BlackRock Inc. (BLK) is by some measures the biggest investment management company across the globe, with nearly $8.7 trillion in assets under management (AUM) as of December 31, 2020. As a major publicly traded company with a market capitalization of about $106 billion, BlackRock provides investment and technology services to both institutional and retail clients around the world.
The firm offers a variety of funds and portfolios investing in vehicles such as equities, money market instruments, and fixed income. 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).
- 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 completed its $1.05 billion acquisition of personalised indexing firm Aperio on February 1, 2021.
BlackRock is the parent company for the iShares group of ETFs, the largest global provider of ETFs. BlackRock reports as a single business segment, deriving the majority of its revenue from investment advisory and administrative fees charged to its clients. Among BlackRock's major competitors are The Vanguard Group, State Street Corp. (STT), and T. Rowe Price Group Inc. (TROW).
In FY 2020 (ended December 31, 2020), BlackRock earned $5.3 billion in net income on $16.2 billion of total revenue. As compared with FY 2019, this represents an annual increase in net income of 16.8%. Operating income for FY 2020 was $5.7 billion, up 2.6%. Revenue grew 11.5% compared to the previous year.
While BlackRock experienced robust gains in revenue and net income, its operating margin of 35.1% in FY 2020 declined from 38.2% in FY 2019. Total AUM climbed 16.8% compared to the previous year.
BlackRock's Business Segments
As indicated above, BlackRock operates as a single business segment and does not report on income for individual parts of its business. However, it does divide its revenue according to categories for "Investment advisory, administration fees and securities lending revenue," for "Investment advisory performance fees," for "Technology services revenue," for "Distribution fees," and for "Advisory and other revenue."
Investment Advisory, Administration Fees, and Securities Lending Revenue
BlackRock derives the majority of its revenue from investment advisory and administration fees levied over time and typically based upon predetermined percentages of AUM. This category of BlackRock's business includes fees related to the firm's equity, fixed income, multi-asset alternative, and cash management services. In FY 2020, this category accounted for $12.6 billion in revenue, or about 78% of total revenue. This was up 7.3% from the previous year.
Investment Advisory Performance Fees
In contrast with administrative fees, performance fees are assessed to certain types of BlackRock accounts when performance exceeds a predetermined threshold. Performance fees accounted for $1.1 billion in revenue, or about 7% of total revenue in FY 2020. This was up 145.3%, making it the fastest-growing part of BlackRock's business during the year by far.
Technology Services Revenue
BlackRock offers a range of technology systems, risk management, and other digital distribution tools to select insurance company, bank, pension fund, and asset manager clients. Technology services accounted for $1.1 billion in revenue for FY 2020, or about 7% of the total. This figure was up 16.9%.
BlackRock levies fees associated with the distribution and service of its various products, as well as for support services related to investment portfolios. In FY 2020, this category accounted for $1.1 billion in revenue, or nearly 7% of total revenue for the year. This was up 5.8% compared to FY 2019.
Advisory and Other Revenue
BlackRock also separates out a category of revenue associated with its advisory services for global financial institutions, regulators, and governments. These fees are set at a fixed rate. In FY 2020, this category accounted for $192 million in revenue, or about 1% of total revenue. This was down 28.6% compared to the previous year.
BlackRock's Recent Developments
On February 1, 2021, BlackRock announced that it had completed its acquisition of Aperio, a firm specializing in offering personalised index investing to high net worth clients. Its services take into account each client's unique risk, tax, and personal values preferences. BlackRock announced the $1.05 billion deal in November of last year.
In late March 2020, the U.S. Federal Reserve tasked BlackRock with helping to carry out the central bank's bond-purchasing program as part of its broader response to the COVID-19 pandemic. BlackRock was instructed to purchase agency commercial mortgage-backed securities on behalf of the New York Federal Reserve. BlackRock was also tasked with managing two large bond-buying programs: a Fed-backed facility for purchasing new investment-grade bonds from U.S. companies; and another facility for purchasing investment-grade bonds that have already been issued.
How BlackRock Reports Diversity & Inclusiveness
As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of BlackRock and its commitment to diversity, inclusiveness, and social responsibility. We examined the data BlackRock releases to show you how it reports the diversity of its board and workforce to help readers make educated purchasing and investing decisions.
Below is a table of potential diversity measurements. It shows whether BlackRock discloses its data about the diversity of its board of directors, C-Suite, general management, and employees overall, as is marked with a ✔. It also shows whether BlackRock breaks down those reports to reveal the diversity of itself by race, gender, ability, veteran status, and LGBTQ+ identity.
|BlackRock Diversity & Inclusiveness Reporting|
|Race||Gender||Ability||Veteran Status||Sexual Orientation|
|Board of Directors||✔|
|Employees||✔ (U.S. Only)||✔|
BlackRock Inc. "Form 10-K for the fiscal year ended December 31, 2020," Page 1. Accessed Feb. 27, 2021.
BlackRock, Inc. "Form 10-K for the fiscal year ended December 31, 2018," Page 1. Accessed Feb. 3, 2020.
BlackRock Inc. "Form 10-K for the fiscal year ended December 31, 2020," Page F-14. Accessed Feb. 27, 2021.
BlackRock Inc. "Form 10-K for the fiscal year ended December 31, 2020," Page 44. Accessed Feb. 27, 2021.
BlackRock Inc. "Form 10-K for the fiscal year ended December 31, 2020," Page F-5. Accessed Feb. 27, 2021.
BlackRock Inc. "Form 10-K for the fiscal year ended December 31, 2020," Page 2. Accessed Feb. 27, 2021.
BlackRock Inc. "Form 10-K for the fiscal year ended December 31, 2020," Page 45. Accessed Feb. 27, 2021.
BlackRock Inc. "Form 10-K for the fiscal year ended December 31, 2020," Page 56. Accessed Feb. 27, 2021.
BlackRock Inc. "Form 10-K for the fiscal year ended December 31, 2020," Page 10. Accessed Feb. 27, 2021.
BlackRock Inc. "Form 10-K for the fiscal year ended December 31, 2020," Page F-12. Accessed Feb. 27, 2021.
Financial Times. "BlackRock aims for wealthy business with $1.05bn Aperio deal." Accessed Dec. 3, 2020.
BlackRock Inc. "BlackRock to Acquire Aperio - Leading Provider of Personalized Index Equity Solutions." Accessed Dec. 3, 2020.
The Wall Street Journal. "Federal Reserve Taps BlackRock to Purchase Bonds for the Government." Accessed Aug. 17, 2020.
BlackRock Inc. "BlackRock Completes Acquisition of Aperio." Accessed Feb. 27, 2021.