With $6.28 trillion in assets under management, BlackRock, Inc. (BLK) is—at least by that measure—the largest investment management company in the world, publicly traded or otherwise. Boasting a market capitalization of over $86 billion, the firm sells mutual funds, exchange-traded funds, and closed-end funds—in addition to other vehicles that focus on objectives ranging from retirement income (the firm’s own branded CoRI funds) to college saving plans.

Domestic Bliss

Although BlackRock has expanded to offices in 30 nations, the firm still makes most of its money close to home. 63% of that staggering assets under management total originates in the Americas; 29% comes from Europe, the Middle East, and Africa; and 8% in Asia-Pacific. While BlackRock doesn’t enjoy anything close to a monopoly, it does dominate the market. The Fortune 100 companies that don’t do business with BlackRock can be counted on both hands. Half of the largest endowments in the United States rely on BlackRock to manage their billions, and practically every American retirement plan of decent size is also a client.

BlackRock investment strategies include both alpha and beta—exclusionary insider argot for active and index, respectively. No firm could grow to BlackRock’s size by just following the indices blindly, but it’s just as true that no firm can succeed in the long term by going it alone with no regard for what the rest of the market is doing.

It’s hard to pinpoint one particular factor, but much of the credit for BlackRock’s current surge goes to the inelasticity of market risk. As growing economies (such as China and India) get more volatile, investors turn to the bond markets. That’s close to obvious, but what isn’t so obvious is that BlackRock clients ended up moving more money into debt than they pulled out of equity. Couple that with a strong economy in the United States relative to the rest of the world, along with an environment of negligible interest rates, and the result is a historically potent performance by the market leader. 

Natural, not Enhanced

BlackRock generated 7% organic growth in fiscal year 2017, much of it through long term net-inflows – about $367 billion. In early 2016, BlackRock saw its revenues decrease for the first time since the financial crisis. This is likely a reason why the asset manager decided to completely overhaul its actively managed equity business, along with cutting fees, and relying more on computers to pick stocks in attempt to beat the market. (See also: BlackRock Replacing Asset Managers with Robots (BLK))

Masters of the ETF

BlackRock didn’t invent exchange-traded funds, but the firm did popularize them to a greater extent than anyone before or since. BlackRock is the parent company of the iShares family, the largest ETF provider in the world. Different iShares funds concentrate on everything from preferred stock to home construction, biotechnology, and emerging markets. As of this writing, investors have placed more than $1 trillion in over 800 different iShares ETFs. The genius of bringing ETFs to market is that they cost next to nothing for BlackRock to construct. Just repackage various securities in a different way, slap a new name on the result, and the firm almost can’t help but find a market for it. There’s always some buyer who wants to capitalize on Brazilian dividend growth or Asia-Pacific small-cap before the rest of the world gets wise.

BlackRock’s assets under management have also increased across the board. Multi-asset investments are still far behind their two components, equities and fixed-income securities. Equities make up 53.6% of BlackRock’s AUM, while bonds and related securities make up 30%.

How to Get Your Calls Returned

BlackRock won’t turn away your business if you’re an individual with lots to spend, but the company lives off the patronage of its institutional clients. Governments, pension funds, sovereign wealth funds, endowments—they make up about 75% of BlackRock’s business. Gigantism at this level is a two-way street, as BlackRock is the world’s largest investor. It’s among the top-three shareholders in Apple Inc. (AAPL), ExxonMobil Corp. (XOM), America’s Big Four banks, and many more enormous corporations.

The Bottom Line

As more of a functionary for other people’s money than a risk-taker itself, BlackRock has grown and maintained a large and diverse clientele that ranges from conservative national government agencies to more aggressive customers looking for growth first and income later. BlackRock has managed to be everything to everyone, without precipitating a loss in quality or customer service (or principal). Perhaps the firm has found a truly new business model that will enable it to build on existing growth and dominate its industry even more. Time will tell.