BLK - Earnings call transcript Q2 2019

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Operator

Good morning. My name is Marcella and I will be your conference facilitator today. At this time, I'd like to welcome everyone to the BlackRock Incorporated Second Quarter 2019 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; Meade.

have background noise. lines a period. been there placed any prevent question-and-answer Instructions]. to mute [Operator After be on will All the remarks, speakers'

your you. conference. Thank you Meade, may Mr. begin

Christopher Meade

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

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

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

I'll Gary. So, turn to it over with that,

Gary Shedlin

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

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

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

increase markets again tensions the below down climbed equities in treasury and quarter volatility market though trade the only second X%. emerging and bond escalated US Global record May to in equity June, markets followed. highs, X% remain domestic moved challenged to in traded X% XX-year once

technology, globally construction and thrive in investment portfolio platform, but shifting accelerated into industry-leading withstand purposely out BlackRock's management today's activity, and not derisking only and cash. diverse volatility, Clients fixed combined rebalancing of designed it. equities income market and risk to with was

their variety market organic goals partnerships consistent growth. deeper with a environments, fosters and enables of more clients, to positioning strategic meet differentiated us Our and drives in

for X% growth total record quarter solutions-oriented $XXX advice in their organic investment meet BlackRock again needs. billion as asset generated annualized inflows long-term turned second net to once a to BlackRock of the clients or

higher-fee X% the growth iShares favoring of volatility-driven reflected organic mix assets from and lower-fee outflows month total and during of precision impact and exposures income of cash base the change financial fee instruments Lower fixed May.

X% was performance than securities driven in lending part Second in quarter and lower the by current year ago, lower a fees billion of revenue lower quarter. $X.X revenue

Including billion effective count income XX% with a per partially associated down tax launch compared fund, were $X.X year operating $XX was in higher of the higher current income non-operating quarter. costs a lower the share share of a rate was operating ago. down to closed-end lower $X.XX million of income X% as diluted of by offset and and Earnings successful

minority eFront. driven million of mid-April reflected of also the finance issuance expense Non-operating results revaluation by for capital seed primarily of of acquisition with associated partially on interest additional income, net fixed certain higher quarter reflected the marks but $XX investment investments, to the unhedged strategic investments income debt the and

second the for rate tax was as-adjusted Our approximately quarter XX%.

XX% estimate legislation. or of tax additional though to reasonable may a actual effective non-recurring tax items the of for of is differ continue run XXXX, guidance rate a We consequence projected rate as issuance on that the and discrete remainder tax

impacts of positive average on Second exchange growth revenue, driven and lower lending the foreign billion by organic pricing beta AUM of year-over-year equity impact investments. strategic securities fees movements quarter negative $X.X acquisitions, down of X% and diversion were base and despite primarily the

spreads. second to equities to demand US hard-to-borrow lower in $XX levels declined due Quarterly and securities exposures lower the ago compared gross year deleveraging lending the half softer reduced hedge revenue million M&A XXXX, fund of XX% to linked record a environment, or in partially for

European trend of seasonal demand continued years. the reduced from previous addition, In

equity growth. beta continue and Diversion fee to impact FX year-over-year base

including appreciation our Dollar down Asia, X% of resulting year-over-year, composite growth. resources, X% index. and period, equity year a impact the an on had overall X% markets products, decline fee year-over-year last time many up our higher-fee to While in our XXX base over on same were the over global was the equity negative average S&P markets X% emerging on linked natural revenue-weighted

additional Sequentially, an the declined equity day overall mix base the fees one and were basis assets. reflecting quarter. in impact up second the this X.X X% lower-fee as fixed our day equivalent in a average count higher basis, result towards On cash and fee and quarter, the of shift effect of rate beta points diversion AUM of income

reflecting Performance revenue fees from year products. a decreased equity XX% million long-only lower ago, of $XX from

strategy in year. funds generate the many to year-end, performance since we positioning fees half have However, of performance in single us of better hedge seen second improved our the

the continued year-over-year, momentum reflecting technology and the services increased revenue closed eFront in Aladdin of May. institutional in impact Quarterly XX% which acquisition

technology combination the Aladdin investment as in and system eFront reinforces comprehensive proposition in and world. a with of management risk value Aladdin's most standard the investment sets The operating new

and discuss Aladdin. detail, and for solutions already technology full will Larry in As demand eFront we're of remains more combination revenue strong of overall range synergies related the our to seeing

year-over-year, other million reflecting lower from million down management was transition and primarily and $XX revenue assignments. at $XX Advisory advisory fees

the acquisition-related due costs primarily associated Total launch by year-over-year fund up costs our the million during $XX impact reporting as-adjusted million of quarter. and launches $XX launch of margin. the sequentially, driven closed-end year-over-year, G&A was We to launch costs reflected expense million up when these in with product current G&A fund operating and exclude product $XX expense which expense quarter. X% higher expense was

historical also consideration expense approximately contingent value $XX to related G&A fair million in professional included acquisition and adjustments activities. Quarterly fees

in million sequentially, acquired acquisition. amortization expense reflecting up assets was amortization Intangible of intangible the eFront $XX

quarter of historic to points up as-adjusted margin return US a as points second operating was markets equity from ago, year but basis ago. highs down XX.X% year XXX sequentially basis Our from XXX a

in and environment we volatility, deeply overall drivers continue ETFs, responsibly challenging see revenue the performance long-term. by to alternatives, capture more strong future to differentiated committed current including a portfolio market remain growth, and of driven construction, Despite for investing technology

combination always and share of capital a cash has invest through repurchases. Our excess and business to dividends shareholders been management strategy return our first in then to

May billion issuance spread in $X a asset the senior raise XX, closed at the XX-year XX-year a previously In manager. a public connection by represented acquisition, for debt treasuries. to spread basis with debt ever point mentioned we eFront XX tightest which on This credit

As repurchases we targeted for share a billion of quarter, $X.X worth in the XXXX, repurchasing completed our reminder, shares. level first common of

repurchasing shares of be we remainder the not in during opportunistic the the shares While year, stock additional in any common of will we second did quarter. repurchase

a across with globally client $XXX to reflecting income Flows regions Quarterly billion validate of net changing fixed meet strong types. platform, partner ability in inflows of client market environments. long-term their our styles, our preferences positive classes, clients from investment asset were across benefited demand to particularly and and variety unique needs

record active representing inflows, were organic demand annualized generated fee and a investment solutions. institutional billion income $XX our top-performing base led BlackRock's fixed net of for liability-driven strategies reflected franchise by and X% Flows growth.

and net wins. $XX two of insights BlackRock's included before. active strategic global offer which are sizable than driven ability Institutional significant holistic were by billion fundings $XX inflows flows, more solutions resulting client income to of billion fixed unique ever active in

reflected remains Multi-asset our of $X active in franchise growth performance continued quantitative LifePath primarily where and Date Target billion long-term equity strategies into strong. net inflows were net inflows

sustainable of growth in ETFs. annualized inflows billion, continued organic fixed and growth, reflected iShares factor core income, X% net asset representing $XX

exposure saw exposure. As XXXX, dynamic capital previously express similar to risk ETFs, fee clients saw market seen allocate we sentiment outflows market the real-time we to periods in which in significant volatility, tactically and and financial higher from use of precision instrument

Quarterly annualized base and X% outflows fee resulted for annualized base growth. on from organic growth the in fee quarter products dilutive a these organic an impact iShares second of overall had BlackRock's

US the and AUM in quarter industry in iShares crossed including one ETFs. income, and during product factors Europe trillion in and sustainable $X and of share the in number globally key the areas achieved fixed flows

XXXX, the significant factors market growth as We and in global fixed as continue in of Europe. to doubling the including end project a ESG, of well ETF by income,

the Retail five largest income the net in BlackRock's of million the BlackRock's BlackRock II, years. as liquid Technology funds closed-end industry's Science largest $X the last fixed $X.X and well close seven of fund as and the in in strength and successful event-driven alternative municipal launch the Trust last years billion reflected inflows franchise

alternatives our with Momentum in institutional inflows quarter. continued $X and approximately retail billion the second in franchise of net

approximately of and in fees. significant $XX clients base addition, performance billion committed of institutional to variety future for have strategies, of source a deploy In representing a alternative we capital

Finally, BlackRock's as of $XX and inflows digital innovative deliver management we and management clients for billion net platforms distribution solutions. cash scale continue saw to risk leverage

solutions our across and quarter technology ETFs, summary, In value broad-based seeking investment place management to ability in our second results clients our alpha highlight platform develop to and strategies. alternative risk the use and

economic of While helping the clients to volatility, of differentiated we organic diversification through our a drive growth and consistent business us control can't and environments, variety serve market cycles. to in breadth positions

our execute invest and We on responsibly growth. strategy long-term clients to to behalf shareholders for of will continue

turn Larry. With to that, I'll it over

Laurence Fink

the thank morning, Gary. call. joining Good and Thanks, everyone, for you

is several clients. with the quarter's to are I've and increasing having And about conversations leading BlackRock depth wins. how this significant quarters, resonating, results those For spoken strategic demonstrates of breadth conversations

billion total cash record classes, all environment. and a driven clients and volatile organic across were of fixed and asset by the and generated a in regions second assessed active more Inflows We BlackRock's index strategies positive growth. both platform of representing X% inflows in as net $XXX the quarter, client breadth income annualized activity full were in types,

with quality made platform BlackRock's The the deliberate in we investment our of and clients. have engagements technology in manifesting investments are quantity and

Gary as clients we results construction and While having asset not management more described, portfolio with allocation, than comprehensive to investment volatility, solutions, are before and market risk globally technology. our are ever conversations about outcomes financial immune and

into a for clients strategic translating and perspective and global distinct world, these The it's distinct capabilities so BlackRock. BlackRock unique mandates and us with and the culmination deeper approach gives larger, around a gives a of into expertise a one many voice

and and global sentiment and high. once a rally geopolitical US down at hit emerging tensions for quarter; global uncertainty in Following macro slowdown through about the trade impacted returned. a improved market have year, US-China equities start The equities are record been same time, flared, negatively investor renewing concerns of have again markets the equity growth, the

also to a unusual for In a have while strong policy situation around on equities weigh delivering demand Brexit on where Europe, to investor sentiment, price has an uncertainties appreciation, focus rate supported safety interest while continued fixed-income has income. led been

the And inflation end ECB a towards rate The cuts introduce to period Reserve dovish both of measures readiness and and the extend XXXX new Reserve rates, address after economic a to shortfalls ECB have Federal by several hopefully easing shifted Federal rising has the expects now the and market highlighted to a more expansion. the stance. of

rebalancing a to The cash achieve events, combinations risk of driven in portfolios. equities their Investors up equity sentiment US on has and are of order in their markets and derisking in markets, shift allocations in in intended globally. financial into top out of these melt a fixed-income asset

clients Today, meet sustainable BlackRock. As landscape the to evolves, can that continued addition portfolios and value and looking more help investment They for their them better transparency, returns clients long-term continue better, outcomes. are goals. convenience turn to to resilient demand to long-term in

positions skill and approach these us well client-centered on to BlackRock's demands. each deliver client of

in our ability As investment are allocation, construction, and asset a shareholders. spectrum to investments growth together those bring investments solutions along for our generating capabilities in that of technology, BlackRock long-term of our and value portfolio all

Barclays Last acquire Investors. to BlackRock XX-year the month, crossed anniversary our announcement of Global

disrupt Our of just willingness what is active together by BlackRock ourselves and bringing today. creating is the foundation and industry to the index

one each More one and was successful to organizations – desire that the technology. integrate one our into of so one our and importantly, acquisitions platform, discipline what global transaction and makes culture unifying subsequent

a that to and combination and clients' reimagine we us portfolios willing ago innovate new the client of business, landscape While all help to think relevant just a in our are about and to face culture as technology needs. years to our that challenges a different and meet XX to our drove use comprehensively approach to ways, set the today, now,

companies, voice BlackRock's partners. pension wins into client is distribution wealth translating large insurance with global and

Our clients shape challenges their are and about helping conversation portfolio investment and construction understanding decisions. execute strategic them with

we The by strategic to institutional of a this in mandates. driven record strong significant saw and organic asset number the growth inflows approach, client contributed net second reflects quarter

BlackRock portfolios, fixed for strategies. platforms. saw income diversified our chose record clients quarter demand across active We our of net for inflows to fixed-income fixed-income $XXX second consecutive de-risk billion significant and their As with and rebalance generated index

billion medium the periods. or $XX the active assets strategies five-year XX% and and performance peer remains three strong by with where led above were of Inflows fixed-income for benchmark into third XX%

XX% demand annualized increased business which $XX growth. as management saw Results derisking our cash activity of a billion, of also cash as a inflows net asset well We number client from client representing generated wins. in organic significant benefited

growth in shift positioning our advantages. that classes, captures In BlackRock addition for across diverse long-term to asset our strategic the investment ability by a client will platform preferences driven of competitive and be

and And to we alpha local management positions that alternatives, which a enables style, the us and scale from investment platform and diverse establishing capture the world. more entire have around illiquid risk industry to chain. capabilities increasingly ETFs us growth leader to serve global management towards investment by to the the seeking be index have high and to value technology potential construction, in identity in do has most are BlackRock which the to asset markets leading portfolios

These with areas grow the to demand client fueling ability differentiators than align highest are and of industry faster average. BlackRock's

a well core the of flows of our core and generated iShares fixed quarter. in the factor sustainable second in and income, net of including categories, and demand $XX included billion and ETFs. into share areas inflows diversified those ETF globally one net as were client United of as iShares inflows $X high-growth highest is platform. one captured and Europe billion States of in ETF the number factors led Flows the ETFs, by and of sustainable area income mix and fixed market

clients and these the institutional certain so asset tactical and allocation instruments and to decisions. options secondary make and around also risk-off liquidity ETFs to use the express them is unique We precision high lending views market valuable financial investors. exposure It markets ETFs that saw

from risk-off longer-term As all across volatility-driven and nature. these outflows fee in of which ETFs masked mentioned, organic other Gary categories, iShares higher-fee growth are

years just since AUM. the reading the crossed five $X $XXX iShares XX trillion in This reaching acquired $X important and milestone franchise. trillion an we after years quarter, is billion in

driven the its double in in XX% the expect remain years maintaining been growth client confident last leadership. next inflows growth by with and industry market over secular the Importantly, years has opportunities for five long-term we iShares and of five the could we ETFs

in to with to investing and deliver ETFs our the globally adoption new new and increase are exposures clients use cases. high-quality for to We platform of clients

$X use ETFs, trillion recently assets. which example, fixed-income the crossed For industry we are more seeing investors in

it In BlackRock XXXX, an ways, since access made diverse launched in convenient all range these the exposures. for more number of fixed-income increasing of ETF have to first investors a products

process. help adopting holdings broader management Institutions income of their for as enhance portfolio individual Individuals replacement efficiencies to a to of using predictable portfolio. a are their or bond generate part are them as them

clients and stress. iShares during an fixed-income ETFs source have of offer of liquidity also the additional they repeatedly times demonstrated the market transparency that

manager, ETFs data is and capabilities BlackRock's of combination and and just a differentiation for our significant industry-leading in The iShares history technology as this bond create expertise a in space, this we beginning. believe

fixed-income in represent ETFs global It the of trillion $XXX for XX and market. still trillion took to reach they X% AUM bond than years $X less

five portfolios demand. bond are like that We market a well-positioned especially regulation trillion globally modernization, and if years, effect to take believe double towards within move $X secular forces will to systematic of and they type create

look financial for Sustainable ETFs impact represent as for ESG target a measurable another in clients strategic increasingly iShares strategies returns. growth area that

second equity the billion launch net the best of ETF which asset an inflows, representing XX Fund gathering ESG generated Leaders iShares years. in in launched quarter $X in We over

launching in client increasingly doubled billion assets Since ETFs to October, demand. iShares discussions and $XX Sustainable our Core we have suggest clients' more our

Beyond platform, and ETFs develop has this across demand expertise for greater and space. seeing sustainable in investments. we're invested for our ESG to investment significant BlackRock

active deliver sustainability-related asset for insights across alternative to We long-term and across classes, so analyze we clients better strategies. our are and leveraging risk opportunities and can and opportunities technology investment results index,

yield returns remains attractive environment. illiquid a for low in also as risk-adjusted Demand search investors alternatives strong sustained for rate and

solutions. in across inflows our net of in alternatives quarter, credit, billion by private business the infrastructure second $X equity illiquid led generated commitments and We

of are clients with on committed our deploying deployed quarter. $X capital another billion the behalf of teams in capital Our consistently

markets, to markets. more portfolios increase as looking the portfolios alternative their comprehensively whole risk exposure alternative clients context individual understand in Increasingly, products. fit they that clients As are and private want than as public private for to manage better technology solutions well and across their of

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capabilities eFront platform. XX% across support enhance revenues BlackRock's technology are Technology services year-over-year, results the to impact leading that closed acquisition grew the we seeing entire of May. in our strong continue including and

the to and excited value our as win comprehensive reinforces share proposition operating of received success already eFront teamwork combined that collaboration alongside in an most system and notification we've contract, are an extension. client reflection world. Aladdin We This eFront, investment Aladdin early first a for the immediate contract across our the is and

clients. to partners giving construction own portfolio enabling risk own With Aladdin management is capabilities and BlackRock with offer managers Wealth and transparency convenience is clients with to advisors their Aladdin wealth a management their wealth Wealth, providing to our tools. connect better better

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as We forward both usage wealth seek consolidation, are and technology-driven the more managers. need requirements at industry regulatory going flexible, institutions shifting more strong solutions momentum product for creating holistic, and

to and committed our BlackRock capabilities is meet clients' is well-positioned these capitalize enhancing technology our on to continually needs. trends to

of periods and BGI, years our uncertainty. of have course XX-year volatility in crisis history and and BlackRock's the the acquisition the Over XX financial various of experienced markets since

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questions. up let's that, for open With it

Operator

Instructions]. [Operator

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

Laurence Fink

Ken. morning, Good

Kenneth Worthington

Hi. Thank for Good you taking my question. morning.

pipeline really both. So, hoping and could fixed-income the going sales, cash you about management after talk for

a of of XQ was that outlook, a repositioning. repositioning was might There rate there? change forward So, sort be huge. we clearly, lots as look left What portion in the of

like a And disproportional income both then, BlackRock was seems it winner in strategies. fixed cash and

did only mention factors sales, you you of share, prepared remarks. drivers which share But driven could, maybe in have the see highlight but market well. not some win just good the your You just if may as that

Laurence Fink

Thank you, Ken.

looking orientation technology now is more if just than we to broad They're fixed of some are cases, like a of in And solution having more holistic So, deeper the to a of either seeing it. Ken, to manage outsource entire outcome they're management component in-house are fixed manage they in And fixed-income I by more and, it BlackRock saying would with difficult looking type clients leads our this for firms say, what for ever they our employing these before, conversations. I've to that. finding quarter, what income of platform their of looking to are windows their have the portfolios of relationships, part income. as leading to each been clients market

ongoing have and we types deep of see of big dissipating broad now types of many don't We in conversations these of terms that type behavior opportunities.

a we're part to that index believe is also a alongside provide able And both active of income ETF do I they solutions. fixed systematic or solutions But to coexist together. where approach just

solutions. for employing more fixed are active income solutions seeing alongside clients We ETF who

this ability now, comprehensive environment whether product organizations that so, in a even markets conversation, more harder source credit smaller the in markets. to having having that's credit public or are time obviously the sourcing, And and having it's the private in –

flows. having and this more global terms types becoming where important is relationships footprint of so, these building even is scale in And of is also that

this a of to us let believe but saying come. Rob is in side, talk opportunity much in manifest cash to we think and about we've huge and the started this has quarter been competitive we I'll for the this quarters

Robert Kapito

Larry's accent just me let So, comments.

looking is leading large these So, resonating are the that to strategic are breadth now and really long-term for of with the partner. the depth because clients conversations strategic having we clients a wins and

execute them includes portfolio technology, strategies a the allocation includes holistic investment And include active this have unique conversations asset they ability capabilities, and portfolio analyzing trading modeling about sheet and management. offer have helping and includes now are these construction So, credits to to solution. strategic has understanding decisions. passive have and and involve it the construction, various challenges we also balance strategies that both And

our the that these get been differentiated of clients result things greater to fundings out in putting this proposition and even premium ever value on quarter think all offer. we than have I the you this reflect really significant more before, So, And saw an are strategic this.

$XX in these funds digital we a inflows flows We is our of number wins of we provider. three cash now into second come as from risk deliver saw this strong scale billion management innovate, and to the both large as market solutions. money And Part globally cash. quarter also money and net and separate management and accounts leverage distribution continue flows institutional market are

So, management than as is more BlackRock's assets risk are technology. scale, management differentiated XX% and we where cash institutional under with a reminder, our of

set differentiated market duration us other So, CTFs, of serve and this money ETFs cash funds, to separate accounts, offerings, clients. help our believe short including strategies we

through by that lastly, I transforming cash, say, our distribution Cachematrix management And called cash a business have Aladdin. we portal and also we delivering through technology management in risk and are would

strategy, So, these to strategic we as in well distribution as get driving technology-first is this holistic and cash creating are a wins. our large approaches success

Operator

Your next comes Bill Katz of Citi. from line question the from

Your line open. is

Laurence Fink

Hi, Bill.

William Katz

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

that then might into the how like – from back with business, that to again. ActiveShares frame want wondering of passive market within going and what And step flow just bit And if gets the out Larry, little to I help any? risk products was what within at of active could and be the you So, least a perspective. from Precidian that, a sort if does sort play equity

Laurence Fink

flows a ETFs. where inflows about about do about active We Let talk raised the we was in our positive good we talk I'll equity what fund and one saw business equity had active Gary of comment active team in does $X.X me but to I performance. and let It passive say to in equities scientific had Precidian, it billion great we form where quarter. closed-end our last wanted

see you all manager they it's assets other where Where with flows, performance-based. have

time, their is This the You about. have for of talking over value money. to things always big prove, we've one been

or fees cannot for going you to the products. to inflows types you're their value return, the continue in see other show If of

going You're into flows of getting see in inability equities. to active continue to alternatives more the because of alpha

funds illiquids. a active And so, think could active you could get their into when get holistic of they going or insurance where more for the spectrum companies, move whole their equities, money allocate approach, they about investment. pension that don't active risk believe they a across alpha they in value If to they're

So, you're that's the trend seeing.

so, predominance seeing and space a in barbelled you're of been ETFs. active more alpha that's they're alternative And transformation seeing where the more getting a by in you're

into see So, provide systematic managers in flows going returns more alpha more to value more the after money back if then can equity and fees, for in of active we're side. their active terms

project not I'm that have industry here to going the And whole returns. so, to active active is

the I much yourself, harder and harder to been I've of years what harder information. we've producing about with active all over managers as the think It's becoming that's it's active commenting and differentiate of democratization seen. alpha

scientific, model into systematically shares, we fewer into so, teams thematics, would and been have more equity with specific shifting more And portfolios based more I stockholdings. say our into

and see we're success. we've migrating that the to and be And active two so, is that's some of years last starting doing to been over we going now that believe where equities

back impact about alpha On really talk conversation strategies index-based for the no ETFs, rise that about, I'll have strategies. and on getting impact People no a – the Gary that will active – underscore allocation. of and I purpose, my using are is which let – to index-based

when not than you And you get issue alpha people your So, And do to the factors or give believe, your precision bigger across sustainable reference. strategies active type going allocation, go so, when are those types that I where of into change. anything. that's those are holistically them think are more of That's instruments index-based instruments, alpha? about going more to those products, across

increased But the let could larger but ETFs. have let an investing me Precidian, active be talk… active becomes a component, I'll And so, Gary about talk then of there if role Gary

Gary Shedlin

I'll secondly, One markets, goal of is Bill, I then our just And, two innovation BlackRock to be investor would agnostic. a say the industry we're anything on. obviously, strong say for proponent basically enhances is, all that and that future So, for the we'll move access is things and that. wrapper to

So, product, to whether it's that fund for position then growth. that we'll, think, investor they passive point to account, be I or retail account. it's the a holds, the an traditional can ETF. the institutional an obviously, Larry wants good co-mingle we investor make if index chooses that we an investors, industry they made, extent active to a ourselves an part investor, they an if think future between or can want an that's sure of between similarly, choose a product, fund choose similarly And mutual If a mutual fund trust or a an separate And ETF.

relates obviously, trade. for complications ETF transparency, think tax for but, some as that to there in spreads some cash are is bid/ask more are mutual how the creates going maybe drag, efficiency There's benefits instrument active still I Early There signs transparency still versus the an implications fund less a that has traditional concept. and and and and out. it redeems are to

around and relates early investors it watch We're ecosystem the will, to itself And days. make so, best think going going to decision the the for the it our I how continue we ultimately, of development product and it's to forward.

Operator

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

open. is line Your

Laurence Fink

morning, Good Patrick.

William Katz

guys. morning, Good

nine days extent still line to you what of product ramp meaningful, that from more mentioned for it and on process? organic quarter, of Could last that. maybe was to on you're incremental you Wealth in us sight seeing up think, increased update and adoption identifiable, ramping of seeing number terms clients up I of that that Aladdin early growth kind BlackRock through

Robert Kapito

investors. Aladdin for advisors portfolio for of for So, managers, opportunity financial the the individual wealth to is make and language biggest construction it for also

is live Aladdin with currently Aladdin for clients This Wealth. So, is globally. XX

see We and that client as get implementation you get caution there we have until up part that they very ramp large would three, grow. when they before come there's is as continue that, fees they start to six-month Aladdin say long of of interest. course, an I to could we be assignment, to strong alive. And also, sometimes

are and every this is in technology. standard risk the seeing are does capabilities, And, demand. And the Aladdin that transparency creates what going construction the institutional and simply market. we portfolio for in people demand So, client on market in to for Aladdin both and more frankly, more takes at Wealth, wealth or how it quite to one become brings look

And about we're what risk them on versa. piques adds quite conversations to that can business and we balance in and, we with also, having with do do sheets portfolios might it other also and their frankly, their technology, our when interest vice

for it to tool because it. the provides, actually have we're comes is for interest it's it to And when the process becoming of and to have is you advisors gathering advisors. not finding you So, technology an there but asset use Wealth, want, only risk the whole a use Aladdin increased these for education app can you any technology

to going So, grow. expectation it's our is

growing it it's, I have in in to for We and going more to think, been it's past grow continue as interest the client us.

Operator

the Deutsche Bank. comes next question from Bedell Brian from Your line of

line open. Your is

Brian Bedell

question. Thanks much very for Great. taking the

holistic think you on you you been forward. quite mandates the solutions. optimistic a touched those mandate, But but nature changed of just fixed well-positioned for talk some lot seem can going has that about what you in Obviously, this, for active Larry. for if maybe about this could you guys on offering more income I into do guide of types know the institutional BlackRock have you time, If

in it something the this or linking that's is is growth technology actually that's generating it So, else?

just the income that that fairly then, grow quarter-out? bonds. permanent added iShares And substitutes quarter-in, fixed to is help fixed you that as Are usage a income secular trend seeing as the for should

Laurence Fink

our where consistency just most Rob assets, fixed to it, our a this I'm agnostic scale as Brian. ability organization but going the very vivid source performance, our globally of positioning Thanks, let is passive ability to to in provide answer an of income. our bringing active is in example and really

product it's really you…? now Rob, deeper But, conversation. don't as manifesting a so, And why

Robert Kapito

Yeah, just a and strategic checking or particular partner. with a answer I the just is think need not about one It's dirty they filling quick product. that box

go interest is it, environment. period help on improve them you can them, provide actually for low them interest also asset of give their passive a can can in a the allocation, that depending modeling And comes whether whether answer the be portfolio the and point able you in improve with to then to to construction, them portfolio portfolios, itself. low allocations you and type get in balance can actually and a it holistically look makes to it the difference you provide upon need, to the current that's client appropriate whether active, it and opportunities whether when were when rate, and basis management products So, credit of you every in-house the technology that provide appropriate have what you you trade allocations cash can products that can sheet sheet balance provide be Really in they because, work can do portfolio counts. the or to give and the

seeing interest our unique with we're where think us approach that's So, I in this more because dialogue having the industry. in is

go more part structure. BlackRock really And five ETF fixed income to to is and about or because this from different reasons. you're into second an The a lot there's four going more driving hear really what's

people millions construction in and innovative outcomes. using One portfolio in achieve fixed variety is, of actively a there to and new is ETFs an are ways income evolution of

it in keep way transparency, It's better is to and just more liquidity, diversification have tax. still more portfolios. good is a way a your great better It to wrapper. more derisk a So, mind,

by now investors. adoption growing There's institutional

So, institutions access. rely like pension companies income funds, asset ETFs managers and insurance for market efficient very quick fixed on

market marketplace. the bond electronification now are the fixed fixed entrenched to As ETFs bond as going markets growth income of to of part income ETFs well as a of modernize, as support vibrant starts bond

helping market to is technology grow. also this So,

new And part access the adding bond future fixed of very to, is us a drive development of this, constant is we coming then, the investors and portion of now better convenience liquidity at constantly bond as ETF what the it's the customize And question up small the now ETF are income market portfolios innovation. is adoption. most better tools income fixed price, exposures. It previous a market. and new which of there's alerted This to to with with ETF is right important

We are very optimistic about growth. future the

bond Larry X% $XXX June. the trillion trillion, than in of global income global fixed less fixed $X mentioned, $X represent As income even ETF under trillion assets at market. management ETFs And crossed

growth high market. going have we think expectations we in from growth to the this and we're benefit So, for

Operator

Credit Your Siegenthaler of next the Suisse. from line from question comes Craig

open. is line Your

Laurence Fink

Craig. Hi,

Craig Siegenthaler

good Hey, Larry. morning,

are So, which at also, in look tools when your of providing competitive a digital in major investments see back take our you I in distribution clients? the the advantages And JP BlackRock your some financial businesses in your the step like platforms, and biggest wanted to firms and Schwabs, space wealth what that management services are Morgans digital at also thoughts the entering direct-to-consumer ETF competitors Vanguard, have point? with recent

Laurence Fink

Gary?

Gary Shedlin

our I'll give you an update investments. on

definitely I a are our investments, obviously, Craig, strategy. we've of minority which made think, capital part of number management

without I the our having to generates very that take more sheet learn position us innovative looking with balance number companies are basically one. think and a cash of effectively flow control to to necessarily our and to we full business stable aggressively day partner use

they I benefit option business over their our think broader with our where, may and companies us time combine add basically helps of to their frankly, the strategy it culture to ultimately, value and, unique reach. derisks ultimately having from basically those

will the alternative eFront-Aladdin on of we've advisor and basically end what we and a into is will expands front or more is successful. combination. them. capabilities Obviously, So, some very done own of doing of iCapital, Again, our think with Scalable not, think really, an technology number we're kind at on which today, I nicely we've strategy the iCapital obviously, Scalable whether what Europe, FutureAdvisor it are global point basically and pair most with got I well-known. very

thousands investment unique capabilities. We've, it more has in has terms since think, helps helps Envestnet, and of RIAs the and only not their get thousands even them our own way stock into an only other done up importantly, in Aladdin fact benefit that the but, of minority bought a desktops of offers I to of significant on obviously, distribution the we things effectively it, been not gone incredibly practices, more but our asset that underlying opportunity beneficial,

more Acorns, And basically way Embark help then, gives there's a number whether technological to opportunity of or smaller more companies, issues, these distribution again, about companies in and an the us a to which evolution of learn value. drive it's smaller

to relates of no going it have direct, direct. the going As we issue intention of

to fact making We to distribute with intermediated frankly, products. are an intermediated the model and our shareholders intended investments that are an lots frankly, model. we're partner And, the we basically to who clients, We of going be beneficial but, our are respecting companies all that forward. of Larry?

Laurence Fink

be using say and letters, are basis. just one helping changes. much millennials would we on societal societal more and need forefront on And we technology in and them. CEO more to holistic I a changes my When at seeing they are X I of Gen And more I huge adept focus more write the the with

America the of of lack component do financial I literacy. believe in is crisis a retirement

are all for work, leading to the improve that's to of we Europe literacy is world. jobs of money – fear and see people. is better putting financial anybody most for investing. we of technology money, one need reduce And could managing it that take parts outcome will people out improve We the to who use respective their If our transparency of fear be structural other the of and people think in so, I of the more and money management problems to to

that to – to to provide it leading create to technology, Aladdin only technology, Wealth, more me, to be have unique transparency. and better us and is it's try so, to And more going is for through what's driving

movement, information you think illiquids, to you better investing But and Aladdin think about for movement more toward provide financial advisor the on literacy investing for and better with side illiquid it if it about transparency on better then especially will illiquids. and iCapital when eFront, When the outcome everybody. will the probably could more lead lead towards we Wealth, to side alongside in

and how and technology design it so, to about in we financial is those take and societies all provide better the offerings, that trying in build in financial position all when And we some can of to then are really of literacy, a think better you trying write unique work our technology how things the our we terms outcomes. – about is I this foundation

what entire of that's we're to trying so, the do. foundation And

Operator

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

Laurence Fink

this morning thank for us I for interest continued want BlackRock. at to the everybody joining and

a really globally, linked our continuously these been And what we've operate. is differentiating we deep leverage all that purpose scale. results really talking with in footprinted globally providing our deliberate quarter second I've We being investments time. strong see to opportunities we've clients meaningful Our about, by partnerships over built to the deeper made communities continue

ultimate to value creation financial to having to We're going for creation trying in our our longer-term capabilities for forward. lead technology invest to the use and deeper for achieve to investments help value BlackRock's through going value clients and our for trying purpose outcomes. the is clients. people shareholders our leverage better And of our

we'll to Everyone, some take to have fall. have a you in good time off summer. Hopefully, talk people and

Operator

This concludes today's call. conference

disconnect. may You now

BlackRock (BLK) 19 Jul 192019 Q2 Earnings call transcript