BLK - Earnings call transcript Q2 2018

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Operator

Good morning. My name is Jamie, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the BlackRock Incorporated Second Quarter 2018 Earnings Teleconference.

Our host for today's call will be Chairman and Chief Executive Officer, Laurence D. Fink; Chief Financial Officer, Gary S. S. Robert President, Shedlin; Counsel, General Christopher and J. Kapito; Instructions]. [Operator Meade Thank you. Mr. Meade, begin your conference. you may

Christopher J. Meade

everyone. Good Meade, the am General Chris morning, I Counsel of BlackRock.

I of from may BlackRock’s actual begin, during these your attention forward-looking statements. we would may fact remind call to Before that the you statements. the We course a of this make we results to call, number of like that course differ

results which of BlackRock duty has to to BlackRock may filed lists SEC some statements. know, the that today. of any you update from As cause and materially with the BlackRock differ see undertake what factors the reports forward-looking does we not no assumes

that, Gary. with So it will over to I turn

Gary S. Shedlin

quarter and everyone. Thanks, good of to It's morning, present pleasure this Chris, my XXXX. second results for

to over his financial Larry I our review results. it and I'll Before performance turn comments, business offer to

GAAP While results. as-adjusted and financial our information, as-adjusted discloses release will on focusing earnings primarily both be I

are investment flattening In all current Market After accounting the caused tensions, face quarter this Investor technology a integrated became Last of differentiators, greater investment trade second month, year-over-year and them to revenue dialogues us they investment how spreads. escalating than on BlackRock's globally yield recognition any on portfolio future. strategic financial standard, referenced we position than reach before and ever to clarity to As comprehensive uncertain reversed products time the pull in in investors markets paused, emerging evolving distribution management XXXX, back. investment having the Day, have start FASB’s slowdown as Aladdin a and reflecting Xst. their advice, January richer results tensions, concerns reflecting described ongoing deferring inflationary a have and clients financials like with volatility until and uncertainty credit needs widening in effective of with and we quarter landscape, at a the array throughout trade unparalleled reminder, continued business times outperform, adoption curve our to tools quarter, XXXX global markets, and comparisons relate strong which capabilities are our will and history. digital mid-first these. our call recast increased on an decisions Client especially for construction greater at

breadth enables inflows in any Our billion growth in our invest business plans globally of were well-positioned to ensure Despite factors, are active, cash second capabilities diversified current flows inflows continually the index generated model the generated the and over BlackRock across and we evidencing stay including market the of illiquid total to representing environment. XX long-term positive months, $XX Net asset organic in us strategies strategic total last quarter. and seeking in serve to to X% industry flows, alternatives. growth. BlackRock indices, over has committed in clients our $XXX billion market slowdown investment total net alpha cap-weighted

ago, rose driven increased lower share quarter in tax XX% was up while operating year to a compared of and current of income billion XX% $X.XX Earnings by quarter. effective billion $X.X $X.X of per Second revenue operating a the XX%. higher results year-over-year, rate

second for estimate a Our that tax XX% now approximately projected reasonable We tax was for quarter rate XXXX. run-rate as-adjusted remainder XX%. the is of the

and a legislation. changes reform tax the of last may to or issuance or consequence additional analysis of differ as our However, effective on tax actual items guidance non-recurring of rate discrete year's

performance a AUM organic appreciation despite and $X.X lower and million hedge growth were revenue lending and $XX result broad-based year-over-year total of Second the equity fund improved $XX oriented and only second fees XX% in count quarter. securities base Performance loan primarily over quarter million XX of fees relative funds last platform. increased up flat Sequentially, driven base solutions a higher as by levels fees seasonally base of the direct of day market X% due average billion our fee months. year-over-year, higher and were to

of in demand base advisory for technology Advisory digital remains a services reflected to and quarter and technology the in for XX% our Overall, our revenue distribution wealth in Continued strong quarter fees. other and bolstered technologies both revenue quarterly $XX services timing of resulted million of contributes several growth momentum significant financial in services. year-over-year revenue. were Aladdin results of client markets institutional gains go-lives. expansion range by full solutions, which strong technology Current and

more markets. expense led or of future year-over-year, categories X% remains volume-related seasonally was year-over-year, expense of significant incentive associated and reflecting in even operating continued across and X% technology growth by Employee up reflecting up year-over-year, driven of planned increased down headcount expense expense. million higher our reflecting portfolio Direct taxes. Sequentially, compensation, Our levels services. X%, primarily in lower compensation variety steadfast, by was million higher expense employer and year-over-year, AUM growth fund primarily a compensation increased driven payroll $XX result up challenging XX% and franchise. or a compensation and higher G&A benefit average benefit $XX commitment for higher iShares Total $XX investment by investment was million was higher as income. with investing expense in to G&A,

a especially XXX Our margin-aware, as-adjusted optimize organic remain up to was current year-over-year. the basis continue efficient XX.X% the in We growth points in most quarter offense margin play to second possible. order way in environment operating of but

returning to shareholders. committed cash to remain flow also We excess

quarterly $X.XX an in share or increase On at we expect to share. this increase to share share from this per increase $XX.XX Day, dividend per of our XX% per approval $X.XX $X share. basis, represents per As from dividend of Board an annualized Investor announced to our we $XX a per XXXX our see to week dividend

net net from continued Institutional associated well momentum continued various alternative index repatriation resources. of inflows during We multi-asset in long-term investors insurance-related the outflows our additional primarily fund. non-U.S. quarter, of book, tactical liquidity flows second sought inflows inflows active net income institutional continued from our income $XX the $X M&A $X during as outflows driven as raised current fee by Global second by fee were solutions. mix the net products also by in investors’ Despite cash liquid activity Fixed year Retail of of for in as date natural by driven management quarter generated outflow clients $X derisked, billion by annualized our with franchise. of active quarter. in billion the allocation the products. paced inflows net core and were and our raising event-driven repurchased Illiquid partially demand activity clients associated losses net non-core environment. iShares significant associated fund positive with our net risk market fee iShares fund during Equity target commitments $X into higher alternative or rebalanced both offset base transactions. income reflected Institutional worth passive quarterly business. index significant Institutional part of in Quarterly for shift growth billion, driven million with $X client strategies offerings. during drove LDI the active uncertainty resulted by billion inflow and and net Flows net billion led strong were fixed slowed decisions. multi-asset investing continued $X activity outflows in with inflows organic has continued into billion have in billion outflows, of equities income, impacted active billion, an in were billion both of shares as in the quarter. fixed equity outflows of higher an additional $XX common cash $XXX derisking $XX positive demand demand reflected and net

acquisition as asset third We augmenting the of of Capital and also meet Partners evolving close and scheduled of diverse needs. solutions goal investment credit our in announced providing a range to clients advancing their position a leading, quarter, to products our manager, with Tennenbaum alternate the global

quarter business difficult inflows clients saw our billion is quarterly the to BlackRock’s scale a for $X industry differentiated net repatriated payments, both of by business and product leading cash cash strategy despite distribution technology-first management tax resonating management seasonal Finally, performance. and and breadth, driven as with

market have at few volatility the and years. business through uncertainty past various managed times over our We

focused During strategically positioning we for on each ourselves remained intensely long-term instance, growth.

in Our will already are strong and fastest growing to proposition prudently and resilient over opportunities Larry. we our I in extending to platform value our investing With continue enables that, turn it where us areas market those leaders.

Laurence D. Fink

questions the free morning, strongest further Strong Good have impacting flows. international the as by in reaching continue investors’ up remained their And for January, the a significantly, strong the Gary. everyone. hands joining highs again. policy Mexico, Political some Thank equity changing risk. around and markets and and Most to recalibrated XXXX call. elevated as ramped volatility clients to in has and in Governments you close thank quarter other has all-time second Italy decisions you, are confidence. challenge of elections offset circumstances components global the frictions uncertainty expansion new U.S. and economic to being markets. and to international uncertainty foundational rising are barriers protectionism potential levels. of growth trade These capital are of earnings for trades being open investing growth markets, markets global rates, to and escalate heightened are economic unfortunately and tested that exchange and been supported the due years After

at shares of make not should the behavior using capital levels and since in markets pool as excess the dynamic demand equities XXXX, past. are positive has environment aggressively such market supply repurchasing seen shrinking. more the not for the investable but it corporate acquisitions the Additionally, has current rewarded companies is and Over time, to and be

breadth If the a outperforming the stocks, of troubling. is tech equity handful of you in out markets strip lack

a better to term for understand Clients wait. rates a shifting, X%, XX have dynamics a risk made now think place those at a are clients uncertainty, point. almost years. not more stand rates they to about struggling safe and but have are place the future. market are flattening by seen as in a curve level profitable We pause surpassed cash These also Short and pivotal investors and rising and causing to now increased not

XX%, of active inflows, industry caution We share diverse of continues Revenues the increased investment flows, income XX% per billion index global BlackRock earnings platform. year-over-year. increased across benefit value investors’ in from cash XX%, positive has our and second $XX quarter. and increased our net to total and While generated impacted operating the technology

like and We markets before. have seen this uncertainty

BlackRock technology, more frequency, clients never long-term positioned at We to asset dialogues clients The and the in relationships and institutional BlackRock BlackRock’s focus construction, portfolio to believe to our allocation long-term The remain investments needs industry and made stay alternative future deepen to the address impactful us This strategically ahead partnerships with is and more local constantly distribution where strengthen on investments remain more deliver and and have and taking our both clients’ global active investing we position value in our with clients. index, wealth out means clients opportunities. platforms, we our investment improving uncertainty, this -- been and grapple reaching momentum. most more the have with our our to platform capture scale becoming our and markets We date of As in more to trends with to serve globally that they’re shareholders. with operate to stronger. intact. advantage better and of technologies our the

with movements react has period around elevated and last year-to-date flows clients year. institutional As up the same to substantially relative uncertainties, the been market to world activity growth

equity driving hesitant Similar our to outsource quarter, been in complex Pension to client been clients saw in index U.S. from have while which assets of and of outsourced have shifted the new in also as U.S. business, quarter. and looking flows is second repurchases within put landscape, behavior influenced M&A. a impact our clients investment in based muted fund investment investment are an both have States ongoing tax CIO A However, last allocations reform to the result. number United responsibilities liquidity internationally. share to to and institutional they the clients increasingly work momentum more assets net strategies,

incentives resilient equity also combination strong seeing and levels as create rising LDI for portfolios. in their markets momentum clients of to immunize a discussions We’re rates

differentiated delivering corporate to Our retirement a long-term results. commitment is to clients also solution generating

XX% our We organic $X target to LifePath, interest the quarter, -- capabilities. representing our service asset generated see in allocation inflows series has in customized continue and in date net billion annualized growth. target date

than less again liquidity-driven captured the quarter, $XX in into And users one and for This volatility of billion interquarter flows share year-to-date. net core investors’ the portfolio of iShares. the portfolios hold Because be ETFs once number buy adoption clients ETF they of to global inflows sensitive to positioning drove long-term, BlackRock their at tend the of ETFs.

index of strategically clients. invested propositions to with our range for have exposures provide We high-quality a value

growth secular equities alpha believe and Growth the and end trillion clients generation are increasingly our by core in ETFs both clients. income have more fee-based global models for managers engagements swaps assets businesses. by in nature holistic confident We using trillion market advisory ETF are of exposures. $XX that futures in opportunities reach in and the the are be fixed and between world Institutions and deep and managers globally to the is advisors Wealth using as can ETFs, similar are with their of tools we in BlackRock's with relationships $XX institutional non-core ETFs And for replacement becoming increasingly and more wealth ecosystems. And products. the fee-based we and XXXX. driven will using long-term

our clients $X and $X were our represents provide active portfolios strategies consecutive with in driven technology second municipal generated flows, manage net fixed growing BlackRock's at we of both who quarter. by net our retail to and our bonds of strategies. advisors inflows and billion tools are top active solutions Inflows digital and funds. demand inflow our whole sixth leveraging each momentum billion with income portfolio ETFs to financial strong and performing construct This drove ability our mutual the quarter using where and Our unconstrained risk

fixed quarter in globally unconstrained. at strategies of fixed period. U.S. quartile. The the the from priced flows unconstrained the XX% for XX% assets one income rate benchmark to value United team's income income platform products we of are fixed particularly rising income remained in space gathering environment. diverse and Performance end Our good use duration performance strong achieved with performing BlackRock's flow for tools tax States where active sophisticated across the a for of in wealth of are scenario year income median the above well-positioned top analytics, number strength strong were assets of delivering at fixed our franchise Aladdin position of testing reflects We technology, offerings peer short quarter, fixed and the are and lowest one across the or our risk

XX% client alternatives, In Our more the net any XX% and peer active of active equities, of fund and or year point assets history. driving in performance is for foundation in systematic our BlackRock's medians than for Strong our benchmark above fundamental one momentum delivering outcomes were seeing equity inflows. raisings period. we’re

a the robust expertise Over by organically last invested differentiated comprehensive we've supported few distribution. both and and years, platform capabilities, investment and inorganically to skilled sourcing build alternative

illiquid focus see these for us our in position credit platform, illiquid across billion commitments through to are in second in especially key alternative We alternative beginning in investments space. We’re and flows our strong in $X private in performance the quarter. benefits the areas and well which billion infrastructure $X raised leading BlackRock and of business additional

strategy further in private commitments, represents over debt middle private platform quarter, capabilities global expanding market $X with Europe. we a in progress credit in which establishing significant European leading and our During the our closed billion

to the strategy. make fund industry. close diverse and $X.X also the our week third investment global global the first We commitments And continue set long-term energy platform progress and last from of infrastructure clients. strong of we a private with energy our as our in leading The billion power first in in close position reinforces capital announced power

benefits strategies one generated BlackRock’s Technology manage the X past driven that a tech-enabled a seen provides cash strategy seeing we of largest in of and a is differentiator model. We true using cash and global goals. as priorities billion of decade. earning between of this $XXX another attractive our management the assets. levels X.X%, Clients $X BlackRock asset benefits not aligns returns, in especially And we are net one not also scale where at The cash with in environment. This gaining differentiators safe distribution. market long-term and by are cash strategic highlights quarter, diverse for share. area in BlackRock. one inflows is approximately our but the the business structure is are billion their and only tremendous Cash in and client as interest that now

Aladdin like managers are globally Aladdin for Provider Cachematrix. and ways and Wealth, regulatory to digital looking wealth consolidation in custodial operate Insurers rethinking managers, and and Asset models These increased facing Institutional more efficiently. business technology BlackRock’s are their requirements. regulatory driving banks banks are involving and tools demand for changes services, Aladdin, broad-based

through Aladdin management For an community. those institutions, to and It powerful investment Provider scale, investment service Aladdin managers execution, is for entire compliance Aladdin, for to tools custodians Wealth, trade a investment broad, to Aladdin benefit who single as wealth a trends platform, simplicity. the operating from continues is solution assets and on global management from bringing sophisticated process also to well as analytics system, those enterprise solutions to and wealth efficiency portfolio through construction institutional the operations. favoring multi-asset powering

technology reflecting outsized in number live grew of clients going revenues on Our platform services quarter. Aladdin the the XX% an year-over-year, institutional

continue expect double-digit forward. growth to in going to teens the We low range mid

longer and needs enhance partner before. on way like than the science questions. these, opportunities We them. I want But offer before pause. depth, With investors investing this our on differentiating we is opportunities markets and are today invest, to that on proposition that, that term we’ve reflective near-term globe. in put focused clients seen artificial and the markets are clients we we it the up let’s greater distribute clients believe to in across value way in premium can open with caused their prepared that the dialogue for have we we better by Indeed, to to are we how in to even technology we BlackRock believe intelligence operate. data with these like saying the of that having quality needs client the This meet the ever and clients an

Operator

from Instructions] [Operator question line our first the with of comes Citigroup. Bill And Katz

Bill Katz

Thank taking this everyone. much for the morning. morning, you question Good very

your Larry, you teens to back to this is quarter think I So, for half about Is the When second a the of here, point of teens discussion. to year-on-year. quarter-on-quarter, sort you I’d the were things to to technology turned start rate sort your you into assumption -- think the good which and ramp seems of momentum mid second low growth like of circle that of guidance -- low sort there there or It nice sort like mid few said, said from further into to we quarter. during on build a year of is then that ‘XX? very that

Laurence D. Fink

that very pleased all and rate I haven’t are institutional Gary will a is Well, we live. said as it’s Gary having I in years the But, and going live that the some with dialogues run clients prepared year more solutions specifics. And a baseline. we my Aladdin the of into The am how these so higher. long we we am technology tend more. I took, had our for adjusted ago on to I we fair as think answer say use And rate. and wins two that to I went large little conversions to very let let growing, yet remarks, ramp a ago, depending go two -- went but is

Gary S. Shedlin

think answered I Well, Larry, you it. I think

forward the I of then but going a the the as and of sequential function increases obviously rate -- obviously there it’s year-over-year becomes think timing. what’s change the question

outsized continue on will number going quarter the of benefit. and reflect did live So, platform an platform of said, to year-over-year growth as clients the Larry institutional significant XX% this the

our benefited that come July item into of The in is which play obviously other related of will timing smaller we to deal closed from revenue other we periods. the obviously Cachematrix XXXX, that

in So, periods’ that we year-over-year time about think revenue both will now as be changes.

Laurence D. Fink

related run said I And more clients growing I my and all level demand would But across good and Aladdin is to for for board. that it’s a Gary as add more conversations worldwide, Aladdin rate a to more services in services as are think just I’m thing benchmark. hearing the The one technology add both looking I and services. this.

Gary S. Shedlin

months periods it’s closer if to time. quarter-to-quarter probably continue think up are much we’ve which way look on we to is tend We’ll don’t this, focus at line the questions. of more look XX believe our always versus business. a for think longer But we say in months we with couple comparisons LTM forward. And to to basis answered We said, I XX think you of as a our at XX%, -- Aladdin, going best

Laurence D. Fink

Yes. momentum strong. the is But

Gary S. Shedlin

Absolutely.

Operator

with Suisse. next from Siegenthaler comes question Our Credit Craig

Craig Siegenthaler

And is term or looks more you like Can is slowdown -- a European the the your just it perspective specific. term on us of an anything this So, issue on softness? a thoughts than flows if in industry any problem? longer give shorter BlackRock this maybe issue

Laurence D. Fink

some and it from investing in been U.S. outflows investors has Well, had were they overseas their based that of money products. European

So, seeing the second reform wealth when that tax repatriated profits some the you’re quarter. money, be Two, in And the occurred of well seeing second dollar, quarter. appreciated of value taking to in there quite sovereign and some clients the the flows. because in that the funds, the in you’re de-risking still dollar of the we had some remains they

intact. And In say of the and seeing repatriation ever. outcomes of having the -- the from information global some time the event. tell different just are there. Europe to to of many one with cash, strong let’s trends. them cases, Eastern be of opportunities Europe, conversation would we’re a broad dialogues some Middle some of of clients would related European I enough spending bit But, I because are uncertainty. ever. But, a and I than back dollar came tension I large say the quarter very you, The But, is clear, trade. seeing diversion quite a growth have we’re you’re say, over would time, have long as But trends pause period don’t just deeper strong of So, I it’s if in

Operator

of Goldman Blostein question with Next Alex line from Sachs. the the comes

Alex Blostein

be to guys metrics Aladdin wondering making. back is the a was the us give around discussion you Aladdin for guys Aladdin can will wealth sort second, what Whether from maybe have XX are going months progress wealth? I the could guys in it’s any had, assets put for if of and contribution AUM over an sense update last helpful. you guess already them I on client for that platform Just you Again, the any

Robert S. Kapito

platform all So, a they XXX portfolios. new us, analyze better giving better the what doing of ability utilizing wealth instead technology returns, so suggest of their that is Aladdin, this and XXX we’re because risk the portfolios, that great for to portfolios, is managers we have in built and can

we're So, this this now over is that very their more and that we're business. using X,XXX are becoming advisors as very, significant big quite requests more individual for out, this. is and a building And technology are There in. building

to something that this models. be I going utilizing will utilizing think our people help that and So, will be some be is models, they will their

their suggesting to products better the portfolios have their that they better but they only to our might portfolios, have be the use portfolios. they in other products people's products in products will that comparing might clients' We not

clients. to this for better the is a deeper their for it's where to and into create institutional way investor, but help distributors for a our doing we're individual So, our what solutions utilizing this solutions take get we're business-to-business clients

excited we're this. So, about

is also to it And it, though already use us a have firms We while even get going implement to on people this. to it implemented. actually while this. a to It's takes that take several signed to us have

or future which So, we're case, especially of clients, excited again, the we're quarter. the wider to in flow on group of a this, from about and of it clients more comments, conversations Larry's very the following about excited with it. ability seeing up us the clients management have gives lot this And very retail wealth holistic this

Laurence D. Fink

one let me Alex, thing. just more add

hearing navigate as we said as to Aladdin better that to think advisors our loud, more they're retail thing better are consistency; But one Wealth understanding; wealth portfolio maybe Aladdin them Rob two Wealth they're money said, looking of this. the like clients it. looking tools for management conversion better I better them looking the one having clearly, very it and utilize client very years to to get allow affect are and long as and understanding using, Rob with transparency; for to they’re clients' models to navigate for takes

it a thing, distribution associated portfolios to those providing needs each more our a sure everyone's if the connected proposition. are our most-clear compliance so, a that of review, demand into the and process, investing portfolios making simplifies advisors creates with compliance understand This to of gives value allows a the and better types firm in all strength. portfolios. better better it us seeing clients meeting and opportunity client anything, we And differentiating environment with and are And importantly, plays of environment partners. for This for because the and I greater comparing the be great these we're risks what their risks products it the for the all would say,

issues solution deal it just a transparency. So, better more greater to it's client with product, them about a is not with enterprise providing with effectively their

Operator

question Worthington Morgan. JP line next from the comes of with Ken Your

Ken Worthington

seeing for we're the distribution commission-free like seems of platforms ETFs. use of It a morning. Good Hi. greater

ETF recently built we’ve more using expanded Schwab seen So, commission-free has and Ameritrade its this scratch approach, platform ETF use from Vanguard. both trading of by

sort guess, this and you do So, to the Larry, competition? ETF these trading evolution ETS? next think of And I commission-free is move of in maybe what

Robert S. Kapito

have to think the better; ETFs, I people and that that are people the ETFs, more -- the access of actually positive the more is This for the aware that Sure. better. us it’s

So, manufacturer frankly, benefits quite to is distribute we there here. the want it us. ETFs, groups if a are And cheaper way these that

have So, certainly the share, distributors, because largest to going distributing market with they’re But to value for ETFs, up aspects more that I and competitive people are us the plate price for process ETFs. do, of think one buying like the the the to a and we of it’s step the is better.

Operator

Your from is next Jefferies. question Dan Fannon with

Laurence D. Fink

Hey, Dan.

Dan Fannon

discuss morning. I $X discuss in broadly momentum that I of forward? you LifePath, that seeing kind talked detail? think about multi-asset Can business more about you a growth just bit flows more Good billion. guess, think in how Thanks. the business in and around the going that or to You can segment

Gary S. Shedlin

Sure, Dan.

multi-asset big is we’ve So, multi-asset want there think or you I three thing two said I question the think are right outset of at quarter. of think well, to drivers line that say really broader on that tables I our it’s multi-asset important just no to before of line and flows quarter. outcome-oriented very the billion is item I and there And flows solutions. the one in in not reconciliation to conflate financial But theme did the see investing know the you X the see items

mentioned, including for demand significant target offerings one you As custom a target client. solution for large data date continued

In pulls in continuing obviously about and and factor we to about of but in growth. overall necessarily solutions. invest global quarter. flow second of do we’re fee allo that That billion parts into higher that client to was a of and very multi-asset BlackRock models portfolio not itself on together relates that or does the organization flows And and has from that multi-asset continue than creates broader before some I see of revenue lots our is strategies drag LifePath fund construction fund. addition, and that obviously believe into note and That But rate think and itself strongly otherwise, in the category allocation to different fee do we’ve we global as each. outflows MAI $X being mentioned strong the said, relevant, $X based it as income billion

Operator

from line Patrick Davitt comes next Research. of Your with question the Autonomous

Patrick Davitt

second seeing maybe the speak are in of of saw you? you’re How and at within running pretty terms core the conversations of terms Good client longer in dated bond punchy You seeing dated the to point? category, a you quarter. from this movement products you’re pipeline bond in losses some Could in hills longer a what if morning. from stuff

Laurence D. Fink

I don’t that of think it was outflows. bigger

it think flows. less. now, of was billion fixed I'm -- least, the $X of $XX at right We saw I number or billion income getting but

the and maybe of there short belief are increase, momentum I to inflation long run think in over function duration, this greater is continue a at that going is long end to it’s in end. to than be investors’ reserves the long going a value tightening,

different change. there is many moving the of you real end into opportunities. believe you into end fixed don’t clients universe, dramatic see I short short or And many when end long there look long think, income when at any end. I times are it’s out

more continues and the we trend. we to think, I intermediate some I level emerging inflows think did outflows. was in there second the and short X trends income that’s and continue gains all to -- again, this -- If of be XX-year continue around now unconstrained, in quarter. duration, extraordinary strong see in I that’s the to municipals see very in outflows But, of -- maturity, is fixed type intermediate we if continue, XX-year. at and inflows the that And anything, think the so don’t anything

there’s think don’t any I trend. So big Rob?

Robert S. Kapito

in as just trend only is is you can a the as in Patrick, So, get get assets. today, a of good and in what his can yield remarks assets risk assets, mentioned opening risk-free risk combination Larry you that

of seen which that are compensated where out So, and getting therefore, we’ve to rates people come because yield risk-free not relative risk-free emerging and that interest rates. are has high where appropriate gone markets the the they considering would are rate flows enough

would when shorter there, be changes, be term, assets risk-free assets. the we it wouldn’t term see flows saw longer the versus it the flows. riskier other way. and So, that And just And we

it. the worried So term. for the really those and about investing long it’s market-oriented It’s that term short are we’re people versus not

Operator

line comes Michael Your Stanley. the next Morgan question of with from Cyprys

Michael Cyprys

Great.

question. the taking for thanks So,

emerge, true where flows wars in think where into? it on out think could do you fall we and if the classes, money we do asset of do see think tariff you Just what flows, terms asset of could curious see geographies impact you

Laurence D. Fink

more flow we would dollar-based into the generally strengthening of dollar. see it’ll assets, Well,

Does see probably I earnings, of uncertainties? GDP it are cheaper short It doesn’t, But, they from experiencing long it we’ve amount markets all great more had war, point would January would we the don’t had a where is the war negative. be So, really today the stock that that’s some dollar say run, than outright we it record purchases. were equity corporate record if does if this M&A, tariff create we have more in at now, from that may real accelerated on disrupt tariff U.S. in tax reform. growth the flows if depends In run. increased

So, and of has shrunk, the amount reduced. underlying equities PEs have

because the the uncertainty. of year-to-date Now from global -- level reduced PEs are from

if there some positive not. And there’s it’s would asymmetry itself markets would then lead if some some is here. Michael So, tariff more quite doesn’t say, the that there I reassert of that tariff market, the war, to clarification strongly. wars, probably is a priced of it’s into

upside will fallen to But be a trade, more have right then it’s If as there’s the PEs I leads GDP, I probably reduction than But, have a a year. now let’s of said, market the setback. beginning think the clear. in future downside. a from little

to all trying as market the we So, speak. is this digest

say, conversations But I’m I’ll witnessed the today uncertainty, and large So, my the opportunities in never said one client thing prepared have I around some this have I as remarks, are as we of and it. ever. with clients about pretty more calm this

clients in conversation, deeper to on design on these broader coming most could more I more of their are And thing relooking types say on and important having probably to different portfolios BlackRock. We’re risk conversations at clients is the scenarios. how their

Operator

next Glenn with Schorr of is Evercore from question line Your ISI.

Kaimon Chung

Hi. Glenn for Kaimon in This Schorr. Chung is

is and environment, in do XX% great heard growth G&A you too I held to you’re up I your comments. on spending you for see. the the offensive during improvement of margin But think not back and greatest in particular any year-over-year? think playing quarter margin-aware And

Laurence D. Fink

No.

Kaimon Chung

No?

Laurence D. Fink

to Gary into going I’m the No. details. get let

spending our We investing to adjusted future. have in not related our

to continue invest our to in going to stay our front needs. clients’ are We future in of

is less. margin the we’re expansion is, technology terms with more from seeing I better past do in able Gary? in efficiencies, our the think you’re investments and to created of what

Gary S. Shedlin

thanks, So, Larry.

really things. I what would with this now a spending of One just We So, went I right Larry. beginning we on year. echo couple are agree the into when is we spending planned

get impact current obviously thoughtful in trying spending more market. places to to greatest we the the in the as be We’re

with in what again I that that discussed length and we’re But, continuing Day. to want you market and about in spend. play talked heads we’ve with up, to our always as strategic forward, do to reallocation and and obviously the of Investor our at there’s are all at invest eyes continuing offense the we So, are rethinking initiatives that think there’s question no

generation, board, the So, of continuing key alpha illiquids, as especially said environment own in platform, be distribution, operating factors to markets. Larry portfolio to the digital in construction, technology think current more across maybe in ever local terms than even our important smartly where in about investing regions,

exactly so, right. And that’s think I

technology, trends again, talked to echoed from other -- markets, are look I year-over-year perspective. we positive ask the at overall. hand, we the Quarterly obviously On our growth in about would when are a we as -- margins even you basically

points closer think the this what trend last margin basis been we saw around rather improvement has over quarter. XX to months the I than of XX

And change a looking so, much our at quarter-to-quarter again, longer trends term operating necessarily on of more spend And than leverage basis. I quarter-to-quarter will think, on is a basis. indicative

Laurence D. Fink

As margin-aware. say, we're we constantly

Gary S. Shedlin

Especially in this environment.

Operator

from line Lee Your next with question comes the Robert KBW. of

Robert Lee

the flow B. to Good is of we my talk contribution while always line. and perspective, really from guess, organic bottom But, everyone. I flow really question maybe kind the well, guess, I -- morning, matters about A Hey. have will what growth a

can how a at how with of on too I that a I kind how been of know quarter you if maybe that but and kind on hinted bottom contribution just we don't little bit mean, you several line focus little would to give that the of mix, you I sense guess you mind, where But quarter, the one compares much -- it’s want in flows maybe at think quarters. to of last characterize So, look I kind this a bit.

Gary S. Shedlin

thanks. Rob, Good question. Yes.

that looked of did uncertainty a would say in alternatives. in shorter at fee our look If are on slowdown We strength that mentioned, quarter, is obviously, fee, as sentiment Japan in in a non-core equities this offering core. slowdown flows we there base-fee specifically to core come income. strength flagship and growth. by less primarily If think as duration organic for does in we those a we our quarter. Larry in in see saw broadly. lower was saw based EEM, fee shift more Europe, see liquid iShares seen but we investors some -- slowdown I the some with client of higher we driven fee as in at as a equities. So, we’ve those on Though momentum well about and that when relatively outflows in pause and see income, than a was fixed historically particular growth clearly amidst fixed markets and growth We non-U.S. flows, did did in emerging what caused which funds, markets the developed bit equities, versus what strong a we exposures higher shift in

an us equity I think as Asia, do what of higher Europe a and feel rates. going we it's really confident is the platform But to I And broader in and divergent from those in again, the discussions, FX, flows, think going for some additionally saw our in is fee do. active beta that strength we carry past to which particularly slower frankly area we’ve mentioned standpoint. performance

having in. we're back client deeper where the clients. we're to be this stronger passes, as when And uncertainty our Larry conversation kicks right that we're pretty mentioned, and we As need with activity convinced

Operator

from comes question of with Hawken UBS. next Brennan Your the line

Brennan Hawken

greater Thanks year-over-year Hey. well. of of seasonality. seasonality. I had for lending have was just taking the regulatory Good we're softened the hearing hopefully changes some throw morning. it strong question. highlighted little up in this sec on color But, of some traditional one, And side, that bit to Europe the as quarter, sort

about dynamic? little color And think quarter? there? you're maybe could a How of versus should this what on give you spread we seeing is volume it that bit here So,

Laurence D. Fink

amount it It’s actually volume, more When special. both. of M&A or have there, are we stocks record produces on

stable believe our the because And that the to the after and do In have. because and of the I fees or we’re iShares of type sec the as investors value addition, able cases the lent, we able rates, of because this investors our rates provide be can BlackRock better of to them. stability of our of these for partially we also, when business, and premium positive the higher because it’s to able assets to to nature that are returns index. position, nature in of and also index assets power And component many of And provide you of command our we investible rates. proposition assets platform, have strength made generate of major lending products we to we’re the our a

Gary S. Shedlin

as that Brennan, mentioned. would to I is Larry it. both a but And up increasing your drive say of we was question So rates. price I part think up were sequential was a XX%, I and frankly, that and spreads book where more, that basis helped volume up saw lending specifically sequentially about it on sec the definitely mean,

you So, part the asset of spreads is obviously in demand just it partly up the fact we I is for increased And going seasonal up. which that but that saw is see M&A just Europe significantly helping think specials, environment is our also business.

Operator

have you the remarks? and time any reached have Mr. Fink, Ladies closing allotted we do questions. gentlemen, for

Laurence D. Fink

morning. this Well, let me joining thank everybody us for

to earlier, than opportunities today seen ever I clients the front think we As us in been the greater. not before better said of markets remarks seen clients’ this needs prepared and my have we’re have and customers I prepared like meet we’ve pause but in before,

goals. Our diverse results their they quarter long-term that our the reflect achieve and technology platform provide for invest investment second value as clients to

great that of confident help are deliver the quarter, And front opportunities scale to We continued long enable that ever. clients good us over shareholders to as BlackRock of and as I everyone. provides both a intact shareholders. our and are the growth the will us differentiation and believe in that is the that us opportunities run ask Have our our

Operator

teleconference. today’s concludes This

may You now disconnect.

BlackRock (BLK) 16 Jul 182018 Q2 Earnings call transcript