BlackRock, Inc. (BLK) CEO Discusses Q2 2013 Results - Earnings Call Transcript

Seeking Alpha

BlackRock, Inc. (BLK) Q2 2013 Earnings Call July 18, 2013 9:00 AM ET

Executives

Matthew J. Mallow - Senior Managing Director and General Counsel

Gary S. Shedlin - Chief Financial Officer and Senior Managing Director

Laurence Douglas Fink - Chairman, Chief Executive Officer and Chairman of Executive Committee

Mark K. Wiedman - Global Head of Ishares and Managing Director

Analysts

Michael Carrier - BofA Merrill Lynch, Research Division

Marc S. Irizarry - Goldman Sachs Group Inc., Research Division

Robert Lee - Keefe, Bruyette, & Woods, Inc., Research Division

William R. Katz - Citigroup Inc, Research Division

Matthew Kelley - Morgan Stanley, Research Division

Kenneth B. Worthington - JP Morgan Chase & Co, Research Division

Luke Montgomery - Sanford C. Bernstein & Co., LLC., Research Division

Operator

Good morning. My name is Susan, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the BlackRock, Inc. Second Quarter 2013 Earnings Teleconference. Our host for today's call will be Chairman and Chief Executive Officer, Laurence D. Fink; Chief Financial Officer, Gary Shedlin; and General Counsel, Matthew Mallow. [Operator Instructions] Thank you. Mr. Mallow, you may begin your conference.

Matthew J. Mallow

Thanks very much. Good morning, everyone. This is Matt Mallow, and I'm General Counsel of BlackRock. Before Larry and Gary make their remarks, let me point out that during the course of this call, we may make a number of forward-looking statements, and we call your attention to the fact that BlackRock's actual results may differ from these statements. As you all are aware, BlackRock has filed reports with the SEC, which lists some of the factors that may cause the results of BlackRock to differ materially from what we say today on the call. BlackRock assumes no duty and does not undertake to update any forward-looking statements.

So with that, I will get out of the way and let the call begin. Gary?

Gary S. Shedlin

Thanks, Matt, and good morning, everyone. It's my pleasure to be here to present our second quarter results for the first time as CFO of BlackRock. Today, I'll provide some opening comments on our financial performance and also reference selected pages from our earnings supplement, which has been posted on the BlackRock Investor Relations website. I'll be discussing primarily as-adjusted results. These results exclude, among other items, the financial impact of a significant Charitable Contribution in the second quarter, which I will review in more detail shortly. Finally, I'll outline some changes we've made to our earnings release to improve transparency and facilitate a better understanding of the drivers of our business.

As I discussed at Investor Day a few weeks ago, we're focused on 3 key drivers of shareholder value: organic growth, operating leverage and capital management. Despite some market volatility over the last 6 weeks of the quarter, we delivered on each of these drivers, resulting in a strong quarter and continued earnings growth. We generated second quarter earnings per share of $4.15, up 34% compared to 2012. Operating income was $982 million, 18% higher than a year ago, reflecting record base fees in the quarter and continued margin improvement. Non-operating results reflected a $22 million increase in the market value of our seed and co-investments, as well as a $39 million noncash pretax gain relating to the PennyMac IPO, which we disclosed in our first quarter 10-Q. The second quarter as-adjusted tax rate was 27.3%. During the quarter, we benefited from a number of discrete tax items totaling approximately $29 million, which were primarily attributable to the realization of loss carryforwards. For planning purposes, we continue to believe that 31% is an appropriate run rate based on what we know today.

Underpinning our results was continued organic growth, which we achieved despite a challenging market. In the second quarter, we generated approximately $12 billion of net new long-term flows. As Larry will discuss in more detail, these flows continued to demonstrate the diversity of our multi-client platform as our retail and institutional channels drove our organic growth this quarter, offsetting the outflows experienced in our iShares business during the month of June.

Despite the fact that organic growth for the quarter was below our stated target, we've generated approximately $130 billion of adjusted net new long-term business over the past 12 months, representing a 4% organic growth rate. Because 83% of these net flows were generated by our retail and iShares channels, our organic revenue growth was even higher, as these channels have higher effective fee rates compared to the firm's overall average fee rate.

As you can see on Page 10 in the supplement, second quarter revenues were $2.48 billion, up $253 million or 11% from a year ago. Base fees reached record levels on the back of historically strong markets and organic growth. We experienced year-over-year base fee growth across all traditional long-dated asset classes.

In the second quarter, we continued to experience strong performance across a number of our single strategy hedge funds, contributing to a significant year-over-year increase in performance fees. Lower performance fees versus the first quarter were a result of seasonal factors. Given recent market volatility and the majority of funds that lock in the second half of the year, we will continue to update you on performance throughout the year.

Our BlackRock Solutions franchise continued to benefit from robust activity. Revenues in the second quarter were $138 million, up $7 million compared to 2012. Our Aladdin business benefited from continued trends favoring global investment platform consolidation and clients seeking multi-asset risk solutions, while our FMA business saw momentum from ongoing regulatory change, especially in Europe. The Aladdin pipeline remains strong, especially driven by demand from asset managers. And while year-over-year results were impacted by the timing and recognition of certain fees, we continue to expect mid-teens growth rates for the business. Securities lending revenue grew 21% versus the first quarter led by seasonal demand, but declined on a year-over-year basis as a result of spread compression.

Turning to Page 12 of the supplement. Expenses were up $103 million year-over-year driven primarily by revenue-related items, including direct fund expense and compensation. This was a 7% increase from a year ago compared to an 11% increase in revenue over the same period, and resulted in an operating margin of 41.3%, 210 basis points higher from a year ago.

We continue to believe that scale is a critically -- is critically important to our business, and we see scale advantages in a number of areas: growing our passive business, leveraging our brand spend, offsetting technology cost to our Aladdin business and absorbing the increased cost of regulation and compliance. In particular, as we indicated last quarter, we'll continue to invest in our brand, especially when there is an opportunity to deliver important messages at a time when messages will have the most meaningful impact. As such, we increased our brand spend in the second quarter to levels more consistent with the year-ago quarter. We still expect our full-year brand investment to be in line with 2012 levels.

Our margin has recently benefited from positive mix shift and rising global market levels. However, in the last 6 weeks of the quarter, we witnessed outflows in certain high-margin products and the decline in market levels. As we emphasized during Investor Day, we remain committed to dual objectives: running the firm as efficiently as possible, while also investing for future growth. While our margin will fluctuate as a function of mix shift and data, we remain confident that we can maintain minimum margins of 40% and stable market conditions.

We remain committed to using our cash flow to optimize shareholder value with the first priority to invest in our business. In May, we announced the acquisition of MGPA, a private equity real estate investment advisory company. This deal will double the size of our real estate advisory business and extend its reach to Asia Pac and EMEA. The acquisition will not be material to earnings per share and is expected to close in the third quarter, subject to customary regulatory approvals and closing conditions.

Though not included in the current quarter, on July 1, we completed the acquisition of Crédit Suisse's ETF business with assets under management of $16 billion. This acquisition will extend our footprint in the Swiss market and bring a broader range of opportunities to Swiss investors through our iShares platforms, while also adding an array of complementary products to serve our clients across Europe.

Our capital management policy remains consistent. We repurchased approximately $250 million of shares in the second quarter, matching the value of shares we repurchased in the first quarter. As we have previously stated in the current environment, we would expect to continue this level of repurchase for the remainder of the year.

Before I turn it over to Larry, I want to address the impact of PennyMac on our quarter results and some changes to our earnings release. Between 2008 and 2012, BlackRock made a series of investment in PennyMac, a leading national mortgage lender and servicer. In May, PennyMac completed an initial public offering. BlackRock was not a seller in the IPO. However, as a result of the IPO, we recorded a noncash, non-operating pretax gain of $39 million related to the carrying value of our equity method investment, which is included in our as-adjusted results.

As Larry will discuss more fully, subsequent to the IPO in June, BlackRock made a Charitable Contribution of approximately 6 million units of our PennyMac investment to a new Donor Advised Fund. The fair value of this contribution was $124 million and is included in G&A expense on our GAAP income statement. In connection with the Charitable Contribution, we also recognized an additional noncash, non-operating gain of $80 million, and recorded a net tax benefit of $57 million. Among other items, the financial impact of the entire Charitable Contribution has been excluded from as-adjusted results. Page 28 of the earnings supplement details the financial impact of both the PennyMac IPO and related Charitable Contribution. Going forward, BlackRock will continue to account for our remaining 20% PennyMac holding as an equity method investment.

Finally, as some of you may have noticed, we have made some changes to our earnings release. Given the diverse nature of our multi-client platform, we feel that our AUM inflows are best viewed and analyzed through a comprehensive lense. With that in mind, we have added incremented AUM disclosures by client and product in order to provide greater transparency on our business drivers, including the addition of average AUM data based on relative month-end averages. Given this additional disclosure, we have also decided to discontinue the reporting of our net new business institutional pipeline. This decision is not meant to signal any change in the outlook for our institutional business. In fact, our pipeline at July 11 was $49.3 billion, up $13.9 billion from April 11, with a mix of business largely in line with prior quarters. We trust these changes will facilitate a better understanding of our overall business.

And with that, I'll turn it over to Larry.

Laurence Douglas Fink

Good morning, everyone. Thank you, Gary, and thanks for joining, everyone -- us today on this call. But before we start, I'd like to reiterate how excited I am to have Gary on board. He's been a close partner of mine and adviser to BlackRock for many years, and it's great to have him as a full-time member of our team.

Let me begin with a little market context. What started out as a relatively steady first 2 months of the quarter for markets took a turn in late May following a series of global events, all within a concentrated period of time. The Fed's comments on May 22, suggesting a change in narrative, a change in the idea of tapering their bond purchasing program led to markets aggressively selling off to the long end of the curve. What we witnessed to see also is a rapid sell-off from leveraged investment products. The same time, growing uncertainty surrounding Japanese policy makers going all-in on our stimulus efforts, triggered approximately a 20% 3-week sell-off in the Nikkei after a very large run-up. And finally, continuing market worries about Chinese growth and emerging market capital flows sparked a downturn in emerging markets. These events drove a material uptick in market volatility, and we saw different types of investor react in different ways, highlighting the stability of BlackRock's multi-client platform. In fact, we saw very little in the ways of changes from our largest institutional clients as we remain committed to their long-term investment objectives.

We did see a market change in trading-oriented investor behavior, particularly with respect to long-duration fixed income and emerging market equity exposure, as those clients used liquidity in our iShares products to reposition their portfolios. Many of these macro and policy concerns that attracted attention in the markets remain, along with the ongoing political uncertainty of the Middle East, are likely to continue to drive global capital market volatility. However, I remain just as constructive on a long-term upside of the U.S. equities as I have been over the last 2 years.

We've spoken frequently about the benefits of our diversified business model at BlackRock, and we saw strong evidence of that again this quarter. Generated record long-term base fees of $2.1 billion and long-term net inflows of approximately $12 billion, taking our flows to $51.4 billion year-to-date. We benefited from the diversity of the client segments we serve, the diversity of our product set and the diversity of the geographies in which we operate.

During the quarter, we had 11 funds across retail, and iShares generated more than $1 billion in flows. These funds did not include our traditional growth engines, Global Al and Equity Dividend, which I believe showcases BlackRock's highly scalable product breadth, which -- with representation across all major classes, client segments and importantly, geographies.

In recent quarters, iShares delivered a substantial portion of BlackRock's overall organic growth. This quarter, it was our Retail and Institutional businesses driving growth and offsetting iShares' outflows. Positive net flows in the quarter were led by multi-asset products, unconstrained fixed income and retail alternatives, 3 key areas of focus where we've been investing to building market-leading position. Our flows also reflect the benefit of our broad platform and BlackRock's global reach, with positive contributions from both our active and passive franchises and strong flows in our EMEA and Asia Pacific regions.

Before I walk through the results, I'd like to take a minute to discuss the macro trend that has been a key driver of flows at BlackRock, and I think will continue to drive BlackRock's upcoming quarters. This is about the growth -- Great Rotation. The Great Rotation in equities has been much discussed. We are seeing a rotation at BlackRock, but it's not from fixed income into equities, it's a rotation within fixed income. Over the past several quarters, we've been warning our clients about the asymmetric risk in their fixed income portfolios. The 30-year bull market, which I was witnessing through my career, in fixed income products has meant that more than a generation of investors had never seen the losses in their fixed income portfolios.

In the past few months, obviously, that's started to change. 10-year yield spiked more than 100 basis points from the lows of early May through the first week of July, and the Barclays Aggregate Bond Index fell nearly 5% during the same period.

There is a Great Rotation. We believe, it's going to be out of core Barclays Aggregate-type products, the types of products that have been benefiting from duration extension in the past but are now sources of increased risk. We expect to see flows moving into more flexible, nontraditional fixed income products. Industry flows into flexible bond products across the industry has increased sevenfold year-to-date versus the same period last year, while flows in more traditional bond categories has fallen as great as 80%.

We built BlackRock on our reputation in fixed income. We let that performance get away from us in 2008. And we spent a great deal of time on rebuilding that -- the performance platform at BlackRock. And we fixed the business over the past few years, and I'm proud to say that we're well positioned today in fixed income space, more than we've ever been, and we're now ahead of most of our competitors.

As of the end of June, we're outperforming in a number of key fixed income areas. We've seen strong recent outperformance in our Total Return Fund, which is a top decile for the 1-year period, and should prove to have a better defensive position relative to our peers. Our Low Duration Bond Fund is a top quartile for a 3-year period of time is in the sweet spot for yield-starved investors searching for some strong performance with minimum duration risk. And perhaps, most importantly, our unconstrained Strategic Income Opportunity fund, or SIO, is in the top quartile for 1- and 3-year period. SIO is designed to provide yield, capital return and downside protection in diverse interest rate environments. They took in more than $1.6 billion in the quarter, now has -- for $6 billion in assets. We're very encouraged by the retail adoption of this product. As we introduced the fund outside the U.S. and to institutional investors, SIO is well positioned to be one of BlackRock's largest and most important products in the coming years.

So across the board, we're well positioned to benefit from the changes in fixed income. We've developed strong offerings across unconstrained, across floating rate, alternatives and multi-asset categories. For example, this quarter, we launched the Asia Floating Rate Income Fund, which is designed to protect against rising rates, and we saw more than $300 million inflows. In the alternative space, we saw $1.1 billion of U.S. retail flows in our Global Long/Short Credit Mutual Fund, a product designed to eliminate interest rate risk and provide credit-driven solutions. Our Multi-Asset Income Fund, or MIA -- MAI, has been a strong fixed income substitute. It's 5-star, go-anywhere income solution that continues to see strong momentum, taking in more than $1 billion for the second consecutive quarter.

As investors begin to more fully appreciate the risk in their fixed income portfolios, we have the solutions our clients need, we're well positioned to reap the benefits of the rotation within fixed income. The types of outcome-oriented solutions I just discussed have been a key driver in our retail and institutional client businesses, which generated healthy flows despite the challenging investment landscape.

In retail, our diversified platform continues to deliver result. This quarter, we generated $5.1 billion in net inflows, with key themes of income, alternatives and outcome-oriented solutions, driving positive results across all geographies. U.S. retail and high net worth had long-term net inflows in the second quarter of $3.5 billion. I just mentioned SIO, MAI and our Global Long/Short Credit Fund, all which netted north of $1 billion in net flows in the quarter. Alternatives are rapidly moving into the mainstream as the funds we launched in the past 2 years have more than $2.5 billion in AUM, having raised $1.1 billion in our second quarter. During the quarter, we also launched the Emerging Market Allocation Fund, an innovative actively managed product, leveraging our 12 separate emerging market teams that create product breadth that few, if any, of our competitors can match.

International retail, we saw long-term net inflows of $1.6 billion, reflecting global consistency in targeted growth areas, including strong multi-asset, fixed income and alternative flows. Multi-asset net inflows demonstrated increasing interest in our Global Allocation, Managed Volatility and Dynamic Asset Allocation offerings, as retail investors look for us, at BlackRock, to provide them solutions to address the market volatility.

Let me turn to fundamental equities. It still is a mixed story. However, we're pleased with the strong start we're starting to -- we're seeing in some of our new managers in U.S., fundamental equities and across the board. And our Basic Value Fund, a great example of the turnaround, over 275 basis points of outperformance in the past 6 months.

Our European equities continue to strengthen, led by our top-decile performing -- performance across a number of our funds, including our euro market fund, offset by outflows and our natural resources where we had a dominant position and remain to be dominant, but where we're seeing outflows in commodity-like type products. And we saw outflows in our U.K. equities.

What I'm particularly pleased -- being set up when we see a refreshed inflows, and that is in our Emerging Market equities. One of our new managers, has been with us close to 2 years now, is Andrew Swan, who continues to outperform, beating his benchmark by more than 300 basis points year-to-date.

Our Global Allocation fund, which has performed very, very well while managing risk exposure, for the last rolling 12 months, it earned over a 12% return to our investors.

Let me turn to institutional, where we generated $7.8 billion in long-term net new business. Flows are driven largely by a combination of continued shift to passive and demand for multi-asset solutions. The tone of our conversation with institutional clients remained positive, as evidenced by clients adding to positions amidst all this market volatility. This also speaks very loudly how our clients are looking for BlackRock for helping them to provide solutions. And in that sense, we are seeing bar belling that continues to be a dominant theme, with large, strategic clients investing in both equity and fixed income index mandates alongside alternative solutions to achieve uncorrelated returns.

Institutional active products saw positive flows for the first time in 8 quarters, with $1.3 billion in net inflows. Strong multi-asset flows offset fundamental equities and active currency challenges. We benefited from our proactive plan dialogue around regulatory changes, as implementation of RDR-like regulation in Europe drove a large, highly customized multi-asset strategy, an advisory win for the quarter.

We expect to see more types of opportunity working alongside our distribution partners as they try to respond to RDR, and we believe we will see more sub-advisory type of relationships as that continues.

Once again, our key growth subsegments, specifically defined contributions and official institutions, continue to be strong contributors. We generated $4 billion in our target date LifePath product in the quarter, with now nets over $7 billion in new flows. We also saw more than $6 billion of flows from official institutions, primarily into path of equity mandates.

We continue to evaluate ways to connect our products and clients for the overlay of risk management through BlackRock Solutions at our Aladdin platform. Our Aladdin business continues to grow with multiple successful implementations and an expanding client base, much of which is in global in nature. As Gary mentioned, we continue to expect mid-teen revenue growth in our Aladdin business. We signed a record number of advisory assignments in Q2, and we continue to see opportunities to have clients use Aladdin, especially now with the new regulatory environment we're all living in.

We also announced that during the quarter, the alliance with MarketAxess, which will allow our clients to tap into a deeper liquidity pool for U.S. credit from the Aladdin platform. We remain well positioned across BlackRock Solutions and our financial advisory business continues to showcase the differentiated and strong multi-client platform.

We were recently retained in 2 new assignments that speak to our unique analytical capabilities. The first is the assignment on behalf of Her Majesty's Treasury to provide advice on Royal Bank of Scotland; and the second is a significant country-wide banking diagnostics. We are proud to be a trusted adviser for global leaders when they face -- faced with issues involving significant financial complexities. And we also work very closely with all the regulators related to the implementation in terms of new focuses on risk management leverage ratios. And we believe with this greater and greater scrutiny, more and more clients are going to be looking for Aladdin as a source of risk management tools.

Now let me turn to iShares. As what Mark Wiedman, who runs our iShares business, told you at Investor Day, iShares are used in both as an investment vehicle, but also it's used as an exposure tool by our clients. Amidst market volatility in June, we saw clients again turn to iShares to express their views, in this case, on emerging markets and long-duration fixed income.

In the 3 weeks following May 22, clients redeemed nearly $15 billion in iShares. The ability to exit quickly, the ability to exit efficiently and in bulk, is part and parcel of our value proposition to an important client segment, a trading-oriented investors. These investors prefer iShares as the broadest, most liquid suite of ETFs. They use iShares when they want to take on fresh risk, as they did earlier in the year and the fourth quarter of 2012, and when they want to exit, as they did following the Fed comments on tapering.

The consequences is that our quarterly flows and our flow market share will be volatile. Since quarter end, the flows have reversed, with more than $6 billion of inflows through yesterday and more than $30 billion of net flows year-to-date. In fact, despite the volatility we saw in June, we are running at the same rate of growth as we did last year, as last year, we saw a summer swoon in our ETF market. So we love our position in our business and we expect this as the same type of future.

But importantly, we look to longer horizons. Over quarters and years, our market share of assets have been stable, and in 2012, for instance, we grew in line with a global industry with 27% AUM growth and a 14% organic growth. The flows in the second quarter reflect the fact that iShares delivered the liquid market exposure that our clients' expect. This is true even in the products that experienced the most selling pressure, including emerging market equities and fixed income ETFs. EEM, our flagship emerging market fund, traded a record $5 billion in a day, all in the secondary market without any creations or redemptions. Similarly, for the first time, we saw a $1 billion plus trading [ph] day in our leading U.S. corporate ETF like HYG and LQD.

So overall, our product performed in a challenging period, but we welcome continued dialogue around the mechanics of ETFs. We are constantly working with market makers and exchanges to ensure that ETFs are working appropriately. As the market leader in the industry, we believe we have a responsibility to lead the charge on market practices and investor education, not just with respect to iShares but in the ETF market globally at large.

Turning to the business results for global iShares, we ended the quarter with $1 billion in net inflows. We've seen a healthy start in the third quarter with $6.2 billion in net inflows through July 16. iShares base fees of $723 million represents a 21% year-over-year increase. Fixed income outflows was $1.5 billion, driven a rotation out of the long-duration fixed income. We also experienced outflows in our commodity-like products of $2.2 billion, in line with the macro pressures in that segment.

Equity net inflows in our ETF products was $2.7 billion, showcasing the breadth of our offerings, as outflows in emerging market products were offset across the franchise. A key driver in our new flows was our minimum volatility equity suite where we saw -- launched a new marketing campaign during the quarter. This set of products offers investors equity exposure with flatter peaks and valleys. It's an innovative solution that we developed in-house, and we raised more than $7.6 billion since the launch of this product only 2 years ago.

Let me just also add, regionally, iShares results were supported by strength in Europe and Latin America, offsetting the weakness I talked about in the United States. EMEA iShares retained its leading position with $2.5 billion in net inflows. Flows were led by equities with $2.2 billion in net inflows. We actually had our 25th consecutive month of positive ETF fixed income flows in India.

Overall, we remain very pleased with the direction of our iShares business. However, we must remain aggressive in pursuing new opportunities through both product innovation and tapping into new market segments. Let me give you 3 examples. First, we launched -- we recently launched our fixed income iSharesBonds series targeted towards traditional fixed income investors. Second, we launched our Core Series products, which we designed for the buy and hold segment, and we delivered $3.6 billion of net positive flows in the quarter. And third, last quarter, we announced our long-term strategic alliance with Fidelity to provide access to iShares in the self-directed segment. And that partnership is off to a great, great start.

In summary, iShares provide solutions both for investors focused on liquidity and those looking to build long-term portfolios using beta products. We believe that we continue to be in a secular bull market for ETFs, and that as a market leader, we will both drive the growth and benefit from the growth of the market.

I'll wrap up my comments with a few other significant events that occurred during the quarter. Our brand campaign continues to drive increased awareness and recognition, and we backed that up with targeted marketing towards our key investor segments and products. We're helping our clients to answer the question to what to do with their money, and we're focusing their attention on the solutions they need to be successful in the current investing environment. We're also trying to remind our clients that their objectives is, in most cases, about retirement. And the noise we saw in the last 6 weeks truly has little consequences in terms of their long-term objective needs. And as I said earlier, we have not seen investor behavior change by what I call our traditional long-term clients. And I think our ad campaign is helping our clients understand that we need to be focused not on the noise of the day but on the objectives over a long cycle.

As Gary discussed, during the quarter, we used a portion of our ownership stake in PennyMac to fund a philanthropic entity by seeding the Donor Advised Fund. As a leader in our community, as a leader in the industry, we're committed to be -- to the well-being of our communities where we live and work. This new charitable initiative will deepen our commitment to public responsibility that has always been fundamental to our business. We expect the fund to be operational in early 2014 and it will be a cornerstone of BlackRock's philanthropic efforts, including, among other things, helping to promote financial education for low-income families and individuals. I'd like to personally congratulate and thank Stan Kurland and the entire PennyMac team for the work they've done in building that business and creating value that will benefit BlackRock shareholders for the years to come.

Finally, in June, we hosted our Inaugural Investor Day. Our goal was to provide more exposure to the depth and talent of our team and provide a deeper dive into the growth prospects for the firm. I've been fortunate to be surrounded by a talented and dedicated global team for many years, and that team is a key driver of our performance and growth. As a result, as this quarter shows, even in periods of volatility, we have a platform designed to deliver for both clients and shareholders.

We are well positioned to benefit from long-term market trends, including the rotation within fixed income space with our unconstrained alternatives and multi-asset offerings, as well as a continued shift to passive in the use of beta products to generate alpha with our iShares business. We will continue to strive to stay ahead of secular changes and put our clients in a position to meet their investment goals. We have an exciting opportunity in front of us to execute on the growth plan we laid out a few weeks ago. I believe that growth plan is intact, and I believe we will continue to drive the types of rates we discussed in much more detail during Investor Day. I would like to thank everybody in all the hard work for all the employees.

And with that, I'll open it up for questions.

Earnings Call Part 2:

Rates

View Comments (0)