Fees for investment advisory services drive revenue
Reviewed by Margaret JamesReviewed by Margaret James
BlackRock Inc. (BLK) is a global investment management company. The publicly traded company had a market capitalization of nearly $112.85 billion as of April 18, 2024. BlackRock provides investment and technology services to institutional and retail clients. Clients look to BlackRock for access to mutual funds, investments focused on objectives related to retirement income and college savings, and exchange-traded funds (ETFs).
Key Takeaways
- BlackRock is one of the world’s largest investment management companies by AUM.
- The company operates as a single business segment.
- The firm derives most of its revenue from investment advisory and administration fees.
- BlackRock’s competitors include The Vanguard Group, State Street Corp., and T. Rowe Price Group Inc.
BlackRock’s Industry
BlackRock generates revenue from five segments: “Investment advisory, administration fees, and securities lending revenue,” “Investment advisory performance fees,” “Technology services revenue,” “Distribution fees,” and “Advisory and other revenue.” BlackRock’s competitors include The Vanguard Group, State Street Corp. (STT), and T. Rowe Price Group Inc. (TROW).
- Investment Advisory, Administrative Fees, and Securities Lending: Provides most of BlackRock’s revenue through investment advisory and administration fees based upon percentages of AUM. In FY 2023, this category accounted for $14.4 billion, or about 81% of total revenue.
- Investment Advisory Performance Fees: Performance fees are assessed when performance exceeds a predetermined threshold. Performance fees accounted for $554 million, or about 3% of total revenue in FY 2023.
- Technology Services: BlackRock offers investment management technology systems, risk management services, wealth management, and digital distribution tools to various insurance companies, banks, pension funds, and asset manager clients. Technology services accounted for $1.49 billion in revenue for FY 2023 or about 8% of the total.
- Distribution Fees: Revenue associated with the distribution and service of its products. In FY 2023, this category accounted for $1.26 billion, or about 7% of total revenue for the year.
- Advisory and Other Revenue: Revenue derived from its advisory services for global financial institutions, regulators, and governments. In FY 2023, this category accounted for $159 million, or about 1% of total revenue.
Important
BlackRock is the parent company for the iShares group of ETFs, a leader in the global ETF market.
BlackRock’s Financials
BlackRock filed its latest 10-K in Feb. 2024 for the 2023 fiscal year (FY), which ended Dec. 31, 2023, reporting over $10.0 trillion in assets under management (AUM). The company reported a net income of $5.5 billion, up 6.26% compared to the previous fiscal year. Revenue shrank by less than 1% year over year (YOY) to $17.86 billion.
BlackRock generated $1.9 trillion of net inflows during the fiscal year. The Americas region led all other regions with long-term net flows of $177.2 billion. The company’s ETF offerings generated $185.9 billion in long-term net inflows, more than the long-term net inflows of retail and institutional investors combined.
History and Leadership
In 1988, Laurence D. Fink and seven partners founded BlackRock. BlackRock went public in 1999, ending with $165 billion in assets under management that year. In 2024, Fink is the company’s Chairman and Chief Executive Officer (CEO).
Recent Developments
BlackRock and Jio Financial Services formed a joint venture in 2023, boosting BlackRock’s presence in India’s financial industry. In 2024, BlackRock acquired Global Infrastructure Partners, an independent infrastructure fund manager, for $3 billion and approximately 12 million shares of BlackRock common stock.
Where Are BlackRock Offices Located?
BlackRock is a global firm with 70 offices in 30 countries.
Where Are BlackRock Clients Located?
BlackRock manages assets for clients in North and South America, Europe, Asia, Australia, the Middle East, and Africa.
What Corporate Clients Has BlackRock Advised?
BlackRock’s corporate clients have included AIG, UBS, the Central Bank of Ireland, and the Federal Reserve Bank of New York.
The Bottom Line
BlackRock is a global investment management company with offices located in thirty countries. The company boasted a nearly $112.85 billion market capitalization in Apr. 2024. The company was founded in 1988 and went public in 1999.
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