September 30, 20172023 from $5.7$9.4 trillion at June 30, 2017, 2023, driven primarily by net market appreciation, positive net inflowsdepreciation and the negative impact of foreign exchange movements.movement.

Net market appreciationLong-term net outflows of $147.1$13 billion was drivenwere comprised of net outflows of $38 billion and $4 billion from institutional and retail clients, respectively, partially offset by higher U.S. and global equity markets.

Long-term net inflows of $75.8$29 billion included $52.3 billion, $16.1 billion and $7.4 billion from iShares ETFs, institutional clients and retail clients, respectively.into ETFs. Net flows in long-term products are described below.

iShares ETFs net inflows of $52.3 billion reflected strength in iShares Core, precision exposure and financial instrument ETFs. Equity net inflows of $33.1 billion were driven by both U.S. and international

42


equity market exposures. Fixed income net inflows of $17.5 billion reflected inflows into treasury, investment grade corporate and broad fixed income funds. Commodities iShares generated $1.5 billion of net inflows.

Institutional index net inflowsoutflows of $16$36 billion includedprimarily reflected $49 billion of net outflows from lower-fee institutional index equity strategies, including $19 billion from a single international client, partially offset by fixed income net inflowsinflows.

Institutional active net outflows of $36.9$1 billion drivenprimarily reflected fixed income net outflows, impacted by demand for liability-driven solutions,client-specific partial redemptions, including reinsurance activity, partially offset by equitymulti-asset net inflows, reflecting continued demand for target-date strategies.
Retail net outflows of $19.6 billion.

$4 billion primarily reflected net outflows from liquid alternatives.

RetailETFs net inflows of $7.4$29 billion reflected net inflows of $3.7 billion in the United States and $3.7 billion internationally. Fixed income net inflows of $4.6 billion were diversified across the Company’s top-performing active platform, led by net inflows into unconstrained, municipalcore equity and emerging market debt strategies. Equity net inflows of $1.7 billion reflected inflows into index mutual funds. Multi-asset net inflows of $1 billion were largely due to inflows into the Multi-asset Income fund family,bond ETFs, partially offset by outflowsredemptions from world allocation strategies.

precision ETFs.

Cash management AUM increased 6% to $425.4$724 billion, driven by $20.4net inflows into US government money market funds.

Net market depreciation of $258 billion of net inflows.was primarily driven by global equity and fixed income market depreciation.

AUM increased $44.4decreased $71 billion due to the impact of foreign exchange movements, primarily resulting from the weakeningstrengthening of the U.S.US dollar against the British pound, the euro and the Euro.Japanese yen.


4347


Component Changes in AUM for the Nine Months Ended September 30, 20172023

The following table presents the component changes in AUM by client type and product type for the nine months ended September 30, 2017.2023.

 

December 31,

 

 

Net
inflows

 

 

 

 

 

Market

 

 

FX

 

 

September 30,

 

 

Average

 

(in millions)

2022

 

 

(outflows)

 

 

Acquisition(1)

 

 

change

 

 

impact(2)

 

 

2023

 

 

AUM(3)

 

Retail:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

$

370,612

 

 

$

3,180

 

 

$

 

 

$

22,167

 

 

$

71

 

 

$

396,030

 

$

401,244

 

Fixed income

 

299,114

 

 

 

4,081

 

 

 

 

 

 

(4,615

)

 

 

1,652

 

 

 

300,232

 

 

 

306,856

 

Multi-asset

 

125,168

 

 

 

(203

)

 

 

 

 

 

4,119

 

 

 

93

 

 

 

129,177

 

 

 

130,860

 

Alternatives

 

48,581

 

 

 

(6,571

)

 

 

 

 

 

981

 

 

 

10

 

 

 

43,001

 

 

 

46,398

 

Retail subtotal

 

843,475

 

 

 

487

 

 

 

 

 

 

22,652

 

 

 

1,826

 

 

 

868,440

 

 

 

885,358

 

ETFs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

2,081,742

 

 

 

23,013

 

 

 

 

 

 

132,850

 

 

 

(3,330

)

 

 

2,234,275

 

 

 

2,232,883

 

Fixed income

 

758,093

 

 

 

80,730

 

 

 

 

 

 

(18,815

)

 

 

(1,264

)

 

 

818,744

 

 

 

814,245

 

Multi-asset

 

8,875

 

 

 

(1,492

)

 

 

 

 

 

335

 

 

 

(2

)

 

 

7,716

 

 

 

7,902

 

Alternatives

 

60,900

 

 

 

(4,030

)

 

 

 

 

 

797

 

 

 

7

 

 

 

57,674

 

 

 

62,015

 

ETFs subtotal

 

2,909,610

 

 

 

98,221

 

 

 

 

 

 

115,167

 

 

 

(4,589

)

 

 

3,118,409

 

 

 

3,117,045

 

Institutional:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

168,734

 

 

 

(14,005

)

 

 

 

 

 

14,122

 

 

 

(934

)

 

 

167,917

 

 

 

174,595

 

Fixed income

 

774,955

 

 

 

(1,297

)

 

 

 

 

 

798

 

 

 

(2,875

)

 

 

771,581

 

 

 

798,447

 

Multi-asset

 

544,469

 

 

 

86,908

 

 

 

 

 

 

17,181

 

 

 

(1,565

)

 

 

646,993

 

 

 

632,229

 

Alternatives

 

153,433

 

 

 

7,989

 

 

 

2,177

 

 

 

3,686

 

 

 

(514

)

 

 

166,771

 

 

 

160,966

 

Active subtotal

 

1,641,591

 

 

 

79,595

 

 

 

2,177

 

 

 

35,787

 

 

 

(5,888

)

 

 

1,753,262

 

 

 

1,766,237

 

Index:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

1,814,266

 

 

 

(57,763

)

 

 

 

 

 

210,289

 

 

 

(23,723

)

 

 

1,943,069

 

 

 

1,968,370

 

Fixed income

 

704,661

 

 

 

27,392

 

 

 

 

 

 

(28,274

)

 

 

(18,131

)

 

 

685,648

 

 

 

712,834

 

Multi-asset

 

6,392

 

 

 

(1,376

)

 

 

 

 

 

122

 

 

 

(152

)

 

 

4,986

 

 

 

6,246

 

Alternatives

 

3,296

 

 

 

197

 

 

 

 

 

 

(123

)

 

 

(40

)

 

 

3,330

 

 

 

3,252

 

Index subtotal

 

2,528,615

 

 

 

(31,550

)

 

 

 

 

 

182,014

 

 

 

(42,046

)

 

 

2,637,033

 

 

 

2,690,702

 

Institutional subtotal

 

4,170,206

 

 

 

48,045

 

 

 

2,177

 

 

 

217,801

 

 

 

(47,934

)

 

 

4,390,295

 

 

 

4,456,939

 

Long-term

 

7,923,291

 

 

 

146,753

 

 

 

2,177

 

 

 

355,620

 

 

 

(50,697

)

 

 

8,377,144

 

 

 

8,459,342

 

Cash management

 

671,194

 

 

 

46,295

 

 

 

 

 

 

5,962

 

 

 

230

 

 

 

723,681

 

 

 

683,678

 

Total

$

8,594,485

 

 

$

193,048

 

 

$

2,177

 

 

$

361,582

 

 

$

(50,467

)

 

$

9,100,825

 

 

$

9,143,020

 

 

 

December 31,

 

 

Net

inflows

 

 

 

 

 

 

Market

 

 

FX

 

 

September 30,

 

 

Average

 

(in millions)

 

2016

 

 

(outflows)

 

 

Acquisition(1)

 

 

change

 

 

impact(2)

 

 

2017

 

 

AUM(3)

 

Retail:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

$

196,221

 

 

$

3,009

 

 

$

-

 

 

$

20,892

 

 

$

5,546

 

 

$

225,668

 

 

$

212,224

 

Fixed income

 

 

222,256

 

 

 

16,497

 

 

 

-

 

 

 

6,003

 

 

 

3,592

 

 

 

248,348

 

 

 

236,065

 

Multi-asset

 

 

107,997

 

 

 

(847

)

 

 

-

 

 

 

10,005

 

 

 

907

 

 

 

118,062

 

 

 

112,831

 

Alternatives

 

 

15,478

 

 

 

(158

)

 

 

-

 

 

 

725

 

 

 

398

 

 

 

16,443

 

 

 

16,522

 

Retail subtotal

 

 

541,952

 

 

 

18,501

 

 

 

-

 

 

 

37,625

 

 

 

10,443

 

 

 

608,521

 

 

 

577,642

 

iShares ETFs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

951,252

 

 

 

129,488

 

 

 

-

 

 

 

134,562

 

 

 

13,093

 

 

 

1,228,395

 

 

 

1,095,500

 

Fixed income

 

 

314,707

 

 

 

58,779

 

 

 

-

 

 

 

5,105

 

 

 

7,676

 

 

 

386,267

 

 

 

351,985

 

Multi-asset

 

 

3,149

 

 

 

61

 

 

 

-

 

 

 

272

 

 

 

9

 

 

 

3,491

 

 

 

3,122

 

Alternatives

 

 

18,771

 

 

 

2,213

 

 

 

-

 

 

 

1,138

 

 

 

162

 

 

 

22,284

 

 

 

20,470

 

iShares ETFs subtotal

 

 

1,287,879

 

 

 

190,541

 

 

 

-

 

 

 

141,077

 

 

 

20,940

 

 

 

1,640,437

 

 

 

1,471,077

 

Institutional:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

120,699

 

 

 

(12,357

)

 

 

-

 

 

 

18,023

 

 

 

4,001

 

 

 

130,366

 

 

 

126,223

 

Fixed income

 

 

536,727

 

 

 

(2,967

)

 

 

-

 

 

 

17,705

 

 

 

10,562

 

 

 

562,027

 

 

 

551,117

 

Multi-asset

 

 

276,933

 

 

 

16,692

 

 

 

-

 

 

 

21,531

 

 

 

12,577

 

 

 

327,733

 

 

 

301,793

 

Alternatives

 

 

75,615

 

 

 

2,367

 

 

 

3,264

 

 

 

2,021

 

 

 

1,831

 

 

 

85,098

 

 

 

79,818

 

Active subtotal

 

 

1,009,974

 

 

 

3,735

 

 

 

3,264

 

 

 

59,280

 

 

 

28,971

 

 

 

1,105,224

 

 

 

1,058,951

 

Index:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

1,389,004

 

 

 

(25,778

)

 

 

-

 

 

 

193,874

 

 

 

30,936

 

 

 

1,588,036

 

 

 

1,504,119

 

Fixed income

 

 

498,675

 

 

 

63,528

 

 

 

-

 

 

 

97

 

 

 

29,478

 

 

 

591,778

 

 

 

540,163

 

Multi-asset

 

 

6,928

 

 

 

(500

)

 

 

-

 

 

 

1,098

 

 

 

215

 

 

 

7,741

 

 

 

7,518

 

Alternatives

 

 

7,074

 

 

 

(367

)

 

 

-

 

 

 

194

 

 

 

245

 

 

 

7,146

 

 

 

7,538

 

Index subtotal

 

 

1,901,681

 

 

 

36,883

 

 

 

-

 

 

 

195,263

 

 

 

60,874

 

 

 

2,194,701

 

 

 

2,059,338

 

Institutional subtotal

 

 

2,911,655

 

 

 

40,618

 

 

 

3,264

 

 

 

254,543

 

 

 

89,845

 

 

 

3,299,925

 

 

 

3,118,289

 

Long-term

 

 

4,741,486

 

 

 

249,660

 

 

 

3,264

 

 

 

433,245

 

 

 

121,228

 

 

 

5,548,883

 

 

 

5,167,008

 

Cash management

 

 

403,584

 

 

 

14,854

 

 

 

-

 

 

 

850

 

 

 

6,135

 

 

 

425,423

 

 

 

406,729

 

Advisory(4)

 

 

2,782

 

 

 

(188

)

 

 

-

 

 

 

(189

)

 

 

181

 

 

 

2,586

 

 

 

2,691

 

Total

 

$

5,147,852

 

 

$

264,326

 

 

$

3,264

 

 

$

433,906

 

 

$

127,544

 

 

$

5,976,892

 

 

$

5,576,428

 

(1)
Amounts include AUM attributable to the Kreos 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 ten months.

(1)  Amount represents AUM acquired in the First Reserve Transaction.  

(2)

Foreign exchange reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.

(3)

Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing ten months.

(4)

Advisory AUM represents long-term portfolio liquidation assignments.

4448


The following table presents the component changes in AUM by investment style and product type for the nine months ended September 30, 2017.2023.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

Net

inflows

 

 

 

 

 

 

Market

 

 

FX

 

 

September 30,

 

 

Average

 

December 31,

 

Net
inflows

 

 

 

Market

 

FX

 

September 30,

 

Average

 

(in millions)

2016

 

 

(outflows)

 

 

Acquisition(1)

 

 

change

 

 

impact(2)

 

 

2017

 

 

AUM(3)

 

2022

 

 

(outflows)

 

 

Acquisition(1)

 

 

change

 

 

impact(2)

 

 

2023

 

 

AUM(3)

 

Active:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

$

275,033

 

 

$

(17,475

)

 

$

-

 

 

$

34,966

 

 

$

7,652

 

 

$

300,176

 

 

$

289,036

 

$

392,836

 

 

$

(21,284

)

 

$

 

 

$

23,194

 

 

$

(1,056

)

$

393,690

 

$

410,836

 

Fixed income

 

749,996

 

 

 

10,910

 

 

 

-

 

 

 

23,502

 

 

 

13,432

 

 

 

797,840

 

 

 

775,996

 

 

1,053,083

 

 

 

(1,852

)

 

 

 

 

 

(3,276

)

 

 

(1,250

)

 

 

1,046,705

 

 

 

1,081,613

 

Multi-asset

 

384,930

 

 

 

15,845

 

 

 

-

 

 

 

31,536

 

 

 

13,484

 

 

 

445,795

 

 

 

414,624

 

 

669,629

 

 

 

86,701

 

 

 

 

 

 

21,300

 

 

 

(1,472

)

 

 

776,158

 

 

 

763,080

 

Alternatives

 

91,093

 

 

 

2,209

 

 

 

3,264

 

 

 

2,746

 

 

 

2,229

 

 

 

101,541

 

 

 

96,339

 

 

202,012

 

 

 

1,417

 

 

 

2,177

 

 

 

4,667

 

 

 

(504

)

 

 

209,769

 

 

 

207,363

 

Active subtotal

 

1,501,052

 

 

 

11,489

 

 

 

3,264

 

 

 

92,750

 

 

 

36,797

 

 

 

1,645,352

 

 

 

1,575,995

 

 

2,317,560

 

 

64,982

 

 

2,177

 

 

 

45,885

 

 

 

(4,282

)

 

 

2,426,322

 

 

 

2,462,892

 

Index and iShares ETFs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

iShares ETFs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Index and ETFs:

 

 

 

 

 

 

 

 

ETFs:

 

 

 

 

 

 

 

 

Equity

 

951,252

 

 

 

129,488

 

 

 

-

 

 

 

134,562

 

 

 

13,093

 

 

 

1,228,395

 

 

 

1,095,500

 

 

2,081,742

 

 

 

23,013

 

 

 

 

 

 

132,850

 

 

 

(3,330

)

 

 

2,234,275

 

 

 

2,232,883

 

Fixed income

 

314,707

 

 

 

58,779

 

 

 

-

 

 

 

5,105

 

 

 

7,676

 

 

 

386,267

 

 

 

351,985

 

 

758,093

 

 

 

80,730

 

 

 

 

 

 

(18,815

)

 

 

(1,264

)

 

 

818,744

 

 

 

814,245

 

Multi-asset

 

3,149

 

 

 

61

 

 

 

-

 

 

 

272

 

 

 

9

 

 

 

3,491

 

 

 

3,122

 

 

8,875

 

 

 

(1,492

)

 

 

 

 

 

335

 

 

 

(2

)

 

 

7,716

 

 

 

7,902

 

Alternatives

 

18,771

 

 

 

2,213

 

 

 

-

 

 

 

1,138

 

 

 

162

 

 

 

22,284

 

 

 

20,470

 

 

60,900

 

 

 

(4,030

)

 

 

 

 

 

797

 

 

 

7

 

 

 

57,674

 

 

 

62,015

 

iShares ETFs subtotal

 

1,287,879

 

 

 

190,541

 

 

 

-

 

 

 

141,077

 

 

 

20,940

 

 

 

1,640,437

 

 

 

1,471,077

 

Non-ETF Index

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ETFs subtotal

 

2,909,610

 

 

98,221

 

 

 

 

 

 

115,167

 

 

 

(4,589

)

 

 

3,118,409

 

 

 

3,117,045

 

Non-ETF Index:

 

 

 

 

 

 

 

 

Equity

 

1,430,891

 

 

 

(17,651

)

 

 

-

 

 

 

197,823

 

 

 

32,831

 

 

 

1,643,894

 

 

 

1,553,530

 

 

1,960,776

 

 

 

(47,304

)

 

 

 

 

 

223,384

 

 

 

(23,530

)

 

2,113,326

 

 

2,133,373

 

Fixed income

 

507,662

 

 

 

66,148

 

 

 

-

 

 

 

303

 

 

 

30,200

 

 

 

604,313

 

 

 

551,349

 

 

725,647

 

 

 

32,028

 

 

 

 

 

 

(28,815

)

 

 

(18,104

)

 

710,756

 

 

736,524

 

Multi-asset

 

6,928

 

 

 

(500

)

 

 

-

 

 

 

1,098

 

 

 

215

 

 

 

7,741

 

 

 

7,518

 

 

6,400

 

 

 

(1,372

)

 

 

 

 

 

122

 

 

 

(152

)

 

4,998

 

 

6,255

 

Alternatives

 

7,074

 

 

 

(367

)

 

 

-

 

 

 

194

 

 

 

245

 

 

 

7,146

 

 

 

7,539

 

 

3,298

 

 

 

198

 

 

 

 

 

 

(123

)

 

 

(40

)

 

3,333

 

 

3,253

 

Non-ETF Index subtotal

 

1,952,555

 

 

 

47,630

 

 

 

-

 

 

 

199,418

 

 

 

63,491

 

 

 

2,263,094

 

 

 

2,119,936

 

 

2,696,121

 

 

(16,450

)

 

 

 

 

194,568

 

 

 

(41,826

)

 

 

2,832,413

 

 

 

2,879,405

 

Index & iShares ETFs subtotal

 

3,240,434

 

 

 

238,171

 

 

 

-

 

 

 

340,495

 

 

 

84,431

 

 

 

3,903,531

 

 

 

3,591,013

 

Index & ETFs subtotal

 

5,605,731

 

 

81,771

 

 

 

 

 

309,735

 

 

 

(46,415

)

 

 

5,950,822

 

 

 

5,996,450

 

Long-term

 

4,741,486

 

 

 

249,660

 

 

 

3,264

 

 

 

433,245

 

 

 

121,228

 

 

 

5,548,883

 

 

 

5,167,008

 

 

7,923,291

 

 

146,753

 

 

2,177

 

 

355,620

 

 

(50,697

)

 

8,377,144

 

 

 

8,459,342

 

Cash management

 

403,584

 

 

 

14,854

 

 

 

-

 

 

 

850

 

 

 

6,135

 

 

 

425,423

 

 

 

406,729

 

 

671,194

 

 

 

46,295

 

 

 

 

 

 

5,962

 

 

 

230

 

 

 

723,681

 

 

 

683,678

 

Advisory(4)

 

2,782

 

 

 

(188

)

 

 

-

 

 

 

(189

)

 

 

181

 

 

 

2,586

 

 

 

2,691

 

Total

$

5,147,852

 

 

$

264,326

 

 

$

3,264

 

 

$

433,906

 

 

$

127,544

 

 

$

5,976,892

 

 

$

5,576,428

 

$

8,594,485

 

 

$

193,048

 

 

$

2,177

 

 

$

361,582

 

 

$

(50,467

)

 

$

9,100,825

 

 

$

9,143,020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table presents the component changes in AUM by product type for the nine months ended September 30, 2017.2023.

 

December 31,

 

 

Net
inflows

 

 

 

 

 

Market

 

 

FX

 

 

September 30,

 

 

Average

 

(in millions)

2022

 

 

(outflows)

 

 

Acquisition(1)

 

 

change

 

 

impact(2)

 

 

2023

 

 

AUM(3)

 

Equity

$

4,435,354

 

 

$

(45,575

)

 

$

 

 

$

379,428

 

 

$

(27,916

)

 

$

4,741,291

 

 

$

4,777,092

 

Fixed income

 

2,536,823

 

 

 

110,906

 

 

 

 

 

 

(50,906

)

 

 

(20,618

)

 

 

2,576,205

 

 

 

2,632,382

 

Multi-asset

 

684,904

 

 

 

83,837

 

 

 

 

 

 

21,757

 

 

 

(1,626

)

 

 

788,872

 

 

 

777,237

 

Alternatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Illiquid alternatives

 

117,751

 

 

 

10,105

 

 

 

2,177

 

 

 

2,088

 

 

 

(184

)

 

 

131,937

 

 

 

125,590

 

Liquid alternatives

 

80,654

 

 

 

(8,082

)

 

 

 

 

 

2,744

 

 

 

(177

)

 

 

75,139

 

 

 

78,712

 

Currency and commodities(4)

 

67,805

 

 

 

(4,438

)

 

 

 

 

 

509

 

 

 

(176

)

 

 

63,700

 

 

 

68,329

 

Alternatives subtotal

 

266,210

 

 

(2,415

)

 

2,177

 

 

5,341

 

 

(537

)

 

270,776

 

 

272,631

 

Long-term

 

7,923,291

 

 

146,753

 

 

2,177

 

 

355,620

 

 

(50,697

)

 

8,377,144

 

 

8,459,342

 

Cash management

 

671,194

 

 

 

46,295

 

 

 

 

 

 

5,962

 

 

 

230

 

 

 

723,681

 

 

 

683,678

 

Total

$

8,594,485

 

 

$

193,048

 

 

$

2,177

 

 

$

361,582

 

 

$

(50,467

)

 

$

9,100,825

 

 

$

9,143,020

 

 

 

December 31,

 

 

Net

inflows

 

 

 

 

 

 

Market

 

 

FX

 

 

September 30,

 

 

Average

 

(in millions)

 

2016

 

 

(outflows)

 

 

Acquisition(1)

 

 

change

 

 

impact(2)

 

 

2017

 

 

AUM(3)

 

Equity

 

$

2,657,176

 

 

$

94,362

 

 

$

-

 

 

$

367,351

 

 

$

53,576

 

 

$

3,172,465

 

 

$

2,938,066

 

Fixed income

 

 

1,572,365

 

 

 

135,837

 

 

 

-

 

 

 

28,910

 

 

 

51,308

 

 

 

1,788,420

 

 

 

1,679,330

 

Multi-asset

 

 

395,007

 

 

 

15,406

 

 

 

-

 

 

 

32,906

 

 

 

13,708

 

 

 

457,027

 

 

 

425,264

 

Alternatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core

 

 

88,630

 

 

 

2,353

 

 

 

3,264

 

 

 

2,753

 

 

 

2,168

 

 

 

99,168

 

 

 

93,963

 

Currency and commodities(5)

 

 

28,308

 

 

 

1,702

 

 

 

-

 

 

 

1,325

 

 

 

468

 

 

 

31,803

 

 

 

30,385

 

Alternatives subtotal

 

 

116,938

 

 

 

4,055

 

 

 

3,264

 

 

 

4,078

 

 

 

2,636

 

 

 

130,971

 

 

 

124,348

 

Long-term

 

 

4,741,486

 

 

 

249,660

 

 

 

3,264

 

 

 

433,245

 

 

 

121,228

 

 

 

5,548,883

 

 

 

5,167,008

 

Cash management

 

 

403,584

 

 

 

14,854

 

 

 

-

 

 

 

850

 

 

 

6,135

 

 

 

425,423

 

 

 

406,729

 

Advisory(4)

 

 

2,782

 

 

 

(188

)

 

 

-

 

 

 

(189

)

 

 

181

 

 

 

2,586

 

 

 

2,691

 

Total

 

$

5,147,852

 

 

$

264,326

 

 

$

3,264

 

 

$

433,906

 

��

$

127,544

 

 

$

5,976,892

 

 

$

5,576,428

 

(1)
Amounts include AUM attributable to the Kreos Transaction.

(1)

Amount represents AUM acquired in the First Reserve Transaction.  

(2)

Foreign exchange reflects the impact of translating non-U.S.non-US dollar denominated AUM into U.S.US dollars for reporting purposes.

(3)

Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing ten months.

(4)

Advisory AUM represents long-term portfolio liquidation assignments.

(3)
Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing ten months.

(5)

Amounts include commodity iShares ETFs.

(4)
Amounts include commodity ETFs.

49


AUM increased $829.0$506 billion or 16%, to $6.0$9.1 trillion at September 30, 20172023 from $5.1$8.6 trillion at December 31, 2016, 2022, driven by net market appreciation positiveand net inflows, partially offset by the negative impact of foreign exchange movements and AUM acquired in the First Reserve Transaction.movement.

Net market appreciation of $433.9 billion was primarily driven by higher U.S. and global equity markets.

45


Long-term net inflows of $249.7$147 billion were comprised of net inflows of $190.5 billion, $40.6$98 billion and $18.5$48 billion from iShares ETFs, institutional clients and retailinstitutional clients, respectively. Net flows in long-term products are described below.

iSharesETFs net inflows of $190.5$98 billion were led by $81 billion and $23 billion of net inflows into fixed income and equity ETFs, respectively. ETFs net inflows also included $77 billion and $51 billion of net inflows into strategic and core equity, respectively, partially offset by $30 billion in redemptions from precision ETFs.

Institutional active net inflows of $129.5$80 billion drivenwere led by both U.S. and international equity market exposures.  Fixed incomemulti-asset net inflows and included the impact of $58.8 billion reflected inflows into corporate investment grade, emerging markets debt and treasury bond funds.

significant outsourcing mandates.

Institutional index net inflowsoutflows of $36.9$32 billion were drivenprimarily reflected net outflows from lower-fee institutional index equity strategies, including $19 billion from a single international client in the third quarter, partially offset by fixed income net inflows of $63.5 billion, partially offset by equity net outflows of $25.8 billion.

inflows.

Retail net inflows of $18.5 billion reflected net inflows of $12.2 billion internationally and $6.3 billion in the United States. Retail net inflows were led by fixed income net inflows of $16.5 billion, reflecting inflows into emerging markets, municipal bond funds and unconstrained strategies.

Institutional active net inflows of $3.7 billion primarily reflected active multi-asset net inflows of $16.7 billion, partially offset by active equity net outflows of $12.4 billion. Multi-asset net inflows were driven by ongoing demand for the LifePath® target-date series.  Equity net outflows of $12.4 billion were primarily from U.S. equity and global strategies.  

Cash management AUM increased 5% to $425.4$724 billion, due to net inflows into US government money market funds.

Net market appreciation of $362 billion was primarily driven by $14.9 billion of net inflows.global equity market appreciation.

AUM increased $127.5decreased $50 billion due to the impact of foreign exchange movements, primarily resulting fromdue to the weakeningstrengthening of the U.S.US dollar against the British pound and the Euro.Japanese yen.


4650


Component Changes in AUM for the Twelve Months Ended September 30, 20172023

The following table presents the component changes in AUM by client type and product type for the twelve months ended September 30, 2017.2023.

 

September 30,

 

 

Net
inflows

 

 

 

 

 

Market

 

 

FX

 

 

September 30,

 

 

Average

 

(in millions)

2022

 

 

(outflows)

 

 

Acquisition(1)

 

 

change

 

 

impact(2)

 

 

2023

 

 

AUM(3)

 

Retail:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

$

342,647

 

 

$

(1,842

)

 

$

 

 

$

48,731

 

 

$

6,494

 

 

$

396,030

 

$

392,563

 

Fixed income

 

294,977

 

 

 

(2,458

)

 

 

 

 

 

1,958

 

 

 

5,755

 

 

 

300,232

 

 

 

304,392

 

Multi-asset

 

120,814

 

 

 

(2,924

)

 

 

 

 

 

10,217

 

 

 

1,070

 

 

 

129,177

 

 

 

129,414

 

Alternatives

 

48,060

 

 

 

(7,115

)

 

 

 

 

 

1,452

 

 

 

604

 

 

 

43,001

 

 

 

46,830

 

Retail subtotal

 

806,498

 

 

 

(14,339

)

 

 

 

 

 

62,358

 

 

 

13,923

 

 

 

868,440

 

 

 

873,199

 

ETFs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

1,861,499

 

 

 

67,578

 

 

 

 

 

 

296,097

 

 

 

9,101

 

 

 

2,234,275

 

 

 

2,182,103

 

Fixed income

 

694,062

 

 

 

127,829

 

 

 

 

 

 

(8,698

)

 

 

5,551

 

 

 

818,744

 

 

 

792,396

 

Multi-asset

 

7,273

 

 

 

(294

)

 

 

 

 

 

707

 

 

 

30

 

 

 

7,716

 

 

 

7,871

 

Alternatives

 

58,576

 

 

 

(7,241

)

 

 

 

 

 

6,236

 

 

 

103

 

 

 

57,674

 

 

 

61,199

 

ETFs subtotal

 

2,621,410

 

 

 

187,872

 

 

 

 

 

 

294,342

 

 

 

14,785

 

 

 

3,118,409

 

 

 

3,043,569

 

Institutional:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

150,409

 

 

 

(10,044

)

 

 

 

 

 

24,024

 

 

 

3,528

 

 

 

167,917

 

 

 

172,013

 

Fixed income

 

685,194

 

 

 

63,873

 

 

 

 

 

 

16,830

 

 

 

5,684

 

 

 

771,581

 

 

 

779,631

 

Multi-asset

 

502,787

 

 

 

91,187

 

 

 

 

 

 

41,619

 

 

 

11,400

 

 

 

646,993

 

 

 

607,567

 

Alternatives

 

148,895

 

 

 

10,607

 

 

 

2,177

 

 

 

3,032

 

 

 

2,060

 

 

 

166,771

 

 

 

158,372

 

Active subtotal

 

1,487,285

 

 

 

155,623

 

 

 

2,177

 

 

 

85,505

 

 

 

22,672

 

 

 

1,753,262

 

 

 

1,717,583

 

Index:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

1,665,757

 

 

 

(71,550

)

 

 

 

 

 

332,610

 

 

 

16,252

 

 

 

1,943,069

 

 

 

1,924,530

 

Fixed income

 

676,030

 

 

 

37,177

 

 

 

 

 

 

(46,732

)

 

 

19,173

 

 

 

685,648

 

 

 

707,225

 

Multi-asset

 

6,571

 

 

 

(2,019

)

 

 

 

 

 

419

 

 

 

15

 

 

 

4,986

 

 

 

6,336

 

Alternatives

 

3,703

 

 

 

(329

)

 

 

 

 

 

(56

)

 

 

12

 

 

 

3,330

 

 

 

3,343

 

Index subtotal

 

2,352,061

 

 

 

(36,721

)

 

 

 

 

 

286,241

 

 

 

35,452

 

 

 

2,637,033

 

 

 

2,641,434

 

Institutional subtotal

 

3,839,346

 

 

 

118,902

 

 

 

2,177

 

 

 

371,746

 

 

 

58,124

 

 

 

4,390,295

 

 

 

4,359,017

 

Long-term

 

7,267,254

 

 

 

292,435

 

 

 

2,177

 

 

 

728,446

 

 

 

86,832

 

 

 

8,377,144

 

 

 

8,275,785

 

Cash management

 

694,119

 

 

 

14,337

 

 

 

 

 

 

7,321

 

 

 

7,904

 

 

 

723,681

 

 

 

686,105

 

Total

$

7,961,373

 

 

$

306,772

 

 

$

2,177

 

 

$

735,767

 

 

$

94,736

 

 

$

9,100,825

 

 

$

8,961,890

 

 

 

September 30,

 

 

Net

inflows

 

 

 

 

 

 

Market

 

 

FX

 

 

September 30,

 

 

Average

 

(in millions)

 

2016

 

 

(outflows)

 

 

Acquisition(1)

 

 

change

 

 

impact(2)

 

 

2017

 

 

AUM(3)

 

Retail:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

$

196,131

 

 

$

4,751

 

 

$

-

 

 

$

22,417

 

 

$

2,369

 

 

$

225,668

 

 

$

207,806

 

Fixed income

 

 

230,842

 

 

 

14,666

 

 

 

-

 

 

 

1,204

 

 

 

1,636

 

 

 

248,348

 

 

 

234,080

 

Multi-asset

 

 

111,369

 

 

 

(2,548

)

 

 

-

 

 

 

8,891

 

 

 

350

 

 

 

118,062

 

 

 

111,957

 

Alternatives

 

 

16,436

 

 

 

(814

)

 

 

-

 

 

 

693

 

 

 

128

 

 

 

16,443

 

 

 

16,435

 

Retail subtotal

 

 

554,778

 

 

 

16,055

 

 

 

-

 

 

 

33,205

 

 

 

4,483

 

 

 

608,521

 

 

 

570,278

 

iShares ETFs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

891,010

 

 

 

180,138

 

 

 

-

 

 

 

150,283

 

 

 

6,964

 

 

 

1,228,395

 

 

 

1,049,435

 

Fixed income

 

 

329,462

 

 

 

58,453

 

 

 

-

 

 

 

(5,239

)

 

 

3,591

 

 

 

386,267

 

 

 

345,114

 

Multi-asset

 

 

2,506

 

 

 

755

 

 

 

-

 

 

 

223

 

 

 

7

 

 

 

3,491

 

 

 

2,999

 

Alternatives

 

 

23,188

 

 

 

495

 

 

 

-

 

 

 

(1,448

)

 

 

49

 

 

 

22,284

 

 

 

20,724

 

iShares ETFs subtotal

 

 

1,246,166

 

 

 

239,841

 

 

 

-

 

 

 

143,819

 

 

 

10,611

 

 

 

1,640,437

 

 

 

1,418,272

 

Institutional:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

123,770

 

 

 

(15,161

)

 

 

-

 

 

 

20,675

 

 

 

1,082

 

 

 

130,366

 

 

 

124,915

 

Fixed income

 

 

560,799

 

 

 

(1,700

)

 

 

-

 

 

 

3,168

 

 

 

(240

)

 

 

562,027

 

 

 

550,908

 

Multi-asset

 

 

280,406

 

 

 

22,351

 

 

 

-

 

 

 

19,126

 

 

 

5,850

 

 

 

327,733

 

 

 

295,524

 

Alternatives

 

 

74,678

 

 

 

4,553

 

 

 

3,264

 

 

 

2,092

 

 

 

511

 

 

 

85,098

 

 

 

78,678

 

Active subtotal

 

 

1,039,653

 

 

 

10,043

 

 

 

3,264

 

 

 

45,061

 

 

 

7,203

 

 

 

1,105,224

 

 

 

1,050,025

 

Index:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

1,355,128

 

 

 

(17,400

)

 

 

-

 

 

 

246,625

 

 

 

3,683

 

 

 

1,588,036

 

 

 

1,468,656

 

Fixed income

 

 

507,165

 

 

 

89,725

 

 

 

-

 

 

 

(15,805

)

 

 

10,693

 

 

 

591,778

 

 

 

528,790

 

Multi-asset

 

 

7,980

 

 

 

(296

)

 

 

-

 

 

 

371

 

 

 

(314

)

 

 

7,741

 

 

 

7,603

 

Alternatives

 

 

7,228

 

 

 

(543

)

 

 

-

 

 

 

408

 

 

 

53

 

 

 

7,146

 

 

 

7,440

 

Index subtotal

 

 

1,877,501

 

 

 

71,486

 

 

 

-

 

 

 

231,599

 

 

 

14,115

 

 

 

2,194,701

 

 

 

2,012,489

 

Institutional subtotal

 

 

2,917,154

 

 

 

81,529

 

 

 

3,264

 

 

 

276,660

 

 

 

21,318

 

 

 

3,299,925

 

 

 

3,062,514

 

Long-term

 

 

4,718,098

 

 

 

337,425

 

 

 

3,264

 

 

 

453,684

 

 

 

36,412

 

 

 

5,548,883

 

 

 

5,051,064

 

Cash management

 

 

388,982

 

 

 

32,526

 

 

 

-

 

 

 

1,074

 

 

 

2,841

 

 

 

425,423

 

 

 

404,180

 

Advisory(4)

 

 

10,341

 

 

 

(7,573

)

 

 

-

 

 

 

(137

)

 

 

(45

)

 

 

2,586

 

 

 

4,323

 

Total

 

$

5,117,421

 

 

$

362,378

 

 

$

3,264

 

 

$

454,621

 

 

$

39,208

 

 

$

5,976,892

 

 

$

5,459,567

 

(1)
Amounts include AUM attributable to the Kreos 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.

(1)  Amount represents AUM acquired in the First Reserve Transaction.  

(2)

Foreign exchange reflects the impact of translating non-U.S. dollar denominated AUM into U.S. 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 long-term portfolio liquidation assignments.

4751


The following table presents the component changes in AUM by investment style and product type for the twelve months ended September 30, 2017.2023.

 

September 30,

 

 

Net
inflows

 

 

 

 

 

Market

 

 

FX

 

 

September 30,

 

 

Average

 

(in millions)

2022

 

 

(outflows)

 

 

Acquisition(1)

 

 

change

 

 

impact(2)

 

 

2023

 

 

AUM(3)

 

Active:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

$

359,587

 

 

$

(21,978

)

 

$

 

 

$

49,389

 

 

$

6,692

 

 

$

393,690

 

 

$

404,531

 

Fixed income

 

960,932

 

 

 

56,585

 

 

 

 

 

 

18,981

 

 

 

10,207

 

 

 

1,046,705

 

 

 

1,061,118

 

Multi-asset

 

623,594

 

 

 

88,259

 

 

 

 

 

 

51,835

 

 

 

12,470

 

 

 

776,158

 

 

 

736,973

 

Alternatives

 

196,953

 

 

 

3,491

 

 

 

2,177

 

 

 

4,484

 

 

 

2,664

 

 

 

209,769

 

 

 

205,200

 

Active subtotal

 

2,141,066

 

 

 

126,357

 

 

 

2,177

 

 

 

124,689

 

 

 

32,033

 

 

 

2,426,322

 

 

 

2,407,822

 

Index and ETFs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ETFs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

1,861,499

 

 

 

67,578

 

 

 

 

 

 

296,097

 

 

 

9,101

 

 

 

2,234,275

 

 

 

2,182,103

 

Fixed income

 

694,062

 

 

 

127,829

 

 

 

 

 

 

(8,698

)

 

 

5,551

 

 

 

818,744

 

 

 

792,396

 

Multi-asset

 

7,273

 

 

 

(294

)

 

 

 

 

 

707

 

 

 

30

 

 

 

7,716

 

 

 

7,871

 

Alternatives

 

58,576

 

 

 

(7,241

)

 

 

 

 

 

6,236

 

 

 

103

 

 

 

57,674

 

 

 

61,199

 

ETFs subtotal

 

2,621,410

 

 

 

187,872

 

 

 

 

 

 

294,342

 

 

 

14,785

 

 

 

3,118,409

 

 

 

3,043,569

 

Non-ETF Index:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

1,799,226

 

 

 

(61,458

)

 

 

 

 

 

355,976

 

 

 

19,582

 

 

 

2,113,326

 

 

 

2,084,575

 

Fixed income

 

695,269

 

 

 

42,007

 

 

 

 

 

 

(46,925

)

 

 

20,405

 

 

 

710,756

 

 

 

730,130

 

Multi-asset

 

6,578

 

 

 

(2,015

)

 

 

 

 

 

420

 

 

 

15

 

 

 

4,998

 

 

 

6,344

 

Alternatives

 

3,705

 

 

 

(328

)

 

 

 

 

 

(56

)

 

 

12

 

 

 

3,333

 

 

 

3,345

 

Non-ETF Index subtotal

 

2,504,778

 

 

 

(21,794

)

 

 

 

 

 

309,415

 

 

 

40,014

 

 

 

2,832,413

 

 

 

2,824,394

 

Index & ETFs subtotal

 

5,126,188

 

 

 

166,078

 

 

 

 

 

 

603,757

 

 

 

54,799

 

 

 

5,950,822

 

 

 

5,867,963

 

Long-term

 

7,267,254

 

 

 

292,435

 

 

2,177

 

 

 

728,446

 

 

 

86,832

 

 

 

8,377,144

 

 

 

8,275,785

 

Cash management

 

694,119

 

 

 

14,337

 

 

 

 

 

 

7,321

 

 

 

7,904

 

 

 

723,681

 

 

 

686,105

 

Total

$

7,961,373

 

 

$

306,772

 

 

$

2,177

 

 

$

735,767

 

 

$

94,736

 

 

$

9,100,825

 

 

$

8,961,890

 

 

September 30,

 

 

Net

inflows

 

 

 

 

 

 

Market

 

 

FX

 

 

September 30,

 

 

Average

 

(in millions)

2016

 

 

(outflows)

 

 

Acquisition(1)

 

 

change

 

 

impact(2)

 

 

2017

 

 

AUM(3)

 

Active:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

$

281,726

 

 

$

(22,023

)

 

$

-

 

 

$

38,028

 

 

$

2,445

 

 

$

300,176

 

 

$

285,819

 

Fixed income

 

782,858

 

 

 

9,427

 

 

 

-

 

 

 

4,516

 

 

 

1,039

 

 

 

797,840

 

 

 

774,433

 

Multi-asset

 

391,775

 

 

 

19,803

 

 

 

-

 

 

 

28,017

 

 

 

6,200

 

 

 

445,795

 

 

 

407,481

 

Alternatives

 

91,114

 

 

 

3,739

 

 

 

3,264

 

 

 

2,785

 

 

 

639

 

 

 

101,541

 

 

 

95,113

 

Active subtotal

 

1,547,473

 

 

 

10,946

 

 

 

3,264

 

 

 

73,346

 

 

 

10,323

 

 

 

1,645,352

 

 

 

1,562,846

 

Index and iShares ETFs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

iShares ETFs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

891,010

 

 

 

180,138

 

 

 

-

 

 

 

150,283

 

 

 

6,964

 

 

 

1,228,395

 

 

 

1,049,435

 

Fixed income

 

329,462

 

 

 

58,453

 

 

 

-

 

 

 

(5,239

)

 

 

3,591

 

 

 

386,267

 

 

 

345,114

 

Multi-asset

 

2,506

 

 

 

755

 

 

 

-

 

 

 

223

 

 

 

7

 

 

 

3,491

 

 

 

2,999

 

Alternatives

 

23,188

 

 

 

495

 

 

 

-

 

 

 

(1,448

)

 

 

49

 

 

 

22,284

 

 

 

20,724

 

iShares ETFs subtotal

 

1,246,166

 

 

 

239,841

 

 

 

-

 

 

 

143,819

 

 

 

10,611

 

 

 

1,640,437

 

 

 

1,418,272

 

Non-ETF Index:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

1,393,303

 

 

 

(5,787

)

 

 

-

 

 

 

251,689

 

 

 

4,689

 

 

 

1,643,894

 

 

 

1,515,558

 

Fixed income

 

515,948

 

 

 

93,264

 

 

 

-

 

 

 

(15,949

)

 

 

11,050

 

 

 

604,313

 

 

 

539,345

 

Multi-asset

 

7,980

 

 

 

(296

)

 

 

-

 

 

 

371

 

 

 

(314

)

 

 

7,741

 

 

 

7,603

 

Alternatives

 

7,228

 

 

 

(543

)

 

 

-

 

 

 

408

 

 

 

53

 

 

 

7,146

 

 

 

7,440

 

Non-ETF Index subtotal

 

1,924,459

 

 

 

86,638

 

 

 

-

 

 

 

236,519

 

 

 

15,478

 

 

 

2,263,094

 

 

 

2,069,946

 

Index & iShares ETFs subtotal

 

3,170,625

 

 

 

326,479

 

 

 

-

 

 

 

380,338

 

 

 

26,089

 

 

 

3,903,531

 

 

 

3,488,218

 

Long-term

 

4,718,098

 

 

 

337,425

 

 

 

3,264

 

 

 

453,684

 

 

 

36,412

 

 

 

5,548,883

 

 

 

5,051,064

 

Cash management

 

388,982

 

 

 

32,526

 

 

 

-

 

 

 

1,074

 

 

 

2,841

 

 

 

425,423

 

 

 

404,180

 

Advisory(4)

 

10,341

 

 

 

(7,573

)

 

 

-

 

 

 

(137

)

 

 

(45

)

 

 

2,586

 

 

 

4,323

 

Total

$

5,117,421

 

 

$

362,378

 

 

$

3,264

 

 

$

454,621

 

 

$

39,208

 

 

$

5,976,892

 

 

$

5,459,567

 

The following table presents the component changes in AUM by product type for the twelve months ended September 30, 2017.2023.

 

September 30,

 

 

Net
inflows

 

 

 

 

 

Market

 

 

FX

 

 

September 30,

 

 

Average

 

(in millions)

2022

 

 

(outflows)

 

 

Acquisition(1)

 

 

change

 

 

impact(2)

 

 

2023

 

 

AUM(3)

 

Equity

$

4,020,312

 

 

$

(15,858

)

 

$

 

 

$

701,462

 

 

$

35,375

 

 

$

4,741,291

 

 

$

4,671,209

 

Fixed income

 

2,350,263

 

 

 

226,421

 

 

 

 

 

 

(36,642

)

 

 

36,163

 

 

 

2,576,205

 

 

 

2,583,644

 

Multi-asset

 

637,445

 

 

 

85,950

 

 

 

 

 

 

52,962

 

 

 

12,515

 

 

 

788,872

 

 

 

751,188

 

Alternatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Illiquid alternatives

 

111,729

 

 

 

14,513

 

 

 

2,177

 

 

 

1,463

 

 

 

2,055

 

 

 

131,937

 

 

 

122,897

 

Liquid alternatives

 

81,418

 

 

 

(9,937

)

 

 

 

 

 

3,021

 

 

 

637

 

 

 

75,139

 

 

 

79,092

 

Currency and commodities(4)

 

66,087

 

 

 

(8,654

)

 

 

 

 

 

6,180

 

 

 

87

 

 

 

63,700

 

 

 

67,755

 

Alternatives subtotal

 

259,234

 

 

(4,078

)

 

2,177

 

 

 

10,664

 

 

2,779

 

 

270,776

 

 

269,744

 

Long-term

 

7,267,254

 

 

292,435

 

 

2,177

 

 

 

728,446

 

 

86,832

 

 

8,377,144

 

 

8,275,785

 

Cash management

 

694,119

 

 

 

14,337

 

 

 

 

 

 

7,321

 

 

 

7,904

 

 

 

723,681

 

 

 

686,105

 

Total

$

7,961,373

 

 

$

306,772

 

 

$

2,177

 

 

$

735,767

 

 

$

94,736

 

 

$

9,100,825

 

 

$

8,961,890

 

 

 

September 30,

 

 

Net

inflows

 

 

 

 

 

 

Market

 

 

FX

 

 

September 30,

 

 

Average

 

(in millions)

 

2016

 

 

(outflows)

 

 

Acquisition(1)

 

 

change

 

 

impact(2)

 

 

2017

 

 

AUM(3)

 

Equity

 

$

2,566,039

 

 

$

152,328

 

 

$

-

 

 

$

440,000

 

 

$

14,098

 

 

$

3,172,465

 

 

$

2,850,812

 

Fixed income

 

 

1,628,268

 

 

 

161,144

 

 

 

-

 

 

 

(16,672

)

 

 

15,680

 

 

 

1,788,420

 

 

 

1,658,892

 

Multi-asset

 

 

402,261

 

 

 

20,262

 

 

 

-

 

 

 

28,611

 

 

 

5,893

 

 

 

457,027

 

 

 

418,083

 

Alternatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core

 

 

88,731

 

 

 

3,569

 

 

 

3,264

 

 

 

2,773

 

 

 

831

 

 

 

99,168

 

 

 

92,758

 

Currency and commodities(5)

 

 

32,799

 

 

 

122

 

 

 

-

 

 

 

(1,028

)

 

 

(90

)

 

 

31,803

 

 

 

30,519

 

Alternatives subtotal

 

 

121,530

 

 

 

3,691

 

 

 

3,264

 

 

 

1,745

 

 

 

741

 

 

 

130,971

 

 

 

123,277

 

Long-term

 

 

4,718,098

 

 

 

337,425

 

 

 

3,264

 

 

 

453,684

 

 

 

36,412

 

 

 

5,548,883

 

 

 

5,051,064

 

Cash management

 

 

388,982

 

 

 

32,526

 

 

 

-

 

 

 

1,074

 

 

 

2,841

 

 

 

425,423

 

 

 

404,180

 

Advisory(4)

 

 

10,341

 

 

 

(7,573

)

 

 

-

 

 

 

(137

)

 

 

(45

)

 

 

2,586

 

 

 

4,323

 

Total

 

$

5,117,421

 

 

$

362,378

 

 

$

3,264

 

 

$

454,621

 

 

$

39,208

 

 

$

5,976,892

 

 

$

5,459,567

 

(1)  Amount represents

Amounts include AUM acquired inattributable to the First ReserveKreos Transaction.

(2)
Foreign exchange reflects the impact of translating non-U.S.non-US dollar denominated AUM into U.S.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 long-term portfolio liquidation assignments.

(3)
Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing thirteen months.

(5)

Amounts include commodity iShares ETFs.

(4)
Amounts include commodity ETFs.

52


AUM increased $859.5 billion, or 17%,$1.1 trillion to $6.0$9.1 trillion at September 30, 20172023 from $5.1$8.0 trillion at September 30, 2016, 2022, driven by net market appreciation, positive net inflows, and the positive impact of foreign exchange movements and AUM acquired in the First Reserve Transaction.movements.

Net market appreciation of $454.6 billion was primarily driven by higher U.S. and global equity markets.

Long-term net inflows of $337.4$292 billion were comprised of net inflows of $239.8 billion, $81.5$188 billion and $16.1$119 billion from iShares ETFs, and institutional clients, andrespectively, partially offset by retail clients, respectively.net outflows of $14 billion. Net flows in long-term products are described below.

48


iShares

ETFs net inflows of $239.8 billion were led by equity net inflows of $180.1 billion, reflecting demand for iShares Core and broad market exposures. Fixed income net inflows of $58.5 billion reflected inflows into corporate investment grade, emerging markets debt and treasury bond funds.

Institutional index net inflows of $71.5$188 billion were driven by fixed income net inflows of $89.7 billion, partially offset byinto bond and core equity net outflows of $17.4 billion.

ETFs.

Institutional active net inflows of $10.0 billion reflected multi-asset net inflows of $22.4 billion and alternatives net inflows of $4.6 billion, partially offset by equity net outflows of $15.2 billion. Multi-asset net inflows were driven by ongoing demand for the LifePath target-date series.  Alternatives net inflows of $4.6$156 billion were led by multi-asset and fixed income net inflows into infrastructure offerings. Equityand included the impact of several significant outsourcing mandates.

Institutional index net outflows of $15.2$37 billion primarily reflected $72 billion of equity net outflows, partially offset by $37 billion of fixed income net inflows.
Retail net outflows of $14 billion were primarily driven by net outflows from U.S. equity and global strategies.

Retail net inflows of $16.1 billion reflected net inflows of $11.5 billion internationally and $4.6 billion in the United States. Retail net inflows primarily reflected net inflows of $14.7 billion from fixed income products, led by core, unconstrained, emerging market and municipal bond strategies, and $4.8 billion from equity products.  

liquid alternatives.

Cash management AUM increased 9% to $425.4$724 billion due to net inflows into US government money market funds.

Net market appreciation of $736 billion was driven by $32.5 billion of net inflows.global equity market appreciation.

AUM increased $39.2$95 billion due to the impact of foreign exchange movements, primarily due to the weakening of the U.S.US dollar largely against the EuroBritish pound and British pound,euro, partially offset by the strengthening of the U.S.US dollar against the Japanese yen.

4953


DISCUSSION OF FINANCIAL RESULTS

The Company’s results of operations for the three and nine months ended September 30, 20172023 and 20162022 are discussed below. For a further description of the Company’s revenue and expense, see the Company’sCompany's Annual Report on Form 10-K for the year ended December 31, 2016 (“20162022, which was filed with the Securities and Exchange Commission on February 24, 2023 ("2022 Form 10-K”10-K.").

Revenue

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in millions)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Investment advisory, administration fees and

   securities lending revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active

 

$

421

 

 

$

409

 

 

$

1,235

 

 

$

1,201

 

iShares ETFs

 

 

836

 

 

 

691

 

 

 

2,333

 

 

 

1,970

 

Non-ETF index

 

 

170

 

 

 

170

 

 

 

509

 

 

 

508

 

Equity subtotal

 

 

1,427

 

 

 

1,270

 

 

 

4,077

 

 

 

3,679

 

Fixed income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active

 

 

442

 

 

 

427

 

 

 

1,281

 

 

 

1,237

 

iShares ETFs

 

 

210

 

 

 

188

 

 

 

595

 

 

 

512

 

Non-ETF index

 

 

88

 

 

 

78

 

 

 

257

 

 

 

217

 

Fixed income subtotal

 

 

740

 

 

 

693

 

 

 

2,133

 

 

 

1,966

 

Multi-asset

 

 

289

 

 

 

285

 

 

 

843

 

 

 

860

 

Alternatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core

 

 

169

 

 

 

156

 

 

 

469

 

 

 

488

 

Currency and commodities

 

 

23

 

 

 

24

 

 

 

67

 

 

 

61

 

Alternatives subtotal

 

 

192

 

 

 

180

 

 

 

536

 

 

 

549

 

Long-term

 

 

2,648

 

 

 

2,428

 

 

 

7,589

 

 

 

7,054

 

Cash management

 

 

144

 

 

 

118

 

 

 

408

 

 

 

340

 

Total base fees

 

 

2,792

 

 

 

2,546

 

 

 

7,997

 

 

 

7,394

 

Investment advisory performance fees:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

30

 

 

 

14

 

 

 

57

 

 

 

67

 

Fixed income

 

 

9

 

 

 

2

 

 

 

20

 

 

 

9

 

Multi-asset

 

 

2

 

 

 

1

 

 

 

14

 

 

 

6

 

Alternatives

 

 

150

 

 

 

41

 

 

 

218

 

 

 

84

 

Total performance fees

 

 

191

 

 

 

58

 

 

 

309

 

 

 

166

 

Technology and risk management revenue(1)

 

 

175

 

 

 

152

 

 

 

497

 

 

 

439

 

Distribution fees

 

 

5

 

 

 

10

 

 

 

17

 

 

 

32

 

Advisory and other revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advisory(1)

 

 

25

 

 

 

22

 

 

 

74

 

 

 

78

 

Other

 

 

45

 

 

 

49

 

 

 

128

 

 

 

156

 

Advisory and other revenue

 

 

70

 

 

 

71

 

 

 

202

 

 

 

234

 

Total revenue

 

$

3,233

 

 

$

2,837

 

 

$

9,022

 

 

$

8,265

 

(1)

Beginning with the first quarter of 2017, Aladdin revenue previously reported within “BlackRock Solutions® and advisory” has been presented within “Technology and risk management revenue” on the condensed consolidated statement of income.  The remaining previously reported “BlackRock Solutions and advisory” revenue is currently reported as part of “Advisory and other revenue.” Under the historical presentation, BlackRock Solutions and advisory revenue would have totaled $200 million and $571 million for the three and nine months ended September 30, 2017, respectively. The prior period amounts reported for BlackRock Solutions and advisory of $174 million and $517 million for the three and nine months ended September 30, 2016, respectively, have been reclassified to conform to the current presentation.  

50


The table below lists the asset type mixpresents detail of investment advisory, administration fees and securities lending revenue (collectively “base fees”) and mix of average AUM by product type:

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

Mix of Base Fees

 

 

 

Mix of Average AUM

by Asset Class(1)

 

 

Mix of Base Fees

 

 

 

Mix of Average AUM

by Asset Class(2)

 

 

 

2017

 

 

2016

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

2017

 

 

2016

 

Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active

 

 

15

%

 

 

16

%

 

 

 

5

%

 

 

6

%

 

 

15

%

 

 

16

%

 

 

 

5

%

 

 

6

%

iShares ETFs

 

 

30

%

 

 

27

%

 

 

 

20

%

 

 

17

%

 

 

29

%

 

 

27

%

 

 

 

20

%

 

 

17

%

Non-ETF index

 

 

6

%

 

 

7

%

 

 

 

28

%

 

 

27

%

 

 

6

%

 

 

7

%

 

 

 

28

%

 

 

27

%

Equity subtotal

 

 

51

%

 

 

50

%

 

 

 

53

%

 

 

50

%

 

 

50

%

 

 

50

%

 

 

 

53

%

 

 

50

%

Fixed income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active

 

 

16

%

 

 

17

%

 

 

 

13

%

 

 

15

%

 

 

17

%

 

 

16

%

 

 

 

13

%

 

 

16

%

iShares ETFs

 

 

8

%

 

 

7

%

 

 

 

6

%

 

 

6

%

 

 

7

%

 

 

7

%

 

 

 

6

%

 

 

6

%

Non-ETF index

 

 

3

%

 

 

3

%

 

 

 

10

%

 

 

10

%

 

 

3

%

 

 

3

%

 

 

 

10

%

 

 

10

%

Fixed income subtotal

 

 

27

%

 

 

27

%

 

 

 

29

%

 

 

31

%

 

 

27

%

 

 

26

%

 

 

 

29

%

 

 

32

%

Multi-asset

 

 

10

%

 

 

11

%

 

 

 

8

%

 

 

8

%

 

 

11

%

 

 

12

%

 

 

 

8

%

 

 

8

%

Alternatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core

 

 

6

%

 

 

6

%

 

 

 

2

%

 

 

2

%

 

 

6

%

 

 

7

%

 

 

 

2

%

 

 

2

%

Currency and commodities

 

 

1

%

 

 

1

%

 

 

 

1

%

 

 

1

%

 

 

1

%

 

 

1

%

 

 

 

1

%

 

 

1

%

Alternatives subtotal

 

 

7

%

 

 

7

%

 

 

 

3

%

 

 

3

%

 

 

7

%

 

 

8

%

 

 

 

3

%

 

 

3

%

Long-term

 

 

95

%

 

 

95

%

 

 

 

93

%

 

 

92

%

 

 

95

%

 

 

96

%

 

 

 

93

%

 

 

93

%

Cash management

 

 

5

%

 

 

5

%

 

 

 

7

%

 

 

8

%

 

 

5

%

 

 

4

%

 

 

 

7

%

 

 

7

%

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 ten months.

Three Months Ended September 30, 2017 Compared with Three Months Ended September 30, 2016

Revenue increased $396 million, or 14%, from the third quarter of 2016, driven by growth in base fees, performance fees, and technology and risk management revenue.

Investment advisory, administration fees and securities lending revenue of $2,792 million increased $246 million from $2,546 million in the third quarter of 2016, reflecting the impact of higher markets and organic growth on average AUM, partially offset by previously announced pricing changes to select investment products.  Securities lending revenue was $150 million in the current quarter compared with $142 million in the third quarter of 2016.

Investment advisory performance fees of $191 million increased $133 million from the third quarter of 2016, primarily reflecting improved performance in a broad range of hedge and long-only funds, including strong performance from a single hedge fund with an annual performance measurement period that ends in the third quarter.

Technology and risk management revenue of $175 million increased $23 million from $152 million in the third quarter of 2016, reflecting ongoing demand for Aladdin and other technology offerings.

Nine Months Ended September 30, 2017 Compared with Nine Months Ended September 30, 2016

Revenue increased $757 million, or 9%, from the nine months ended September 30, 2016, driven by growth in base fees, performance fees, and technology and risk management revenue, partially offset by lower advisory and other revenue.

Investment advisory, administration fees and securities lending revenue of $7,997 million increased $603 million from $7,394 million for the nine months ended September 30, 2016, reflecting the impact of higher markets and organic growth on average AUM, and the effect of AUM acquired in the BofA® Global Capital Management transaction, partially offset by previously announced pricing changes to select investment products.  Securities lending revenue was $447 million for the nine months ended September 30, 2017 compared with $441 million for the nine months ended September 30, 2016.  

51


Investment advisory performance fees of $309 million increased $143 million from the nine months ended September 30, 2016, primarily reflecting improved performance in a broad range of hedge and long-only funds, including strong performance from a single hedge fund with an annual performance measurement period that ends in the third quarter.

Technology and risk management revenue of $497 million increased $58 million from $439 million for the nine months ended September 30, 2016 reflecting ongoing demand for Aladdin and other technology offerings.

Advisory and other revenue of $202 million decreased $32 million from $234 million for the nine months ended September 30, 2016, reflecting lower fees for distributing certain exchange-traded products, lower earnings from a strategic minority investment and lower commissions for sales of certain funds.

Expense

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in millions)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Expense, GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

$

1,088

 

 

$

969

 

 

$

3,108

 

 

$

2,893

 

Distribution and servicing costs

 

 

123

 

 

 

114

 

 

 

361

 

 

 

320

 

Amortization of deferred sales commissions

 

 

4

 

 

 

8

 

 

 

13

 

 

 

27

 

Direct fund expense

 

 

234

 

 

 

200

 

 

 

666

 

 

 

583

 

General and administration:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketing and promotional

 

 

76

 

 

 

72

 

 

 

231

 

 

 

232

 

Occupancy and office related

 

 

68

 

 

 

65

 

 

 

202

 

 

 

208

 

Portfolio services

 

 

68

 

 

 

57

 

 

 

195

 

 

 

164

 

Technology

 

 

51

 

 

 

41

 

 

 

145

 

 

 

129

 

Professional services

 

 

37

 

 

 

27

 

 

 

92

 

 

 

84

 

Communications

 

 

8

 

 

 

9

 

 

 

24

 

 

 

29

 

Other general and administration

 

 

55

 

 

 

41

 

 

 

125

 

 

 

100

 

Total general and administration expense

 

 

363

 

 

 

312

 

 

 

1,014

 

 

 

946

 

Restructuring charge

 

 

 

 

 

 

 

 

 

 

 

76

 

Amortization of intangible assets

 

 

27

 

 

 

25

 

 

 

77

 

 

 

75

 

Total expense, GAAP

 

$

1,839

 

 

$

1,628

 

 

$

5,239

 

 

$

4,920

 

Less non-GAAP expense adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PNC LTIP funding obligation

 

 

4

 

 

 

7

 

 

 

12

 

 

 

21

 

Restructuring charge

 

 

 

 

 

 

 

 

 

 

 

76

 

Total non-GAAP expense adjustments

 

 

4

 

 

 

7

 

 

 

12

 

 

 

97

 

Expense, as adjusted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

$

1,084

 

 

$

962

 

 

$

3,096

 

 

$

2,872

 

Distribution and servicing costs

 

 

123

 

 

 

114

 

 

 

361

 

 

 

320

 

Amortization of deferred sales commissions

 

 

4

 

 

 

8

 

 

 

13

 

 

 

27

 

Direct fund expense

 

 

234

 

 

 

200

 

 

 

666

 

 

 

583

 

General and administration

 

 

363

 

 

 

312

 

 

 

1,014

 

 

 

946

 

Amortization of intangible assets

 

 

27

 

 

 

25

 

 

 

77

 

 

 

75

 

Total expense, as adjusted

 

$

1,835

 

 

$

1,621

 

 

$

5,227

 

 

$

4,823

 

Three Months Ended September 30, 2017 Compared with Three Months Ended September 30, 2016

GAAP.    Expense increased $211 million from the third quarter of 2016, driven primarily by higher employee compensation and benefits expense, higher general and administration expense, and higher direct fund expense.

Employee compensation and benefits expense increased $119 million, or 12%, from the third quarter of 2016, primarily reflecting higher incentive compensation, driven primarily by higher performance fees and operating income, and higher headcount.  Employees at September 30, 2017 totaled approximately 13,700 compared with approximately 13,000 at September 30, 2016.

52


Direct fund expense increased $34 million from the third quarter of 2016, reflecting higher average AUM.

General and administration expense increased $51 million from the third quarter of 2016, reflecting higher portfolio services, technology, and professional services expense, as well as increased foreign exchange remeasurement expense and contingent consideration fair value adjustments.  

As Adjusted.    Expense, as adjusted, increased $214 million, or 13%, to $1,835 million from $1,621 million in the third quarter of 2016. The increase in total expense, as adjusted, is driven primarily by higher employee compensation and benefits expense, higher general and administration expense, and higher direct fund expense.

Nine Months Ended September 30, 2017 Compared with Nine Months Ended September 30, 2016

GAAP.    Expense increased $319 million from the nine months ended September 30, 2016, driven primarily by higher employee compensation and benefits expense, higher direct fund expense, higher general and administration expense, and approximately $22 million of expense associated with the strategic repositioning of the active equity platform, partially offset by a restructuring charge recorded in the first quarter of 2016.

Employee compensation and benefits expense increased $215 million, or 7%, from the nine months ended September 30, 2016, reflecting higher incentive compensation, higher headcount, and approximately $20 million of severance and accelerated compensation expense associated with the repositioning of the active equity platform.  

Distribution and servicing costs increased $41 million, or 13%, from the nine months ended September 30, 2016, reflecting higher average AUM and the effect of AUM acquired in the BofA Global Capital Management transaction.

Direct fund expense increased $83 million from the nine months ended September 30, 2016, reflecting higher average AUM.

General and administration expense increased $68 million from the nine months ended September 30, 2016, reflecting higher portfolio services and technology expense, and the impact of foreign exchange remeasurement expense.  

As Adjusted.    Expense, as adjusted, increased $404 million, or 8%, to $5,227 million from $4,823 million in the nine months ended September 30, 2016. The increase in total expense, as adjusted, is driven primarily by higher employee compensation and benefit expense, higher direct fund expense, higher general and administration expense and the $22 million expense associated with the repositioning of the active equity platform.  The restructuring charge recorded in the first quarter of 2016 has been excluded from the as adjusted results.  

Nonoperating Results

The summary and reconciliation of U.S. GAAP nonoperating income (expense) to nonoperating income (expense), as adjusted for the three and nine months ended September 30, 20172023 and 2016 was2022 and includes the product type mix of base fees and securities lending revenue and performance fees.

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

(in millions)

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

Investment advisory, administration fees and
   securities lending revenue:

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

 

 

 

Active

$

510

 

 

$

503

 

 

$

1,516

 

 

$

1,669

 

ETFs

 

1,136

 

 

 

1,063

 

 

 

3,316

 

 

 

3,324

 

Non-ETF index

 

186

 

 

 

179

 

 

 

560

 

 

 

552

 

Equity subtotal

 

1,832

 

 

 

1,745

 

 

 

5,392

 

 

 

5,545

 

Fixed income:

 

 

 

 

 

 

 

 

 

 

 

Active

 

479

 

 

 

478

 

 

 

1,429

 

 

 

1,515

 

ETFs

 

315

 

 

 

276

 

 

 

919

 

 

 

839

 

Non-ETF index

 

93

 

 

 

91

 

 

 

268

 

 

 

311

 

Fixed income subtotal

 

887

 

 

 

845

 

 

 

2,616

 

 

 

2,665

 

Multi-asset

 

308

 

 

 

316

 

 

 

904

 

 

 

1,006

 

Alternatives:

 

 

 

 

 

 

 

 

 

 

 

Illiquid alternatives

 

231

 

 

 

184

 

 

 

638

 

 

 

547

 

Liquid alternatives

 

143

 

 

 

155

 

 

 

434

 

 

 

483

 

Currency and commodities(1)

 

46

 

 

 

51

 

 

 

141

 

 

 

169

 

Alternatives subtotal

 

420

 

 

 

390

 

 

 

1,213

 

 

 

1,199

 

Long-term

 

3,447

 

 

 

3,296

 

 

 

10,125

 

 

 

10,415

 

Cash management

 

234

 

 

 

235

 

 

 

669

 

 

 

637

 

Total investment advisory, administration fees
   and securities lending revenue

 

3,681

 

 

 

3,531

 

 

 

10,794

 

 

 

11,052

 

Investment advisory performance fees:

 

 

 

 

 

 

 

 

 

 

 

Equity

 

17

 

 

 

(2

)

 

 

38

 

 

 

13

 

Fixed income

 

1

 

 

 

(3

)

 

 

2

 

 

 

19

 

Multi-asset

 

5

 

 

 

2

 

 

 

23

 

 

 

14

 

Alternatives:

 

 

 

 

 

 

 

 

 

 

 

Illiquid alternatives

 

24

 

 

 

79

 

 

 

124

 

 

 

181

 

Liquid alternatives

 

23

 

 

 

6

 

 

 

56

 

 

 

59

 

Alternatives subtotal

 

47

 

 

 

85

 

 

 

180

 

 

 

240

 

Total investment advisory performance fees

 

70

 

 

 

82

 

 

 

243

 

 

 

286

 

Technology services revenue

 

407

 

 

 

338

 

 

 

1,106

 

 

 

1,011

 

Distribution fees

 

321

 

 

 

325

 

 

 

959

 

 

 

1,067

 

Advisory and other revenue:

 

 

 

 

 

 

 

 

 

 

 

Advisory

 

21

 

 

 

8

 

 

 

66

 

 

 

39

 

Other

 

22

 

 

 

27

 

 

 

60

 

 

 

81

 

Total advisory and other revenue

 

43

 

 

 

35

 

 

 

126

 

 

 

120

 

Total revenue

$

4,522

 

 

$

4,311

 

 

$

13,228

 

 

$

13,536

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)
Amounts include commodity ETFs.

54


The table below lists a percentage breakdown of base fees and securities lending revenue and average AUM by product type:

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

Percentage of Base
Fees and
Securities Lending
Revenue

 

 

 

Percentage of
Average AUM
by Product Type
(1)

 

 

Percentage of Base
Fees and
Securities Lending
Revenue

 

 

 

Percentage of
Average AUM
by Product Type
(2)

 

 

2023

 

 

2022

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

2023

 

 

2022

 

Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active

 

14

%

 

 

14

%

 

 

 

4

%

 

 

5

%

 

 

14

%

 

 

14

%

 

 

 

4

%

 

 

5

%

ETFs

 

32

%

 

 

30

%

 

 

 

24

%

 

 

25

%

 

 

31

%

 

 

30

%

 

 

 

25

%

 

 

24

%

Non-ETF index

 

5

%

 

 

5

%

 

 

 

24

%

 

 

23

%

 

 

5

%

 

 

5

%

 

 

 

23

%

 

 

24

%

Equity subtotal

 

51

%

 

 

49

%

 

 

 

52

%

 

 

53

%

 

 

50

%

 

 

49

%

 

 

 

52

%

 

 

53

%

Fixed income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active

 

12

%

 

 

14

%

 

 

 

11

%

 

 

11

%

 

 

13

%

 

 

14

%

 

 

 

12

%

 

 

11

%

ETFs

 

9

%

 

 

8

%

 

 

 

9

%

 

 

8

%

 

 

9

%

 

 

7

%

 

 

 

9

%

 

 

8

%

Non-ETF index

 

3

%

 

 

3

%

 

 

 

8

%

 

 

9

%

 

 

2

%

 

 

3

%

 

 

 

8

%

 

 

9

%

Fixed income subtotal

 

24

%

 

 

25

%

 

 

 

28

%

 

 

28

%

 

 

24

%

 

 

24

%

 

 

 

29

%

 

 

28

%

Multi-asset

 

8

%

 

 

9

%

 

 

 

9

%

 

 

8

%

 

 

8

%

 

 

9

%

 

 

 

9

%

 

 

8

%

Alternatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Illiquid alternatives

 

6

%

 

 

5

%

 

 

 

1

%

 

 

1

%

 

 

6

%

 

 

5

%

 

 

 

1

%

 

 

1

%

Liquid alternatives

 

4

%

 

 

4

%

 

 

 

1

%

 

 

1

%

 

 

4

%

 

 

4

%

 

 

 

1

%

 

 

1

%

Currency and
   commodities
(3)

 

1

%

 

 

1

%

 

 

 

1

%

 

 

1

%

 

 

2

%

 

 

3

%

 

 

 

1

%

 

 

1

%

Alternatives subtotal

 

11

%

 

 

10

%

 

 

 

3

%

 

 

3

%

 

 

12

%

 

 

12

%

 

 

 

3

%

 

 

3

%

Long-term

 

94

%

 

 

93

%

 

 

 

92

%

 

 

92

%

 

 

94

%

 

 

94

%

 

 

 

93

%

 

 

92

%

Cash management

 

6

%

 

 

7

%

 

 

 

8

%

 

 

8

%

 

 

6

%

 

 

6

%

 

 

 

7

%

 

 

8

%

Total AUM

 

100

%

 

 

100

%

 

 

 

100

%

 

 

100

%

 

 

100

%

 

 

100

%

 

 

 

100

%

 

 

100

%

(1)
Average AUM is calculated as follows: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 ten months.
(3)
Amounts include commodity ETFs.

Three Months Ended September 30, 2023 Compared with Three Months Ended September 30, 2022

Revenue increased $211 million, or 5%, from the three months ended September 30, 2022, primarily driven by higher base fees due to the impact of organic growth and market movements over the past twelve months on average AUM and higher technology service revenue.

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in millions)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Nonoperating income (expense), GAAP basis(1)

 

$

10

 

 

$

1

 

 

$

4

 

 

$

(72

)

Less: Net income (loss) attributable to NCI

 

 

12

 

 

 

2

 

 

 

31

 

 

 

(2

)

Nonoperating income (expense), as adjusted, net of NCI(2)(3)

 

$

(2

)

 

$

(1

)

 

$

(27

)

 

$

(70

)

Investment advisory, administration fees and securities lending revenue of $3.7 billion increased $150 million from $3.5 billion for the three months ended September 30, 2022, primarily driven by organic base fee growth and the impact of market and foreign exchange movements over the past twelve months on average AUM. Securities lending revenue of $167 million increased from $162 million for the three months ended September 30, 2022.

(1)

Amounts include a gain of $29 million and $19 million for the three months ended September 30, 2017 and 2016, respectively, attributable to consolidated variable interest entities (“VIEs”). Amounts include a gain of $95 million and $34 million for the nine months ended September 30, 2017 and 2016, respectively, attributable to consolidated VIEs.

(2)

Net of income (loss) attributable to NCI.  

(3)

Management believes nonoperating income (expense), as adjusted, is an effective measure for reviewing BlackRock’s nonoperating contribution to results. See Non-GAAP Financial Measures for further information on non-GAAP financial measures for the three and nine months ended September 30, 2017 and 2016.

Investment advisory performance fees of $70 million decreased $12 million from $82 million for the three months ended September 30, 2022, primarily reflecting lower revenue from illiquid alternative products, partially offset by higher revenue from long-only and liquid alternative products.


Technology services revenue of $407 million increased $69 million from $338 million for the three months ended September 30, 2022, driven by sustained demand for our technology offerings. Current quarter technology services revenue also benefited from the impact of several large client renewals of eFront on-premise licenses, for which a majority of the revenue is recognized at the time of renewal.

55


Nine Months Ended September 30, 2023 Compared with Nine Months Ended September 30, 2022

Revenue decreased $308 million, or 2%, from the nine months ended September 30, 2022, primarily driven by the impact of lower markets on average AUM and lower performance fees, partially offset by higher technology services revenue.

Investment advisory, administration fees and securities lending revenue of $10.8 billion decreased $258 million from $11.1 billion for the nine months ended September 30, 2022, primarily driven by the negative impact of market beta on average AUM, partially offset by higher securities lending revenue. Securities lending revenue of $518 million increased from $460 million for the nine months ended September 30, 2022, primarily reflecting higher spreads.

Investment advisory performance fees of $243 million decreased $43 million from $286 million for the nine months ended September 30, 2022, primarily reflecting lower revenue from illiquid alternative and long-only fixed income products, partially offset by higher revenue from long-only equity products.

Technology services revenue of $1.1 billion increased $95 million from $1.0 billion for the nine months ended September 30, 2022, reflecting sustained demand for our technology offerings but also the impact of fixed income market movements over the last twelve months on positions on the Aladdin platform. Current period technology services revenue also benefited from the impact of several large client renewals of eFront on-premise licenses, for which a majority of the revenue is recognized at the time of renewal.

Expense

The components of nonoperating income (expense), as adjusted,following table presents expense for the three and nine months ended September 30, 20172023 and 2016 were2022.

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

(in millions)

2023

 

 

2022

 

 

2023

 

 

2022

 

Expense

 

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

$

1,420

 

 

$

1,339

 

 

$

4,276

 

 

$

4,251

 

Distribution and servicing costs

 

526

 

 

 

536

 

 

 

1,549

 

 

 

1,682

 

Direct fund expense

 

354

 

 

 

318

 

 

 

1,013

 

 

 

951

 

General and administration expense:

 

 

 

 

 

 

 

 

 

 

 

Marketing and promotional

 

82

 

 

 

95

 

 

 

244

 

 

 

231

 

Occupancy and office related

 

103

 

 

 

99

 

 

 

313

 

 

 

304

 

Portfolio services

 

65

 

 

 

73

 

 

 

202

 

 

 

209

 

Sub-advisory

 

20

 

 

 

21

 

 

 

59

 

 

 

63

 

Technology

 

145

 

 

 

156

 

 

 

421

 

 

 

449

 

Professional services

 

51

 

 

 

47

 

 

 

128

 

 

 

129

 

Communications

 

12

 

 

 

11

 

 

 

36

 

 

 

32

 

Foreign exchange remeasurement

 

(3

)

 

 

3

 

 

 

(2

)

 

 

2

 

Contingent consideration fair value adjustments

 

 

 

 

1

 

 

 

1

 

 

 

2

 

Other general and administration

 

71

 

 

 

48

 

 

 

185

 

 

 

159

 

Total general and administration expense

 

546

 

 

 

554

 

 

 

1,587

 

 

 

1,580

 

Amortization of intangible assets

 

39

 

 

 

38

 

 

 

113

 

 

 

114

 

Total expense

$

2,885

 

 

$

2,785

 

 

$

8,538

 

 

$

8,578

 

 

 

 

 

 

 

 

 

 

 

 

 

56


Three Months Ended September 30, 2023 Compared with Three Months Ended September 30, 2022

Expense increased $100 million, or 4%, from the three months ended September 30, 2022, reflecting higher employee compensation and benefits expense and direct fund expense.

Employee compensation and benefits expense increased $81 million from the three months ended September 30, 2022, reflecting higher base compensation, driven primarily by base salary increases, and higher incentive compensation primarily as follows:a result of higher operating income.

Direct fund expense increased $36 million from the three months ended September 30, 2022, primarily reflecting higher average index AUM.

Nine Months Ended September 30, 2023 Compared with Nine Months Ended September 30, 2022

Expense decreased $40 million from the nine months ended September 30, 2022, reflecting lower distribution and servicing costs due to lower average AUM, partially offset by higher direct fund expense and employee compensation and benefits expense.

Employee compensation and benefits expense increased $25 million from the nine months ended September 30, 2022, primarily resulting from higher base compensation, driven primarily by base salary increases, partially offset by lower incentive compensation, largely driven by lower operating income.

Direct fund expense increased $62 million from the nine months ended September 30, 2022, primarily reflecting higher average index AUM.

57


Nonoperating Results

The summary of nonoperating income (expense), less net income (loss) attributable to NCI for the three and nine months ended September 30, 2023 and 2022 was as follows:

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

(in millions)

2023

 

 

2022

 

 

2023

 

 

2022

 

Nonoperating income (expense), GAAP basis

$

171

 

 

$

165

 

 

$

538

 

 

$

(320

)

Less: Net income (loss) attributable to NCI

 

(9

)

 

 

(45

)

 

 

60

 

 

 

(232

)

Nonoperating income (expense), net of NCI

 

180

 

 

 

210

 

 

 

478

 

 

 

(88

)

Less: Hedge gain (loss) on deferred cash compensation
   plans
(1)

 

(4

)

 

 

 

 

 

29

 

 

 

 

Nonoperating income (expense), net of NCI, as adjusted(2)

$

184

 

 

$

210

 

 

$

449

 

 

$

(88

)

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

(in millions)

2023

 

 

2022

 

 

2023

 

 

2022

 

Net gain (loss) on investments, net of NCI

 

 

 

 

 

 

 

 

 

 

 

Private equity

$

91

 

 

$

20

 

 

$

281

 

 

$

22

 

Real assets

 

3

 

 

 

9

 

 

 

11

 

 

 

23

 

Other alternatives(3)

 

22

 

 

 

1

 

 

 

32

 

 

 

 

Other investments(4)

 

46

 

 

 

(58

)

 

 

51

 

 

 

(245

)

Hedge gain (loss) on deferred cash compensation
   plans
(1)

 

(4

)

 

 

 

 

 

29

 

 

 

 

Subtotal

 

158

 

 

 

(28

)

 

 

404

 

 

 

(200

)

Other gains (losses)(5)

 

(35

)

 

 

247

 

 

 

(30

)

 

 

190

 

Total net gain (loss) on investments, net of NCI

 

123

 

 

 

219

 

 

 

374

 

 

 

(10

)

Interest and dividend income

 

139

 

 

 

41

 

 

 

314

 

 

 

80

 

Interest expense

 

(82

)

 

 

(50

)

 

 

(210

)

 

 

(158

)

Net interest income (expense)

 

57

 

 

 

(9

)

 

 

104

 

 

 

(78

)

Nonoperating income (expense), net of NCI

 

180

 

 

 

210

 

 

 

478

 

 

 

(88

)

Less: Hedge gain (loss) on deferred cash compensation
   plans
(1)

 

(4

)

 

 

 

 

 

29

 

 

 

 

Nonoperating income (expense), net of NCI, as adjusted(2)

$

184

 

 

$

210

 

 

$

449

 

 

$

(88

)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in millions)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net gain (loss) on investments(1)(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private equity

 

$

7

 

 

$

2

 

 

$

21

 

 

$

11

 

Real assets

 

 

1

 

 

 

2

 

 

 

2

 

 

 

5

 

Other alternatives(3)

 

 

11

 

 

 

9

 

 

 

34

 

 

 

13

 

Other investments(4)

 

 

10

 

 

 

16

 

 

 

35

 

 

 

22

 

Subtotal

 

 

29

 

 

 

29

 

 

 

92

 

 

 

51

 

Other gains

 

 

 

 

 

 

 

 

5

 

 

 

 

Total net gain (loss) on investments(1)(2)

 

 

29

 

 

 

29

 

 

 

97

 

 

 

51

 

Interest and dividend income

 

 

15

 

 

 

22

 

 

 

35

 

 

 

33

 

Interest expense

 

 

(46

)

 

 

(52

)

 

 

(159

)

 

 

(154

)

Net interest expense

 

 

(31

)

 

 

(30

)

 

 

(124

)

 

 

(121

)

Nonoperating income (expense), as adjusted(1)(2)

 

$

(2

)

 

$

(1

)

 

$

(27

)

 

$

(70

)

(1)
Amount relates to the gain (loss) from economically hedging BlackRock's deferred cash compensation plans.
(2)
Management believes nonoperating income (expense), net of NCI, as adjusted, is an effective measure for reviewing BlackRock’s nonoperating results, which ultimately impacts BlackRock’s book value. See Non-GAAP Financial Measures for further information on other non-GAAP financial measures.
(3)
Amounts primarily include net gains (losses) related to credit funds, direct hedge fund strategies and hedge fund solutions.
(4)
Amounts primarily include net gains (losses) related to BlackRock's seed investment portfolio, net of impact of certain hedges.
(5)
The amounts for the three and nine months ended September 30, 2022, primarily include nonoperating noncash pre-tax gains in connection with strategic minority investment in iCapital Network, Inc. of approximately $267 million. Additional amounts include noncash pre-tax gains (losses) related to the revaluation of certain other minority investments

58


Income Tax Expense

 

GAAP

 

 

As Adjusted

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

(in millions)

2023

 

 

2022

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating income(1)

$

1,637

 

 

$

1,526

 

 

$

4,690

 

 

$

4,958

 

 

$

1,691

 

 

$

1,585

 

 

$

4,877

 

 

$

5,134

 

Total nonoperating
  income (expense)
(1)(2)

$

180

 

 

$

210

 

 

$

478

 

 

$

(88

)

 

$

184

 

 

$

210

 

 

$

449

 

 

$

(88

)

Income before income
  taxes
(2)

$

1,817

 

 

$

1,736

 

 

$

5,168

 

 

$

4,870

 

 

$

1,875

 

 

$

1,795

 

 

$

5,326

 

 

$

5,046

 

Income tax expense

$

213

 

 

$

330

 

 

$

1,041

 

 

$

951

 

 

$

233

 

 

$

344

 

 

$

1,085

 

 

$

1,011

 

Effective tax rate

 

11.7

%

 

 

19.0

%

 

 

20.1

%

 

 

19.5

%

 

 

12.4

%

 

 

19.2

%

 

 

20.4

%

 

 

20.0

%

(1)

Net of net income (loss) attributable to NCI.  Amounts also include net gain (loss) on consolidated VIEs.

(1)
As adjusted items are described in more detail in Non-GAAP Financial Measures.

(2)

Management believes nonoperating income (expense), as adjusted, is an effective measure for reviewing BlackRock’s nonoperating contribution to results. See Non-GAAP Financial Measures for further information on non-GAAP financial measures for the three and nine months ended September 30, 2017 and 2016.

(2)
Net of net income (loss) attributable to NCI.

(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 equity and fixed income investments.

2023. Income tax expense for the three months ended September 30, 2023 included approximately $223 million of discrete tax benefits related to the resolution of certain outstanding tax matters.

InterestIncome tax expense for the nine months ended September 30, 20172023 included a “make-whole” redemption premiumapproximately $185 million of $14 milliondiscrete tax net benefits related to refinancing the $700resolution of certain outstanding tax matters and $41 million 6.25% notes,of discrete tax benefits related to stock-based compensation awards that vested in 2023.

On August 16, 2022, the Inflation Reduction Act of 2022 ("IRA") was enacted into law, which were repaid priorbecame effective January 1, 2023 and introduced new provisions including a corporate book minimum tax and an excise tax on net stock repurchases. The provisions within the IRA did not have a material impact on BlackRock's condensed consolidated financial statements.

2022.Income tax expense for the three months ended September 30, 2022 included approximately $93 million of discrete tax benefits related to their September 2017 maturity.  

the resolution of certain outstanding tax matters. Income Tax Expense

 

 

GAAP

 

 

As Adjusted

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

(in millions)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Operating income(1)

 

$

1,394

 

 

$

1,209

 

 

$

3,783

 

 

$

3,345

 

 

$

1,398

 

 

$

1,216

 

 

$

3,795

 

 

$

3,442

 

Total nonoperating income (expense)(1)(2)

 

 

(2

)

 

 

(1

)

 

 

(27

)

 

 

(70

)

 

 

(2

)

 

 

(1

)

 

 

(27

)

 

 

(70

)

Income before income taxes(2)

 

$

1,392

 

 

$

1,208

 

 

$

3,756

 

 

$

3,275

 

 

$

1,396

 

 

$

1,215

 

 

$

3,768

 

 

$

3,372

 

Income tax expense

 

$

445

 

 

$

333

 

 

$

1,090

 

 

$

954

 

 

$

427

 

 

$

361

 

 

$

1,074

 

 

$

1,010

 

Effective tax rate

 

 

32.0

%

 

 

27.6

%

 

 

29.0

%

 

 

29.1

%

 

 

30.6

%

 

 

29.7

%

 

 

28.5

%

 

 

30.0

%

(1)

See Non-GAAP Financial Measures for further information on and reconciliation of as adjusted items.

(2)

Net of net income (loss) attributable to NCI.

2017.  The three andtax expense for the nine months ended September 30, 20172022 included $139 million of discrete tax benefits related to the resolution of certain tax matters and $87 million of discrete tax benefits related to stock-based compensation awards that vested in 2022. In addition, GAAP income tax expense (GAAP) reflectedfor the nine months ended September 30, 2022 included $18 million of net noncash expense of $19 milliontax benefit related to the revaluation of certain deferred income tax liabilities as a result of domestic state and local tax changes.liabilities.

The nine months ended September 30, 2017 income tax expense (GAAP) also included an $81 million discrete tax benefit, reflecting the adoption of new accounting guidance related to stock-based compensation awards that vested in the first quarter of 2017.  See Note 2, Significant Accounting Policies, for further information.

5459


The as adjusted effective tax rate of 30.6% and 28.5% for the three and nine months ended September 30, 2017, respectively, excluded the net noncash expense of $19 million mentioned above as it will not have a cash flow impact and to ensure comparability among periods presented.  

STATEMENT OF FINANCIAL CONDITION OVERVIEW

2016.  The three and nine months ended September 30, 2016 income tax expense (GAAP) reflected:

a $26 million net noncash tax benefit, primarily related to the revaluation of certain deferred income tax liabilities as a result of legislation enacted in the United Kingdom, and domestic state and local tax changes, and

nonrecurring tax benefits, which totaled $16 million and $35 million for the three and nine months ended September 30, 2016, respectively.

The as adjusted effective tax rate of 29.7% and 30.0% for the three and nine months ended September 30, 2016, respectively, excluded the net noncash benefit of $26 million mentioned above, as it will not have a cash flow impact and to ensure comparability among periods presented.  

55


BALANCE SHEET OVERVIEW

As Adjusted Balance SheetStatement 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 funds, including consolidated VIEs.products ("CIPs").

The Company presents the as adjusted balance sheetstatement of financial condition as additional information to enable investors to exclude certain assets that have equal and offsetting liabilities or noncontrolling interestsNCI that ultimately do not have an impact on stockholders’ equity or cash flows. Management views the as adjusted balance sheet, astatement of financial condition, which contains non-GAAP financial measure,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 by BlackRock Life Limited, a wholly owned subsidiary of the Company that is a registered life insurance company in the United Kingdom ("UK"), 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 receivedobtained under BlackRock Life Limited securities lending arrangements for which it has legal title as its own asset in addition to an equal and offsetting separate account collateral liability for the obligation to return the collateral. The collateral is not available to creditors of the Company, and the borrowers under the securities lending arrangements have no recourse to the Company’s assets.

Consolidated Sponsored Investment FundsProducts

The Company consolidates certain sponsored investment fundsproducts accounted for as variable interest entities (“VIEs”) and voting rights entities (“VREs”) and VIEs, (collectively, “Consolidated Sponsored Investment Funds”). See Note 2, Significant Accounting Policies, in the notes to the consolidated financial statements contained in the 20162022 Form 10-K for more information on the Company’s consolidation policy.

5660


The Company cannot readily access cash and cash equivalents or other assets held by Consolidated Sponsored Investment FundsCIPs to use in its operating activities. In addition, the Company cannot readily sell investments held by Consolidated Sponsored Investment FundsCIPs in order to obtain cash for use in the Company’s operations.

 

 

September 30, 2023

 

(in millions)

 

GAAP
Basis

 

 

Separate
Account
Assets/
Collateral
(1)

 

 

CIPs(2)

 

 

As
Adjusted

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

7,316

 

 

$

 

 

$

322

 

 

$

6,994

 

Accounts receivable

 

 

3,886

 

 

 

 

 

 

 

 

 

3,886

 

Investments

 

 

9,835

 

 

 

 

 

 

2,101

 

 

 

7,734

 

Separate account assets and collateral held
   under securities lending agreements

 

 

56,346

 

 

 

56,346

 

 

 

 

 

 

 

Operating lease right-of-use assets

 

 

1,429

 

 

 

 

 

 

 

 

 

1,429

 

Other assets(3)

 

 

5,966

 

 

 

 

 

 

155

 

 

 

5,811

 

Subtotal

 

 

84,778

 

 

 

56,346

 

 

 

2,578

 

 

 

25,854

 

Goodwill and intangible assets, net

 

 

33,807

 

 

 

 

 

 

 

 

 

33,807

 

Total assets

 

$

118,585

 

 

$

56,346

 

 

$

2,578

 

 

$

59,661

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Accrued compensation and benefits

 

$

1,796

 

 

$

 

 

$

 

 

$

1,796

 

Accounts payable and accrued liabilities

 

 

1,217

 

 

 

 

 

 

 

 

 

1,217

 

Borrowings

 

 

7,884

 

 

 

 

 

 

 

 

 

7,884

 

Separate account liabilities and collateral
   liabilities under securities lending agreements

 

 

56,346

 

 

 

56,346

 

 

 

 

 

 

 

Deferred income tax liabilities(4)

 

 

3,448

 

 

 

 

 

 

 

 

 

3,448

 

Operating lease liabilities

 

 

1,780

 

 

 

 

 

 

 

 

 

1,780

 

Other liabilities

 

 

5,483

 

 

 

 

 

 

621

 

 

 

4,862

 

Total liabilities

 

 

77,954

 

 

 

56,346

 

 

 

621

 

 

 

20,987

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

Total BlackRock, Inc. stockholders’ equity

 

 

38,627

 

 

 

 

 

 

 

 

 

38,627

 

Noncontrolling interests

 

 

2,004

 

 

 

 

 

 

1,957

 

 

 

47

 

Total equity

 

 

40,631

 

 

 

 

 

 

1,957

 

 

 

38,674

 

Total liabilities and equity

 

$

118,585

 

 

$

56,346

 

 

$

2,578

 

 

$

59,661

 

 

 

September 30, 2017

 

(in millions)

 

GAAP

Basis

 

 

Separate

Account

Assets/

Collateral(1)

 

 

Consolidated Sponsored Investment Funds(2)

 

 

As

Adjusted

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

6,165

 

 

$

 

 

$

63

 

 

$

6,102

 

Accounts receivable

 

 

3,183

 

 

 

 

 

 

 

 

 

3,183

 

Investments

 

 

1,928

 

 

 

 

 

 

28

 

 

 

1,900

 

Assets of consolidated VIEs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

82

 

 

 

 

 

 

82

 

 

 

 

Investments

 

 

1,286

 

 

 

 

 

 

238

 

 

 

1,048

 

Other assets

 

 

46

 

 

 

 

 

 

46

 

 

 

 

Separate account assets and collateral held

   under securities lending agreements

 

 

175,369

 

 

 

175,369

 

 

 

 

 

 

 

Other assets(3)

 

 

1,882

 

 

 

 

 

 

8

 

 

 

1,874

 

Subtotal

 

 

189,941

 

 

 

175,369

 

 

 

465

 

 

 

14,107

 

Goodwill and intangible assets, net

 

 

30,626

 

 

 

 

 

 

 

 

 

30,626

 

Total assets

 

$

220,567

 

 

$

175,369

 

 

$

465

 

 

$

44,733

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accrued compensation and benefits

 

$

1,614

 

 

$

 

 

$

 

 

$

1,614

 

Accounts payable and accrued liabilities

 

 

1,652

 

 

 

 

 

 

 

 

 

1,652

 

Liabilities of consolidated VIEs

 

 

319

 

 

 

 

 

 

319

 

 

 

 

Borrowings

 

 

5,000

 

 

 

 

 

 

 

 

 

5,000

 

Separate account liabilities and collateral

   liabilities under securities lending agreements

 

 

175,369

 

 

 

175,369

 

 

 

 

 

 

 

Deferred income tax liabilities(4)

 

 

4,966

 

 

 

 

 

 

 

 

 

4,966

 

Other liabilities

 

 

1,230

 

 

 

 

 

 

(229

)

 

 

1,459

 

Total liabilities

 

 

190,150

 

 

 

175,369

 

 

 

90

 

 

 

14,691

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders’ equity

 

 

30,042

 

 

 

 

 

 

 

 

 

30,042

 

Noncontrolling interests

 

 

375

 

 

 

 

 

 

375

 

 

 

 

Total equity

 

 

30,417

 

 

 

 

 

 

375

 

 

 

30,042

 

Total liabilities and equity

 

$

220,567

 

 

$

175,369

 

 

$

465

 

 

$

44,733

 

(1)
Amounts represent segregated client assets and related liabilities, in which BlackRock has no economic interest. BlackRock earns an investment advisory fee for the service of managing these assets on behalf of its clients.
(2)
Amounts represent the impact of consolidating CIPs.
(3)
Amount includes property and equipment and other assets.
(4)
Amount includes approximately $4.3 billion of deferred income tax liabilities related to goodwill and intangibles.

(1)

Amounts represent segregated client assets generating advisory fees in which BlackRock has no economic interest or liability.

(2)

Amounts represent the portion of assets and liabilities of Consolidated Sponsored Investment Funds attributable to NCI.

(3)

Amounts include property and equipment and other assets.

(4)

Amount includes approximately $5.6 billion of deferred income tax liabilities 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 of September 30, 20172023 and December 31, 20162022 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 September 30, 2017 and December 31, 20162023 included $73$322 million and $53 million, respectively, of cash held by consolidated VREsCIPs (see Liquidity and Capital Resources for details on the change in cash and cash equivalents during the nine months ended September 30, 2017)2023).

Accounts receivable at September 30, 20172023 increased $833$622 million from December 31, 20162022, primarily due to higher base fee and technology services receivables.Investments at September 30, 2023 increased $2.4 billion from December 31, 2022 (for more information see Investments herein). Goodwill and intangible assets at September 30, 2023 increased $164 million from December 31, 2022, primarily due to the Kreos Transaction, partially offset by the amortization of intangible assets. Other assets at September 30, 2023 increased $1.5 billion from December 31, 2022, primarily related to an increase in unit trust receivables (substantially offset by an increase in unit trust payables recorded within accounts payable and accruedother liabilities) and higher BlackRock mutual funds, iShares ETFs and performance fee receivables. Investments were $1,928 million at September 30, 2017 (for more information see Investments herein). Goodwill and intangible assets increased $145 million from December 31, 2016, primarily due to the First Reserve Transaction and Cachematrix Transaction,, partially offset by $77 million of amortization of intangible assets. Other assets (including property and equipment) increased $258 milliona decrease in due from December 31, 2016, primarily related to an increase in current taxes receivable, certain strategic investments and other assets.parties.

57


Liabilities. Accrued compensation and benefits at September 30, 20172023 decreased $266$476 million from December 31, 2016,2022, primarily due to 20162022 incentive compensation cash payments in the first quarter of 2017,2023, partially offset by 20172023 incentive compensation accruals. Accounts payable and accruedOther liabilities at September 30, 20172023 increased $558 million$1.9 billion from December 31, 20162022, primarily due to higher unit trust payables (substantially offset by an increase in unit trust receivables recorded within accounts receivable).

other assets) and an increase in the deferred carried interest liability. Net deferred income tax liabilities at September 30, 20172023 increased $126$67 million partiallyfrom December 31, 2022, primarily due to the effects of temporary differences associated with stock-based compensation and intangibles. The change also reflects the revaluation of certain deferred income tax liabilities as a result of domestic state and local tax changes. Other liabilities increased $223 million from December 31, 2016, primarily related to an increase in contingent liabilities related to the First Reserve Transaction, uncertain tax positions, and other operating liabilities.Kreos Transaction.

Investments and Investments of Consolidated VIEs61


Investments

The Company’s investments were $9.8 billion and investments of consolidated VIEs (collectively, “Total Investments”) were $1,928 million and $1,286 million, respectively,$7.5 billion at September 30, 2017. Total2023 and December 31, 2022, respectively. Investments include consolidated investments held by sponsored investment fundsCIPs accounted for as VREsVIEs and VIEs.VREs. Management reviews BlackRock’s Total Investmentsinvestments on an “economic” basis, which eliminates the portion of Total Investmentsinvestments 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 Total Investments,investments, as adjusted, to enable investors to understand the portion of Total Investmentsinvestments 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 deferred cash compensation investments and hedged investments,exposures, to reflect another helpful measure for investors. The economic impact of Total Investmentsinvestments held pursuant to deferred cash compensation arrangementsplans is substantially offset by a change in associated compensation expense.  Theexpense, and the impact of certainthe portfolio of seed investments is substantially mitigated by swap hedges.futures entered into as part of the Company's macro hedging strategy. 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 in Federal Reserve Bank stock, which is not subject to market or interest rate risk, is excluded from the Company’s net economic investment exposure.

 

 

September 30,

 

 

December 31,

 

(in millions)

 

2023

 

 

2022

 

Investments, GAAP

 

$

9,835

 

 

$

7,466

 

Investments held by CIPs

 

 

(6,349

)

 

 

(4,669

)

Net interest in CIPs(1)

 

 

4,248

 

 

 

3,622

 

Investments, as adjusted

 

 

7,734

 

 

 

6,419

 

Investments related to deferred cash compensation plans

 

 

(252

)

 

 

 

Hedged exposures

 

 

(1,578

)

 

 

(1,461

)

Federal Reserve Bank stock

 

 

(92

)

 

 

(91

)

Carried interest

 

 

(1,945

)

 

 

(1,550

)

Total “economic” investment exposure(2)

 

$

3,867

 

 

$

3,317

 

58

(1)
Amounts included $1.9 billion and $1.5 billion of carried interest (VIEs) as of September 30, 2023 and December 31, 2022, respectively, which has no impact on the Company’s “economic” investment exposure.
(2)
Amounts do not include investments in strategic minority investments included in other assets on the condensed consolidated statements of financial condition.

62


 

 

September 30,

 

 

December 31,

 

(in millions)

 

2017

 

 

2016

 

Investments, GAAP

 

$

1,928

 

 

$

1,595

 

Investments held by consolidated VIEs, GAAP

 

 

1,286

 

 

 

1,008

 

Total Investments

 

 

3,214

 

 

 

2,603

 

Investments held by consolidated VIEs

 

 

(1,286

)

 

 

(1,008

)

Investments held by consolidated VREs

 

 

(507

)

 

 

(465

)

Net interest in consolidated VREs

 

 

479

 

 

 

444

 

Net interest in consolidated VIEs(1)

 

 

1,048

 

 

 

840

 

Total Investments, as adjusted

 

 

2,948

 

 

 

2,414

 

Federal Reserve Bank stock

 

 

(90

)

 

 

(89

)

Deferred compensation investments

 

 

(58

)

 

 

(66

)

Hedged investments

 

 

(538

)

 

 

(614

)

Carried interest (VIEs/VREs)

 

 

(280

)

 

 

(126

)

Total “economic” investment exposure

 

$

1,982

 

 

$

1,519

 

(1)

Amount includes $260 million of carried interest (VIEs) as of September 30, 2017 and $108 million as of December 31, 2016, which has no impact on the Company’s “economic” investment exposure.

The following table represents the carrying value of the Company’s economic investment exposure, by asset type, at September 30, 20172023 and December 31, 2016:2022:

 

 

September 30,

 

 

December 31,

 

(in millions)

 

2023

 

 

2022

 

Equity/Fixed income/Multi-asset(1)

 

$

2,776

 

 

$

2,423

 

Alternatives:

 

 

 

 

 

 

Private equity

 

 

1,429

 

 

 

1,207

 

Real assets

 

 

467

 

 

 

368

 

Other alternatives(2)

 

 

773

 

 

 

780

 

Alternatives subtotal

 

 

2,669

 

 

 

2,355

 

Hedged exposures

 

 

(1,578

)

 

 

(1,461

)

Total “economic” investment exposure

 

$

3,867

 

 

$

3,317

 

 

 

September 30,

 

 

December 31,

 

(in millions)

 

2017

 

 

2016

 

Private equity

 

$

333

 

 

$

334

 

Real assets

 

 

304

 

 

 

94

 

Other alternatives(1)

 

 

254

 

 

 

245

 

Other investments(2)

 

 

1,091

 

 

 

846

 

Total “economic” investment exposure

 

$

1,982

 

 

$

1,519

 

(1)
Amounts include seed investments in equity, fixed-income, and multi-asset mutual funds/strategies.
(2)
Other alternatives primarily include co-investments in credit funds, direct hedge fund strategies, and hedge fund solutions.

(1)

Other alternatives include distressed credit/mortgage funds/opportunistic funds and hedge funds/funds of hedge funds.

(2)

Other investments primarily include seed investments in fixed income, equity and multi-asset mutual funds/strategies as well as U.K. government securities, primarily held for regulatory purposes.

As adjusted investment activity for the nine months ended September 30, 20172023 was as follows:

(in millions)

Nine Months
Ended
September 30, 2023

 

Investments, as adjusted, beginning balance

$

6,419

 

Purchases/capital contributions

 

1,142

 

Sales/maturities

 

(542

)

Distributions(1)

 

(68

)

Market appreciation(depreciation)/earnings from equity method investments

 

392

 

Carried interest capital allocations/(distributions)

 

395

 

Other(2)

 

(4

)

Investments, as adjusted, ending balance

$

7,734

 

(in millions)

 

 

 

 

Total Investments, as adjusted, December 31, 2016

 

$

2,414

 

Purchases/capital contributions

 

 

830

 

Sales/maturities

 

 

(603

)

Distributions(1)

 

 

(67

)

Market appreciation(depreciation)/earnings from equity method investments

 

 

183

 

Carried interest capital allocations/(distributions)/acquired

 

 

154

 

Other

 

 

37

 

Total Investments, as adjusted, September 30, 2017

 

$

2,948

 

(1)
Amount includes distributions representing return of capital and return on investments.
(2)
Amount includes the impact of foreign exchange movements.

(1)

Amount includes distributions representing return of capital and return on investments.

5963


LIQUIDITY AND CAPITAL RESOURCES

BlackRock Cash Flows Excluding the Impact of Consolidated Sponsored Investment FundsCIPs

The condensed consolidated statements of cash flows include the cash flows of the Consolidated Sponsored Investment Funds.CIPs. The Company uses an adjusted cash flow statement, which excludes the impact of Consolidated Sponsored Investment Funds,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 Consolidated Sponsored Investment Funds,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 Consolidated Sponsored Investment Funds:CIPs:

(in millions)

GAAP
Basis

 

 

Impact on
Cash Flows
of CIPs

 

 

Cash Flows
Excluding
Impact of
CIPs

 

Cash, cash equivalents and restricted cash, December 31, 2022

$

7,433

 

 

$

265

 

 

$

7,168

 

Net cash provided by/(used in) operating activities

 

2,167

 

 

 

(958

)

 

 

3,125

 

Net cash provided by/(used in) investing activities

 

(773

)

 

 

21

 

 

 

(794

)

Net cash provided by/(used in) financing activities

 

(1,489

)

 

 

994

 

 

 

(2,483

)

Effect of exchange rate changes on cash, cash equivalents
   and restricted cash

 

(5

)

 

 

 

 

 

(5

)

Net increase/(decrease) in cash, cash equivalents and restricted cash

 

(100

)

 

 

57

 

 

 

(157

)

Cash, cash equivalents and restricted cash, September 30, 2023

$

7,333

 

 

$

322

 

 

$

7,011

 

(in millions)

 

GAAP

Basis

 

 

Impact on

Cash Flows

of Consolidated

Sponsored Investment Funds

 

 

Cash Flows

Excluding

Impact of

Consolidated

Sponsored Investment Funds

 

Cash and cash equivalents, December 31, 2016

 

$

6,091

 

 

$

53

 

 

$

6,038

 

Cash flows from operating activities

 

 

2,486

 

 

 

(252

)

 

 

2,738

 

Cash flows from investing activities

 

 

(490

)

 

 

(52

)

 

 

(438

)

Cash flows from financing activities

 

 

(2,083

)

 

 

324

 

 

 

(2,407

)

Effect of exchange rate changes on cash and cash

   equivalents

 

 

161

 

 

 

 

 

 

161

 

Net change in cash and cash equivalents

 

 

74

 

 

 

20

 

 

 

54

 

Cash and cash equivalents, September 30, 2017

 

$

6,165

 

 

$

73

 

 

$

6,092

 

Sources of BlackRock’s operating cash primarily include investment advisory, administrationbase fees and securities lending revenue, performance fees, revenue from technology and risk management services revenue, advisory and other revenue and distribution fees. BlackRock uses its cash to pay all operating expense,expenses, interest and principal on borrowings, income taxes, dividends on BlackRock’s capital stock,and repurchases of the Company’s stock, acquisitions, capital expenditures and purchases of co-investments and seed investments.

For details of the Company’s GAAP cash flows from operating, investing and financing activities, see the Condensed Consolidated Statementscondensed consolidated statements of Cash Flowscash flows contained in Part I, Item 1 of this filing.

Cash flows fromprovided by/(used in) operating activities, excluding the impact of Consolidated Sponsored Investment Funds,CIPs, primarily include the receipt of investment advisory and administrationbase fees, securities lending revenue, and performance fees and technology services revenue, offset by the payment of operating expenses incurred in the normal course of business, including year-end incentive and deferred cash compensation accrued forduring prior years, and income tax payments.

Cash flows used in the prior year.

Cash outflows from investing activities, excluding the impact of Consolidated Sponsored Investment Funds,CIPs, for the nine months ended September 30, 20172023 were $438$794 million and primarily reflected $404$411 million of net investment purchases, $100$220 million of purchases of property and equipment, $73and $189 million related to the First Reserve Transaction and $29 million related to the Cachematrix Transaction, partially offset by $142 million of net proceeds from sales and maturities of certain investments.Kreos Transaction.

Cash outflows fromflows used in financing activities, excluding the impact of Consolidated Sponsored Investment Funds,CIPs, for the nine months ended September 30, 20172023 were $2,407 million,$2.5 billion, primarily resulting from $1,133 million$2.3 billion of cash dividend payments, and $1.5 billion of share repurchases, including $825 million$1.1 billion in open market transactions and $308 million$0.4 billion of employee tax withholdings related to employee stock transactions, $1,259 million of cash dividend payments and $700 million of repayments of long-term borrowings, partially offset by $697 million$1.2 billion of proceeds from issuance of long-term borrowings.

6064


The Company manages its financial condition and funding to maintain appropriate liquidity for the business. Management believes that the Company’s liquid assets, continuing cash flows from operations, borrowing capacity under the Company’s existing revolving credit facility and uncommitted commercial paper private placement program, provide sufficient resources to meet the Company’s short-term and long-term cash needs, including operating, debt and other obligations as they come due and anticipated future capital requirements. Liquidity resources at September 30, 20172023 and December 31, 20162022 were as follows:

 

September 30,

 

 

December 31,

 

(in millions)

2023

 

 

2022

 

Cash and cash equivalents

$

7,316

 

 

$

7,416

 

Cash and cash equivalents held by CIPs(1)

 

(322

)

 

 

(265

)

Subtotal(2)

 

6,994

 

 

 

7,151

 

Credit facility – undrawn

 

5,000

 

 

 

4,700

 

Total liquidity resources

$

11,994

 

 

$

11,851

 

 

 

September 30,

 

 

December 31,

 

(in millions)

 

2017

 

 

2016

 

Cash and cash equivalents(1)

 

$

6,165

 

 

$

6,091

 

Cash and cash equivalents held by consolidated VREs(2)

 

 

(73

)

 

 

(53

)

Subtotal

 

 

6,092

 

 

 

6,038

 

Credit facility – undrawn

 

 

4,000

 

 

 

4,000

 

Total liquidity resources(3)

 

$

10,092

 

 

$

10,038

 

(1)
The Company cannot readily access such cash and cash equivalents to use in its operating activities.
(2)
The percentage of cash and cash equivalents held by the Company’s US subsidiaries was approximately 55% and 50% at both September 30, 2023 and December 31, 2022, respectively. See Net Capital Requirements herein for more information on net capital requirements in certain regulated subsidiaries.

(1)

The percentage of cash and cash equivalents held by the Company’s U.S. subsidiaries was approximately 40% and 50% at September 30, 2017 and December 31, 2016, respectively.  See Net Capital Requirements herein for more information on net capital requirements in certain regulated subsidiaries.

(2)

The Company cannot readily access such cash to use in its operating activities.

(3)

Amount at December 31, 2016 does not reflect year-end incentive compensation accruals of approximately $1.3 billion, which were paid in the first quarter of 2017.

Total liquidity resources increased $54$143 million during the nine months ended September 30, 2017,2023, primarily reflecting cash flows from other operating activities, $1.2 billion of proceeds from long-term borrowings and a $300 million increase in the aggregate commitment amount under the credit facility, partially offset by cash dividend payments of 2016 year-end incentive awards,$2.3 billion, share repurchases of $1,133$1.5 billion and $189 million and cash dividend payments of $1,259 million.  related to the Kreos Transaction.

A significant portion of the Company’s $2,948 million$7.7 billion of Total Investments,investments, as adjusted, is illiquid in nature and, as such, cannot be readily convertible to cash.

Share Repurchases. In January 2017,2023, the Company announced that the Board of Directors approvedauthorized the repurchase of an increase inadditional seven million shares under the Company's existing share repurchase program for a total of up to approximately 7.9 million shares that may beof BlackRock common stock. The timing and actual number of shares repurchased will depend on a variety of factors, including legal limitations, price and market conditions.

During the nine months ended September 30, 2023, the Company repurchased 1.6 million common shares under the Company’s existing share repurchase program to allow for the repurchase of an additional 6 million shares for a total up to 9 million shares of BlackRock common stock.

The Company repurchased 2.1 million common shares in open market transactions under the share repurchase program for approximately $825 million during the nine months ended September 30, 2017.$1.1 billion. At September 30, 2017,2023, there were 6.9approximately 6.3 million shares still authorized to be repurchased.repurchased under the program.

Net Capital Requirements. The Company is required to maintain net capital in certain regulated subsidiaries within a number of jurisdictions, which is partially maintained by retaining cash and cash equivalent investments in those subsidiaries or jurisdictions. As a result, such subsidiaries of the Company may be restricted in their ability to transfer cash between different jurisdictions and to their parents. Additionally, transfers of cash between international jurisdictions including repatriation to the United States, may have adverse tax consequences that could discourage such transfers.

BlackRock Institutional Trust Company, N.A. (“BTC”) is chartered as a national bank that does not accept client deposits or make commercial loans and whose powers are limited to trust and other fiduciary activities. BTC provides investment management and other fiduciary services, including investment advisory and securities lending agency services, to institutional clients. BTC is subject to regulatory capital and liquid asset requirements administered by the US Office of the Comptroller of the Currency.

At September 30, 20172023 and December 31, 2016,2022, the Company was required to maintain approximately $1.7$1.8 billion and $1.4$2.2 billion, respectively, in net capital in certain regulated subsidiaries, including BTC, entities regulated by the Financial Conduct Authority and Prudential Regulation Authority in the United Kingdom,UK, and the Company’s broker-dealers. The Company was in compliance with all applicable regulatory net capital requirements.

65


Short-Term Borrowings

20172023 Revolving Credit Facility.The Company’sCompany maintains an unsecured revolving credit facility has anwhich is available for working capital and general corporate purposes (the “2023 credit facility”). In March 2023, the 2023 credit facility was amended to, among other things, (1) increase the aggregate commitment amount of $4.0by $300 million to $5 billion, and was amended in April 2017 to(2) extend the maturity date to April 2022 (the “2017 credit facility”March 2028 and (3) change the secured overnight financing rate (“SOFR”). adjustment to 10 bps per annum for all SOFR-based borrowings. The 20172023 credit facility permits the Company to request up to an additional $1.0 billion of borrowing capacity, subject to lender credit approval, increasingwhich could increase the overall size of the 20172023 credit facility to an aggregate principal amount notof up to exceed $5.0$6 billion. Interest on borrowings outstanding accrues at a rate based on the applicable London Interbank Offered Rate plus a spread. The 20172023 credit facility requires the Company not to exceed a maximum leverage ratio (ratio of net debt to earnings before interest, taxes, depreciation and amortization, where net debt equals total debt less unrestricted cash) of 3 to 1, which was satisfied with a ratio of less than 1 to 1 at September 30, 2017. The 2017 credit facility provides back-up liquidity to fund ongoing working capital for general corporate purposes and various investment opportunities.2023. At September 30, 2017,2023, the Company had no amount outstanding under the 20172023 credit facility.

61


Commercial Paper Program.The Company can issue unsecured commercial paper notes (the “CP Notes”) on a private-placement basis up to a maximum aggregate amount outstanding at any time of $4.0$4 billion. The commercial paper program is currently supported by the 20172023 credit facility. At September 30, 2017,2023, BlackRock had no CP Notes outstanding.

Long-Term Borrowings

At September 30, 2017,2023, the principal amount of long-term borrowingsnotes outstanding was $5.0$7.9 billion. See Note 12, 15, Borrowings, in the 20162022 Form 10-K for more information on overall borrowings outstanding as of December 31, 2016.2022.

During the nine months ended September 30, 2023, the Company paid approximately $140 million of interest on long-term notes. Future principal repayments and interest requirements at September 30, 2023 were as follows:

(in millions)

 

 

 

 

 

 

 

 

 

Year

 

Principal

 

 

Interest

 

 

Total
Payments

 

Remainder of 2023

 

$

 

 

$

58

 

 

$

58

 

2024

 

 

1,000

 

 

 

210

 

 

 

1,210

 

2025(1)

 

 

741

 

 

 

193

 

 

 

934

 

2026

 

 

 

 

 

183

 

 

 

183

 

2027

 

 

700

 

 

 

172

 

 

 

872

 

2028

 

 

 

 

 

161

 

 

 

161

 

Thereafter

 

 

5,500

 

 

 

452

 

 

 

5,952

 

Total

 

$

7,941

 

 

$

1,429

 

 

$

9,370

 

(1)
The amounts related to the 2025 Notes are calculated using the EUR/USD foreign exchange rate as of September 30, 2023.

In March 2017,May 2023, the Company issued $700 million$1.25 billion in aggregate principal amount of 3.20%4.75% senior unsecured and unsubordinated notes maturing on March 15, 2027May 25, 2033 (the “2027“2033 Notes”). The net proceeds of the 2033 Notes are being used for general corporate purposes, which may include the future repayment of all or a portion of the $1.0 billion 3.50% Notes maturing in March 2024. Interest of approximately $59 million per year is payable semi-annually on March 15May 25 and September 15November 25 of each year, commencing September 15, 2017, and is approximately $22 million per year.on November 25, 2023. The 20272033 Notes may be redeemed prior to maturity at any timethe option of the Company, in whole or in part, at the optionany time prior to February 25, 2033 at a "make-whole" redemption price, or thereafter at 100% of the Company at a “make-whole” redemption price.principal amount of the 2033 Notes, in each case plus accrued but unpaid interest. The unamortized discount and debt issuance costs are being amortized over the remaining term of the 20272033 Notes.

In April 2017, the net proceeds of the 2027 Notes were used to fully repay $700 million in aggregate principal amount outstanding of 6.25% notes prior to their maturity in September 2017.Commitments and Contingencies

During the nine months ended September 30, 2017, the Company paid approximately $149 million of interest on long-term borrowings. Future principal repayments and interest requirements at September 30, 2017 were as follows:

(in millions)

 

 

 

 

 

 

 

 

 

 

 

 

Year

 

Principal

 

 

Interest

 

 

Total

Payments

 

Remainder of 2017

 

$

 

 

$

54

 

 

$

54

 

2018

 

 

 

 

 

175

 

 

 

175

 

2019

 

 

1,000

 

 

 

175

 

 

 

1,175

 

2020

 

 

 

 

 

125

 

 

 

125

 

2021

 

 

750

 

 

 

109

 

 

 

859

 

2022

 

 

750

 

 

 

80

 

 

 

830

 

Thereafter(1)

 

 

2,528

 

 

 

184

 

 

 

2,712

 

Total

 

$

5,028

 

 

$

902

 

 

$

5,930

 

__________________________

(1)

The amount of principal and interest payments for the 2025 Notes (issued in Euros) represents the expected payment amounts using foreign exchange rates as of September 30, 2017.

Investment Commitments. At September 30, 2017,2023, the Company had $328$774 million of various capital commitments to fund sponsored investment funds,products, including consolidated VIEs.CIPs. These fundsproducts include various illiquid alternative products, including private equity funds and real assets funds and opportunistic funds. This amount excludes additional commitments made by consolidated funds of funds to underlying third-party funds as third-party noncontrolling interest holders have the legal obligation to fund the respective commitments of such funds of funds. Generally, the timing of the funding of these commitments is unknown and the commitments are callable on demand at any time prior to the expiration of the commitment. These unfunded commitments are not recorded on the condensed consolidated statements of financial condition. These commitments do not include potential future commitments approved by the Company that are not yet legally binding. The Company intends to make additional capital commitments from time to time to fund additional investment products for, and with, its clients.

Lease Commitment.  In May 2017, the Company entered into an agreement with 50 HYMC Owner LLC, for the lease of approximately 847,000 square feet of office space located at 50 Hudson Yards, New York, New York. The term of the lease is twenty years from the date that rental payments begin, expected to occur in May 2023, with the option to renew for a specified term.

6266


Future minimum commitments of annual base rental payments under this operating lease are as follows:

(in millions)

 

 

 

Year

Amount

 

2023

$

34

 

2024

 

51

 

2025

 

51

 

2026

 

51

 

2027

 

51

 

Thereafter

 

1,007

 

Total

$

1,245

 

Contingent Payments Related to Business Acquisitions.     In connection with certain acquisitions, BlackRock is required to make contingent payments, subject to achieving specified performance targets, which may include revenue related to acquired contracts or new capital commitments for certain products.  The fair value of the remaining aggregate contingent payments at September 30, 2017 totaled $228 million, including $125 million related to the First Reserve Transaction, and is included in other liabilities on the condensed consolidated statements of financial condition.

Carried Interest Clawback.    As a general partner in certain investment funds, including private equity partnerships and certain hedge funds, the Company may receive carried interest cash distributions from the partnerships in accordance with distribution provisions of the partnership agreements. The Company may, from time to time, be required to return all or a portion of such distributions to the limited partners in the event the limited partners do not achieve a return as specified in the various partnership agreements. Therefore, BlackRock records carried interest subject to such clawback provisions in Total Investments, or cash/cash of consolidated VIEs to the extent that it is distributed, and as a deferred carried interest liability/other liabilities of consolidated VIEs on its condensed consolidated statements of financial condition. Carried interest is recorded as performance fees on BlackRock’s condensed consolidated statements of income upon the earlier of the termination of the investment fund or when the likelihood of clawback is considered mathematically improbable.

Indemnifications.    On behalf of certain clients, the Company lends securities to highly rated banks and broker-dealers. In these securities lending transactions, the borrower is required to provide and maintain collateral at or above regulatory minimums. Securities on loan are marked to market daily to determine if the borrower is required to pledge additional collateral. BlackRock has issued certain indemnifications to certain securities lending clients against potential loss resulting from a borrower’s failure to fulfill its obligations under the securities lending agreement should the value of the collateral pledged by the borrower at the time of default be insufficient to cover the borrower’s obligation under the securities lending agreement. At September 30, 2017, the Company indemnified certain of its clients for their securities lending loan balances of approximately $197.6 billion. The Company held, as agent, cash and securities totaling $210.6 billion as collateral for indemnified securities on loan at September 30, 2017. The fair value of these indemnifications was not material at September 30, 2017.

While the collateral pledged by a borrower is intended to be sufficient to offset the borrower’s obligations to return securities borrowed and any other amounts owing to the lender under the relevant securities lending agreement, in the event of a borrower default, the Company can give no assurance that the collateral pledged by the borrower will be sufficient to fulfill such obligations. If the amount of such pledged collateral is not sufficient to fulfill such obligations to a client for whom the Company has provided indemnification, BlackRock would be responsible for the amount of the shortfall. These indemnifications cover only the collateral shortfall described above, and do not in any way guarantee, assume or otherwise insure the investment performance or return of any cash collateral vehicle into which securities lending cash collateral is invested.

63


Critical Accounting Policies and Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expense during the reporting periods. Actual results could differ significantly from those estimates. These estimates, judgments and assumptions are affected by the Company’s application of accounting policies. Management considers the following critical accounting policies importantand estimates critical to understanding the condensed consolidated financial statements. These policies and estimates are considered critical because they had a material impact, or are reasonably likely to have a material impact on the Company’s condensed consolidated financial statements and because they require management to make significant judgments, assumptions or estimates. For a summary of these and additional accounting policies, see Note 2, Significant Accounting Policies, in the notes to the condensed consolidated financial statements contained in Part I, Item 1 of this filing and statements. In addition, see Critical Accounting Policies and Estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2016 Form 10-K and Note 2, Significant Accounting Policies, in the 20162022 Form 10-K for further information.

Consolidation. In the normal course of business,The Company consolidates entities in which the Company ishas a controlling financial interest. The company has a controlling financial interest when it owns a majority of the manager of various types of sponsored investment vehicles. The Company performs an analysis for investment products to determine if the productVRE or is a VIE orprimary beneficiary (“PB”) of a VRE.VIE. Assessing whether an entity is a VIE or a VRE involves judgment and analysis.analysis on a structure-by-structure basis. Factors considered in this assessment include the entity’s legal organization, the entity’s capital structure, the rights of equity investment holders, the Company’s contractual involvement with and equity ownership,economic interest in the entity and any related party or de facto agent implications of the Company’s involvement with the entity. InvestmentsEntities that are determined to be VREs are consolidated if the Company can exert control over the financial and operating policies of the investee, which generally exists if there is greater than 50% voting interest. See Note 4, Consolidated Voting Rights Entities, in the notes to the condensed consolidated financial statements for more information. Investments that are determined to be VIEs are consolidated if the Company is the primary beneficiary (“PB”)PB of the entity.

At September 30, 2017, BlackRock was determined to be the PB for certain investment funds that were determined to be VIEs, which required BlackRock to consolidate them. BlackRock wasis deemed to be the PB becauseof a VIE if it (1) has the power to direct the activities that most significantly impact the entities’ economic performance and (2) has the obligation to absorb losses or the right to receive benefits that potentially could be significant to the VIE. There is judgment involved in assessing whether the Company is the PB of a VIE. In addition, the Company’s ownership interest in VIEs is subject to variability and is impacted by actions of other investors such as on-going redemptions and contributions. The Company generally consolidates VIEs in which it holds an equity ownershipeconomic interest of 10% or greater and deconsolidates such VIEs once equity ownershipits economic interest falls below 10%. As of September 30, 2023, the Company was deemed to be the PB of 109 VIEs. See Note 5, Variable Interest EntitiesConsolidated Sponsored Investment Products, in the notes to the condensed consolidated financial statements for more information.

Fair Value Measurements.    Measurements.The Company’s assessment of the significance of a particular input to the fair value measurement according to the fair value hierarchy (i.e., Level 1, 2 and 3 inputs, as defined) in its entirety requires judgment and considers factors specific to the financial instrument. See Note 2, Significant Accounting Policies, and Note 7, Fair Value Disclosures, in the notes to the condensed consolidated financial statements for more information on fair value measurements.

Investment Advisory Performance Fees / Carried Interest. The Company receives investment advisory performance fees, orincluding incentive allocations (carried interest) from certain actively managed investment funds and certain separately managed accounts.accounts ("SMAs"). These performance fees are dependent upon exceeding specified relative or absolute investment return thresholds. Such fees are recorded upon completion of the measurement period,thresholds, which variesvary by product or account, and could beinclude monthly, quarterly, annuallyannual or longer.longer measurement periods.

In addition,Performance fees, including carried interest, are recognized when it is determined that they are no longer probable of significant reversal (such as upon the sale of a fund’s investment or when the investment performance exceeds a contractual threshold at the end of a specified measurement period). Given the unique nature of each fee arrangement, contracts with customers are evaluated on an individual basis to determine the timing of revenue recognition. Significant judgment is involved in making such determination. Performance fees typically arise from investment management services that began in prior reporting periods. Consequently, a portion of the fees the Company recognizes may be partially related to the services performed in prior periods that meet the recognition criteria in the current period. At each reporting date, the Company considers various factors in estimating performance fees to be recognized, including carried interest. These factors include but are not limited to whether: (1) the amounts are dependent on the financial markets and, thus, are highly susceptible to factors outside the Company’s influence; (2) the ultimate payments have a large number and a broad range of possible amounts; and (3) the funds or SMAs have the ability to (a) invest or reinvest their sales proceeds or (b) distribute their sales proceeds and determine the timing of such distributions.

The Company is allocatedallocated/distributed carried interest from certain alternative investment products upon exceeding performance thresholds. BlackRockThe Company may be required to reverse/return all, or part, of such carried interest allocationsallocations/distributions depending upon future performance of these funds. Therefore, BlackRock records carriedproducts. Carried interest subject to such clawback provisions is recorded in Total Investments,investments or cash/cash of consolidated VIEsand cash equivalents to the extent that it is distributed, on its condensed

67


consolidated statements of financial condition. Carried interest is recorded as performance fee revenue upon the earlier of the termination of the investment fund or when the likelihood of clawback is considered mathematically improbable.

The Company records a liability for deferred carried interest liability to the extent it receives cash or capital allocations related to carried interest prior to meeting the revenue recognition criteria. At September 30, 20172023 and December 31, 2016,2022, the Company had $303 million$1.9 billion and $152 million,$1.4 billion, respectively, of deferred carried interest recorded in other liabilities/other liabilities of consolidated VIEs on the condensed consolidated statements of financial condition. A portion of the deferred carried interest liability willmay also be paid to certain employees.employees and other third parties. The ultimate timing of the recognition of performance fee revenue and related compensation expense, if any, for these products is unknown.

64


The following table presents SeeNote 15, Revenue, in the notes to the condensed consolidated financial statements for detailed changes in the deferred carried interest liability (including the portion related to consolidated VIEs)balance for the three and nine months ended September 30, 20172023 and 2016:2022.

68

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in millions)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Beginning balance

 

$

280

 

 

$

131

 

 

$

152

 

 

$

143

 

Net increase (decrease) in unrealized allocations

 

 

23

 

 

 

8

 

 

 

52

 

 

 

7

 

Performance fee revenue recognized

 

 

 

 

 

(11

)

 

 

(12

)

 

 

(22

)

Acquisition

 

 

 

 

 

 

 

 

111

 

 

 

 

Ending balance

 

$

303

 

 

$

128

 

 

$

303

 

 

$

128

 


Accounting Developments

Recent Accounting Pronouncements Not Yet Adopted.

Revenue from Contracts with Customers.    In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance also changes the accounting for certain contract costs and revises the criteria for determining if an entity is acting as a principal or agent in certain arrangements. The Company continues to evaluate the impact of ASU 2014-09 on the presentation and recognition of its revenue contracts and certain contract costs. The most significant change identified to date relates to the presentation of certain distribution costs, which are currently presented net against revenues (contra-revenue) and will likely be presented as an expense on a gross basis. The Company currently expects such net gross up to annual revenue to be approximately $1 billion with a corresponding gross up to annual expense. Consequently, the Company expects its GAAP operating margin to decline upon adoption of the new guidance due to the gross up of revenue. However, it currently does not expect any material impact to its as adjusted operating margin. The Company is currently evaluating which transition method it will apply when it adopts the new revenue recognition guidance in the first quarter of 2018.

For accounting pronouncements that the Company adopted during the nine months ended September 30, 2017 and for additional recent accounting pronouncements not yet adopted, see Note 2, Significant Accounting Policies, in the condensed consolidated financial statements contained in Part I, Items 1 of this filing.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

AUM Market Price Risk. BlackRock’s investment advisory and administration fees are primarily comprised of fees based on a percentage of the value of AUM and, in some cases, performance fees expressed as a percentage of the returns realized on AUM. At September 30, 2017,2023, the majority of the Company’s investment advisory and administration fees were based on average or period end AUM of the applicable investment funds or separate accounts. Movements in equity market prices, interest rates/credit spreads, foreign exchange rates or all three could cause the value of AUM to decline, which would result in lower investment advisory and administration fees.

Corporate Investments Portfolio Risks.As a leading investment management firm, BlackRock devotes significant resources across all of its operations to identifying, measuring, monitoring, managing and analyzing market and operating risks, including the management and oversight of its own investment portfolio. The Board of Directors of the Company has adopted guidelines for the review of investments (or commitments to invest) to be made by the Company, requiring, among other things, that investments be reviewed by certain senior officers of the Company, and that certain investments may be referred to the Audit Committee or the Board of Directors, depending on the circumstances, for notification or approval.

In the normal course of its business, BlackRock is exposed to equity market price risk, interest rate/credit spread risk and foreign exchange rate risk associated with its corporate investments.

65


BlackRock has investments primarily in sponsored investment products that invest in a variety of asset classes, including real assets, private equity and hedge funds. Investments generally are made for co-investment purposes, to establish a performance track record, to hedge exposure to certain deferred cash compensation plans or for regulatory purposes. Currently, theThe Company has a seed capital hedging program in which it enters into swapsfutures to hedge market and interest rate exposure with respect to certain investments. At September 30, 2017, theits total portfolio of seed investments in sponsored investment products. The Company had outstanding total return swapsfutures related to its seed capital hedging program with an aggregate notional value of approximately $538 million.  $1.6 billion and $1.5 billion at September 30, 2023 and December 31, 2022, respectively.

At September 30, 2017, there were no outstanding interest rate swaps.

At September 30, 2017,2023, approximately $1.8$6.3 billion of BlackRock’s Total Investmentsinvestments were maintained in consolidated sponsored investment fundsproducts accounted for as VREs and VIEs.variable interest entities or voting rights entities. Excluding the impact of the Federal Reserve Bank stock, carried interest, investments made to hedge exposure to certain deferred cash compensation plans and certain investments that are hedged via the seed capital hedging program, the Company’s economic exposure to its investment portfolio is $1,982 million.$3.9 billion. See Balance Sheet Overview- Investments and InvestmentsStatement of Consolidated VIEs Financial Condition Overview-Investments in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations for further information on the Company’s Total Investments.investments.

Equity Market Price Risk.At September 30, 2017,2023, the Company’s net exposure to equity market price risk in its investment portfolio was approximately $816 million$1.6 billion of the Company’s total economic investment exposure. Investments subject to market price risk include public and private equity and real assets investments, hedge funds and funds of funds as well as mutual funds. The Company estimates that a hypothetical 10% adverse change in market prices would result in a decrease of approximately $81.6$160 million in the carrying value of such investments.

Interest Rate/Credit Spread Risk. At September 30, 2017,2023, the Company was exposed to interest-rateinterest rate risk and credit spread risk as a result of approximately $1,166 million$2.3 billion of Total Investmentsinvestments in debt securities and sponsored investment products that invest primarily in debt securities. Management considered a hypothetical 100 basis point fluctuation in interest rates or credit spreads and estimates that the impact of such a fluctuation on these investments, in the aggregate, would result in a decrease, or increase, of approximately $20.3$60 million in the carrying value of such investments.

Foreign Exchange Rate Risk.As discussed above, the Company invests in sponsored investment products that invest in a variety of asset classes. The carrying value of the total economic investment exposure denominated in foreign currencies, primarily the British pound and Euro,euro, was $404 millionapproximately $1.1 billion at September 30, 2017.2023. A 10% adverse change in the applicable foreign exchange rates would result in approximately a $40.4$111 million decline in the carrying value of such investments.

Other Market Risks. The Company executes forward foreign currency exchange contracts to mitigate the risk of certain foreign exchange risk movements. At September 30, 2017,2023, the Company had outstanding forward foreign currency exchange contracts with an aggregate notional value of approximately $1.3 billion.$2.4 billion, with expiration dates in October 2023. In addition, the Company entered into futures to hedge economically the exposure to market movements on certain deferred cash compensation plans. At September 30, 2023, the Company had outstanding exchange traded futures with aggregate notional values related to its deferred cash compensation hedging program of approximately $182 million, with expiration dates during the fourth quarter of 2023.

69


Item 4. Controls and Procedures

Disclosure Controls and Procedures. Under the direction of BlackRock’s Chief Executive Officer and Chief Financial Officer, BlackRock evaluated the effectiveness of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, BlackRock’s Chief Executive Officer and Chief Financial Officer have concluded that BlackRock’s disclosure controls and procedures were effective.

Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 20172023 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

6670


PART II – OTHER INFORMATION

From time to time, BlackRock receives subpoenas or other requests for information from various U.S. federal, state governmental and domestic and international regulatory authorities in connection with certain industry-wide or other investigations or proceedings. It is BlackRock’s policy to cooperate fully with such inquiries. The Company and certain of its subsidiaries have been named as defendants in various legal actions, including arbitrations and other litigation arising in connection with BlackRock’s activities. Additionally, BlackRock advised investment portfolios may be subject to lawsuits, any of which potentially could harm the investment returnsFor a discussion of the applicable portfolio or resultCompany’s legal proceedings, see Note 14, Commitments and Contingencies, in the Company being liablenotes to the portfolios for any resulting damages.condensed consolidated financial statements of this Form 10-Q.

71


On May 27, 2014, certain purported investorsItem 1A. Risk Factors

In addition to the other information set forth in this report, the BlackRock Global Allocation Fund, Inc. and the BlackRock Equity Dividend Fund (collectively, the “Funds”) filed a consolidated complaint (the “Consolidated Complaint”)risks discussed in the U.S. District CourtBlackRock's Annual Report on Form 10-K for the District of New Jersey against BlackRock Advisors, LLC, BlackRock Investment Management, LLCyear ended December 31, 2022 could materially affect our business, financial condition, operating results and BlackRock International Limited under the caption In re BlackRock Mutual Funds Advisory Fee Litigation. The Consolidated Complaint, which purports to be brought derivatively on behalf of the Funds, alleges that the defendants violated Section 36(b) of the Investment Company Act by receiving allegedly excessive investment advisory fees from the Funds. On February 24, 2015, the same plaintiffs filed another complaint in the same court against BlackRock Investment Management, LLC and BlackRock Advisors, LLC. The allegations and legal claims in both complaints are substantially similar, with the new complaint purporting to challenge fees received by defendants after the plaintiffs filed their prior complaint. Both complaints seek, among other things, to recover on behalf of the Funds all allegedly excessive advisory fees received by defendants in the twelve month period preceding the start of each lawsuit, along with purported lost investment returns on those amounts, plus interest. The defendants believe the claims in both lawsuits are without merit and intend to vigorously defend the actions.  On September 25, 2017, the defendants filed a motion for summary judgment to dismiss the lawsuit.nonoperating results.

Between November 12, 2015 and November 16, 2015, BlackRock, Inc., BlackRock Realty Advisors, Inc. (“BRA”), BlackRock US Core Property Fund, Inc. (formerly known as BlackRock Granite Property Fund, Inc.) (“Granite Fund”), and certain other Granite Fund related entities (collectively, the “BlackRock Parties”) were named as defendants in thirteen lawsuits filed in the Superior Court of the State of California for the County of Alameda arising out of the June 16, 2015 collapse of a balcony at the Library Gardens apartment complex in Berkeley, California (the “Property”). The Property is indirectly owned by the Granite Fund, which is managed by BRA. The plaintiffs also named as defendants in the lawsuits Greystar, which manages the Property, and certain other non-BlackRock related entities, including the developer of the Property, building contractors and building materials suppliers. The plaintiffs allege, among other things, that the BlackRock Parties were negligent in their ownership, control and maintenance of the Property’s balcony, and seek monetary, including punitive, damages. Additionally, on March 16, 2016, three former tenants of the Library Gardens apartment unit that experienced the balcony collapse sued the BlackRock Parties. The former tenants, who witnessed (but were not physically injured in) the accident make allegations virtually identical to those in the other previously filed actions and claim that, as a result of the collapse, they suffered unspecified emotional damage. Several defendants also filed cross-complaints alleging a variety of claims, including claims against the BlackRock Parties for contribution, negligence, and declaratory relief. BlackRock, Inc. believes the claims against it are without merit and intends to vigorously defend the actions. A trial on all claims is scheduled to begin on February 5, 2018.  

On June 16, 2016, iShares Trust, BlackRock, Inc. and certain of its advisory affiliates, and the directors and certain officers of the iShares ETFs were named as defendants in a purported class action lawsuit filed in California state court.  The lawsuit was filed by investors in certain iShares ETFs (the "ETFs"), and alleges the defendants violated the federal securities laws, purportedly by failing to adequately disclose in prospectuses issued by the ETFs the risks to the ETFs’ shareholders in the event of a "flash crash."  Plaintiffs seek unspecified monetary damages. The Plaintiffs’ complaint was dismissed in December 2016 and on January 6, 2017, plaintiffs filed an amended complaint. The defendants filed a motion for judgment on the pleadings dismissing that complaint. On September 18, 2017, the court dismissed the lawsuit.

On April 5, 2017, BlackRock, Inc., BlackRock Institutional Trust Company, N.A. (“BTC”), the BlackRock, Inc. Retirement Committee and various sub-committees, and a BlackRock employee were named as defendants in a purported class action lawsuit brought in the U.S. District Court for the Northern District of California by a former employee on behalf of all BlackRock employee 401(k) Plan (the “Plan”) participants and beneficiaries in the Plan from

6772


April 5, 2011, to the present.  The lawsuit generally alleges that the defendants breached their duties towards Plan participants in violation of the Employee Retirement Income Security Act of 1974 by, among other things, offering investment options that were overly expensive, underperformed peer funds, focused disproportionately on active versus passive strategies, and were unduly concentrated with investment options managed by BlackRock.  While the complaint does not contain any specific amount in alleged damages, it claims that the purported underperformance and hidden fees cost Plan participants more than $60 million. On October 10, 2017, the plaintiffs filed an Amended Complaint, which, among other things, adds as defendants certain current and former members of the BlackRock Retirement and Investment Committees.  The Amended Complaint also includes a new purported class claim on behalf of investors in certain Collective Trust Funds (“CTFs”) managed by BTC.  Specifically, the plaintiffs allege that BTC exercised fiduciary authority over its compensation for securities lending services to the CTFs.  The defendants believe the claims in this lawsuit are without merit and intend to vigorously defend the action.

Management, after consultation with legal counsel, currently does not anticipate that the aggregate liability arising out of regulatory matters or lawsuits will have a material effect on BlackRock’s results of operations, financial position, or cash flows. However, there is no assurance as to whether any such pending or threatened matters will have a material effect on BlackRock’s results of operations, financial position or cash flows in any future reporting period. Due to uncertainties surrounding the outcome of these matters, management cannot reasonably estimate the possible loss or range of loss that may arise from these matters.  


68


Item 2. Unregistered Sales of EquityEquity Securities, and Use of Proceeds, and Issuer Purchases of Equity Securities

During the three months ended September 30, 2017,2023, the Company made the following purchases of its common stock, which is registered pursuant to Section 12(b) of the Exchange Act.

 

 

Total Number
of Shares
Purchased
(1)

 

 

 

Average
Price Paid
per Share

 

 

Total Number
of Shares
Purchased
as Part of
Publicly
Announced

Plans or
Programs

 

 

Maximum
Number of
 Shares
that
May Yet Be
Purchased
Under the
Plans or
Programs
(1)

 

July 1, 2023 through July 31, 2023

 

 

165,353

 

 

 

$

739.65

 

 

 

154,138

 

 

 

6,672,170

 

August 1, 2023 through August 31, 2023

 

 

353,007

 

 

 

$

691.60

 

 

 

346,762

 

 

 

6,325,408

 

September 1, 2023 through September 30, 2023

 

 

34,448

 

 

 

$

702.46

 

 

 

29,677

 

 

 

6,295,731

 

Total

 

 

552,808

 

 

 

$

706.65

 

 

 

530,577

 

 

 

 

(1)
Consists of purchases made by the Company primarily to satisfy income tax withholding obligations of employees and members of the Company’s Board of Directors related to the vesting of certain restricted stock unit awards and purchases made by the Company as part of the share repurchase program that the Company announced in July 2010, which initially authorized the repurchase of 5.1 million shares with no stated expiration. In January 2023, the Company announced that the Board of Directors authorized the repurchase of an additional seven million shares under the Company’s existing share repurchase program, for a total of up to approximately 7.9 million shares of BlackRock common stock.

73


Item 6. Exhibits

 

 

Total Number

of Shares

Purchased

 

 

 

Average

Price Paid

per Share

 

 

Total Number of

Shares

Purchased as

Part of Publicly

Announced Plans

or Programs

 

 

Maximum

Number of

Shares that May

Yet Be

Purchased Under

the Plans or

Programs(1)

 

July 1, 2017 through July 31, 2017

 

 

198,234

 

(2)

 

$

427.31

 

 

 

183,716

 

 

 

7,407,531

 

August 1, 2017 through August 31, 2017

 

 

439,530

 

(2)

 

$

422.69

 

 

 

427,122

 

 

 

6,980,409

 

September 1, 2017 through September 30, 2017

 

 

39,343

 

(2)

 

$

419.40

 

 

 

37,753

 

 

 

6,942,656

 

Total

 

 

677,107

 

 

 

$

423.85

 

 

 

648,591

 

 

 

 

 

_______________________

(1)Exhibit No.

In January 2017, the Board of Directors authorized the repurchase of an additional 6 million shares under the Company’s existing share repurchase program for a total of up to 9 million shares of BlackRock common stock.

(2)

Includes purchases made by the Company primarily to satisfy income tax withholding obligations of employees and members of the Company’s Board of Directors related to the vesting of certain restricted stock or restricted stock unit awards and purchases made by the Company as part of the publicly announced share repurchase program.

69


Item 6.    Exhibits

Exhibit No. 

Description

 12.13.1(1)

ComputationAmended and Restated Bylaws of Ratio of Earnings to Fixed ChargesBlackRock

31.1

Section 302 Certification of Chief Executive Officer

31.2

Section 302 Certification of Chief Financial Officer

32.1

Section 906 Certification of Chief Executive Officer and Chief Financial Officer

101.INS

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

70


EXHIBIT INDEX

Exhibit No.

Description

 12.1104

Computation of Ratio of Earnings to Fixed ChargesCover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

 31.1

Section 302 Certification of Chief Executive Officer

 31.2

Section 302 Certification of Chief Financial Officer

 32.1

Section 906 Certification of Chief Executive Officer and Chief Financial Officer

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

(1)
Incorporated by reference to BlackRock's Current Report on Form 8-K filed on September 15, 2023.

7174


SIGNATURES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BLACKROCK, INC.

(Registrant)

By:

   /s/ Gary/s/ Martin S. ShedlinSmall

Date: November 8, 20176, 2023

   GaryMartin S. ShedlinSmall

Senior Managing Director &

Chief Financial Officer

(Principal Financial Officer)

75

72