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Good morning. My name is Jen, and I will be your conference facilitator today. At this time, I'd like to welcome everyone to the BlackRock, Inc. First Quarter 2026 Earnings Teleconference. Our host for today's call will be Chairman and Chief Executive Officer, Laurence D. Fink; Chief Financial Officer, Martin S. Small; President, Robert S. Kapito; and General Counsel, Christopher J. Meade.

[Operator Instructions]. Mr. Meade, you may begin your conference.

Good morning, everyone. I'm Chris Meade, the General Counsel of BlackRock. Before we begin, I'd like to remind you that during the course of this call, we may make a number of forward-looking statements. We call your attention to the fact that BlackRock's actual results may, of course, differ from these statements. As you know, BlackRock has filed reports with the SEC, which list some of the factors that may cause the results of BlackRock to differ materially from what we say today. BlackRock assumes no duty and does not undertake to update any forward-looking statements.

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

Thanks, Chris. Good morning, everyone. It's my pleasure to present results for the first quarter of 2026. Before I turn it over to Larry, I'll review our financial performance and business results. Our earnings release discloses both GAAP and as-adjusted results. A reconciliation between GAAP and our as-adjusted results has been included in the tables attached to today's press release. I'll be focusing primarily on our as-adjusted results.

It's been a standout start to the year for BlackRock. Our first quarter revenue, operating income and earnings per share grew double digits. We expanded margins by over 100 basis points, and we delivered 8% organic base fee growth. That's our seventh consecutive quarter at or above 5%, bringing the last 12 months organic base fee growth to 10%. What's driving that performance is deep engagement with clients. We're providing advice, insights and access across the whole portfolio, allowing clients to efficiently implement both long-term strategic asset allocation moves and tactical exposures to navigate near-term themes and markets. These higher velocity markets bring clients closer to our firm.

BlackRock is winning mind share and wallet share reflected in $130 billion of net inflows in the first quarter. Organic growth is durable and broad-based. It's consistently across product, region and client type. Firms we brought together deliberately are now compounding even faster in our results and with our clients. You see it across the BlackRock portfolio. Aperio flows accelerating as advisers bring tax-aware direct indexing into the core of accounts, iShares leading the industry across active and index, infrastructure fundraising and deployment ahead of plan.

The first quarter of 2026 unfolded in a more volatile market environment. Markets showed heightened sensitivity to incremental economic data with volatility rising across rates, equities and currencies. There is real impactful geopolitical uncertainty. There's both excitement and anxiety about how artificial intelligence will impact day-to-day lives and business models. As capital reallocates and assumptions are challenged, markets can feel unsettled even when underlying fundamentals are sound. That dynamic is evident today.

While headlines and sentiment remain uneven, BlackRock's performance tells a very different story. Our fundamentals are strong. Organic base fee growth remains well above target and margin expansion continues to reflect the operating leverage built into our model. Momentum across our business continues to accelerate. That momentum is rooted in clients wanting to partner with scaled, trusted platforms, and they're consolidating more of their portfolios with BlackRock.

Turning to our financial results. First quarter revenue of $6.7 billion increased 27% year-over-year, driven by organic growth, the impact of higher markets on average AUM, the acquisitions of HPS and Preqin, and higher technology services and subscription revenue. Operating income of $2.7 billion was up 31% and earnings per share of $12.53 was 11% higher versus a year ago. EPS also reflected lower nonoperating income, a higher effective tax rate and higher share count in the current quarter linked to the closing of the HPS transaction on July 1, 2025. Nonoperating results for the quarter included $66 million of net investment gains, driven primarily by equity method earnings and noncash valuation gains in our minority investments.

Our as-adjusted tax rate for the first quarter was approximately 23%. This reflected $57 million of discrete tax benefits related to stock-based compensation awards that vest in the first quarter of each year. We continue to estimate that 25% is a reasonable projected tax run rate for the remainder of 2026. The actual effective tax rate may differ because of nonrecurring or discrete items or potential changes in tax legislation.

First quarter base fee and securities lending revenue of $5.4 billion was up 24% year-over-year, driven by the positive impact of market beta on average AUM, organic base fee growth and approximately $230 million in base fees from HPS. On an equivalent day count basis, our annualized effective fee rate was 2/10 of a basis point higher compared to the fourth quarter. Our fee rate benefited from outperformance of international equity markets relative to the U.S., along with client demand for international iShares exposures and our structural growers in systematic equities, private markets, Aperio and active ETFs. Performance fees of $272 million increased from a year ago, reflecting higher revenue from alternatives, which includes $121 million of performance fees from HPS.

Quarterly technology services and subscription revenue was up 22% compared to a year ago. Growth reflects sustained demand for our full range of Aladdin technology offerings and a full quarter impact of the Preqin transaction, which closed on March 3, 2025. Preqin added approximately $65 million to first quarter revenue. Annual contract value, or ACV, increased 14% year-over-year. We remain committed to low to mid-teens ACV growth over the long term.

Total expense increased 24% year-over-year, reflecting higher compensation, sales asset and account expense and G&A. Employee compensation and benefit expense was up 27%, reflecting higher incentive compensation linked to higher operating income and performance fees and higher headcount associated with the onboarding of HPS and Preqin employees. Sales asset and account expense increased 25% compared to a year ago, primarily driven by higher distribution and servicing costs and direct fund expense. G&A expense increased 14%, primarily driven by the impact of the HPS and Preqin acquisitions. Excluding the impact of the HPS and Preqin acquisitions, G&A would have increased a mid-single-digit percentage from a year ago.

Our first quarter as-adjusted operating margin of 44.5% was up 130 basis points from a year ago, reflecting the positive impact of markets on revenue and strong organic base fee growth. We continue to deliver higher margin expansion on recurring fee-related earnings. Excluding the impact of all performance fees and related compensation, our adjusted operating margin for the first quarter would have been 45.6%, up 180 basis points year-over-year.

We repurchased $450 million worth of shares in the first quarter. At present, based on our capital spending plans for the year and subject to market and other conditions, we still anticipate repurchasing at least $450 million of shares per quarter for the balance of the year, consistent with our January guidance. In the first quarter, BlackRock generated total net inflows of $130 billion, led by strength across ETFs, active and private markets. Record first quarter ETF net inflows of $132 billion were led by index bond ETFs with $41 billion of net inflows. Precision exposures, core equity and active ETFs added $39 billion, $32 billion and $19 billion, respectively.

Client demand for international diversification presents meaningful upside for BlackRock, particularly in areas like emerging markets and precision single country allocations. This demand for premium exposures that are specific to iShares resulted in double-digit organic base fee growth for ETFs in the quarter. Retail net inflows of $15 billion reflected continued strength in our systematic liquid alternatives, active fixed income and evergreen private markets offerings. Subscriptions for HPS' flagship non-traded BDC continue with approximately $150 million of subscriptions for the April window. Demand for Aperio and SpiderRock is also accelerating as financial advisers turn to these platforms for customized and tax-aware strategies. Aperio generated a record $13 billion of net inflows and SpiderRock added over $1 billion in the quarter. Aperio's AUM has more than tripled and SpiderRock's AUM has more than doubled in the 5 and 2 years since their respective closings.

Institutional active net inflows were $24 billion, driven by our LifePath target date franchise, private markets and systematic strategies. These inflows were partially offset by a few client-specific active fixed income redemptions. Institutional index net outflows of $35 billion were concentrated in low-fee index equities. In private markets, we continue to see strong momentum supported by investment performance, differentiated deal flow and the breadth of our client relationships. We saw an aggregate $9 billion of net inflows led by private credit and infrastructure and primarily driven by deployment activity. Finally, BlackRock's cash management platform saw $6 billion of net outflows in the first quarter. Cash management results reflected seasonal redemptions from U.S. government funds, partially offset by growth in customized cash mandates.

BlackRock is at its best helping clients navigate intense periods of transformation across industries, markets and geopolitics. Capital is moving. Wealth management platforms, institutions, consultants, they're evaluating their providers of asset management services. Our whole portfolio model has a proven track record of capturing momentum and gaining share in these environments. BlackRock is simultaneously a leading public markets manager, a scaled private markets platform and a global technology company. That's not something that can be replicated overnight. Our clients know it, our results prove it. We generated 8% organic base fee growth in the quarter and 10% over the last 12 months. At the same time, we grew revenue and operating income double digits and expanded margins by over 100 basis points.

When clients are making big decisions about their portfolios, they're choosing BlackRock, because we can meet them across public markets, private markets and technology, all on one platform. We have the investment expertise, the technology, the global reach and the track record. And we have nearly 25,000 colleagues, One BlackRock, working together to deliver excellence for our clients and growth for our shareholders.

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

Thank you, Martin. Good morning, everyone, and thank you for joining the call. This was one of the strongest starts to a year in BlackRock's history. Clients awarded us with $130 billion of net inflows in the first quarter. That drove 8% organic base fee growth, representing our highest first quarter in the last 5 years. Technology Services ACV grew 14%. Our margins expanded by over 100 basis points to 44.5%. And our firm's effective fee rate moved upward. And over the last 12 months, clients entrusted BlackRock with $744 billion in net new assets, powering 10% organic base fee growth.

Our result reflects a global business with accelerating momentum, deep client engagement worldwide and a platform built to compound through cycles. But our position reflects something larger than 1 quarter or even 1 year results. The conversations I'm having with clients around the world confirm what our results already show. Our business is becoming more global and more connected. Our brand is strengthening in every region in which we operate. I've seen it deepen even in the last few weeks in my trips to Mexico, Europe and my conversations with colleagues and clients in the Middle East. I want to recognize the resilience and partnership from our employees, our clients and our Board members in the Middle East. We'll continue to do everything we can to support them.

In a world where capital is moving and provider relationships are being reevaluated, BlackRock is a trusted destination. A major part of my role has always been spending time with clients. By 2026, schedule has already been filled with rich dialogue with CEOs, sovereign wealth funds, pension funds, insurance CIOs, wealth managers and governments. In these conversations, I hear a consistent theme, the world feels different, not just uncertain, but different. The world is reorganizing around self-reliance. AI is reshaping how we live and how we work. Private markets are a large and growing part of the capital markets, and clients are turning to BlackRock to help them understand what this means for their portfolios and for their beneficiaries.

We're engaged with clients across every channel, geography and asset class. Many of these conversations would not have been possible 5 years ago, because the platform we now have built did not exist. We built it by bridging public and private markets and by expanding iShares into new regions and asset classes, by unlocking personal SMAs through Aperio and by making active a true scale business through systematic alpha.

BlackRock is playing a role that goes beyond asset management. We're partnering with governments and clients to help more people grow with their economies and with their countries. Through iShares and our local platforms, we're helping turn citizens into investors in their local economies in India, in Mexico, in Japan, in Europe and beyond. Much of our work is focused on making retirement investing more accessible. Strong retirement systems deepen on deep functioning capital markets, and deep capital markets are built in part by the savings of people planning for retirement. BlackRock's role in retirement is resonating in every conversation I have with every governmental leader. Retirement is foundational to BlackRock.

Our platform spans defined benefits and defined contributions and brings together public and private markets, active and index and technology at a global scale. That combination differentiates us in the U.S. as plan sponsors consider the role of private markets in 401(k)s. But it's also shaping how we partner with clients in regions like the Middle East and India to build a more durable retirement system and local capital markets. We're invested ahead of our clients' needs and secular forces driving growth in capital markets. We're more confident than ever in our model and the breadth of our pipeline has never been greater.

BlackRock's diversified platform is an advantage. We develop whole portfolio solutions at scale. We're deepening client relationships and enabling more durable growth. It provides resilience and it gives us upside capture when market conditions shift. When clients rotate towards international exposures, as they did this quarter, BlackRock benefits. iShares is differentiated in that it indexes virtually every slice of global equities and bond markets from broad benchmarks to emerging markets to single country precision exposures. Demand for these premium exposures drove record iShares first quarter net inflows of $132 billion, with net base fees double what they were compared to this time last year.

Our active ETF platform has grown 4x in the last 2 years to more than $110 billion in AUM. Net inflows of $19 billion led the industry. We said that we believe that active ETFs can be a $500 million or greater revenue generator by 2030, and we're already more than halfway there. Strong client engagement drove $3 billion of active equity net inflows. For BlackRock, active equity is a growth area. Our systematic equity offerings remain one of the leading investment performance engines. We're working on a number of other systematic equity assignments with clients around the world. Clients want to harness AI, decades of proprietary data and BlackRock's track record of turning quantitative rigor into long-term investment performance. Then in retail active fixed income, we raised $2 billion, led by our top-performing unconstrained strategic income opportunity fund.

We're firmly in the era of whole portfolios. Clients want advice. They need allocation and implementation across public and private markets together at scale. A decade ago, fiduciary's best practice often meant diversifying across a number of managers. As portfolios and governance have grown more complex, our clients are actually increasingly choosing to work with fewer strategic partners, many times just one. We see that shift reflecting in the industry outsourced CIO assets, which have more than doubled over the last 5 years. This movement towards whole portfolios is playing directly to our strengths. Clients are choosing BlackRock because we build together asset management and technology across public and private markets seamlessly in one integrated platform. The whole portfolio construct has resonated for years in our institutional channel, where we've been entrusted with approximately $300 billion in large-scale outsourcing mandates over the last 3 years.

In wealth, we are also opening new avenues of growth as demand for public, private tax awareness investing reshapes how investors build their portfolios. BlackRock's wealth platform spans over $1 trillion in AUM with global distribution across tens of thousands of financial advisers. It delivers seamlessly integrated public and private market solutions, model portfolios and practice management capabilities. That significant value proposition as wealth management firms rethink their product shelves and look to do more with fewer partners. We're seeing demand across our wealth offering. That includes a record quarter in Aperio and SpiderRock, outsourcing mandates and net inflows into liquid active and private market strategies. Private markets, including net inflows into our ELTIF 2.0 funds in Europe and our flagship non-traded credit BDC.

The combinations of GIP and HPS with BlackRock are surpassing the highest expectations we underwrote. GIP V closed above its $25 billion target and is already majority committed through recently announced deals like TCR, AES and Aligned. Then joining HPS outsourcing and structuring expertise with BlackRock's relationship network has supercharged our combined origination capabilities. That allowed us to be more selective while still actively deploying capital at scale. These businesses are not just integrating, these businesses are accelerating.

There's been a lot of attention on private credit, but the headlines do not reflect what clients are telling us, what our portfolio data shows or where we see the market going. Demand is structural. Private credit serves an important role in the financing ecosystems. Banks, governments, public capital markets cannot fully address the world's growth and investment capital needs. That isn't changing. Much of the focus on wealth vehicles like BDCs, interval funds and tender funds. But these funds, these make up around $550 billion in AUM or about 25% of the $2.2 trillion private credit industry.

Actually, institutional demand is accelerating. They're increasing allocation to private credit as wider spreads are enhancing return potential and defaults while normalizing or still within historical standards. Private credit has historically offered asset level yields that are approximately 150 basis points higher than comparable rated traditional fixed income. New activity levels have been somewhat lower in the first quarter, which is partially seasonal and reflects related to market uncertainty. But new regular way direct lending opportunities are being quoted 25 to 50 basis points wider than where the market was in the fourth quarter, with select opportunities over 100 basis points wider. Periods of market disallocation (sic) [ dislocation ] are when private credit investment opportunities are most compelling.

BlackRock's private financing solutions platform benefited from a balanced and diversified client base across investor types and geographies. We have particularly strong representation among insurance companies and pensions as well as sovereign wealth funds and private market relationships. About 85% of private financing solution investor base is institutional focused, leading to greater capital durability across market cycles. This enables us to remain active investors across market environments, which should ultimately lead to better long-term risk-adjusted returns.

Over the last 5 to 7 years, relatively benign credit markets have lifted all boats. As the overall market environment becomes more complex, we expect to see much more dispersion in performance among private credit managers. That's an environment we like to compete in. We believe that HPS' strong underwriting discipline and its proactive risk management will compare favorably and ultimately result in differentiated returns and share gains.

Private credit has scaled rapidly and the risk management infrastructure supported has not kept pace. That is a meaningful opportunity for Aladdin. We already have a comprehensive public private workflow and data offering through Aladdin, eFront, and Preqin. We are positioning BlackRock and Aladdin to be the language of private credit portfolios for transparency and for risk analytics. We believe that the combination of Preqin and eFront data represents the broadest universal (sic) [ universe ] available in the markets. Aladdin's value as an enterprise-wide operating system is only amplified in a world with more need for real-time verified data on one single platform.

We have visibility on strong future fundraising and deployment across multiple dimensions of our private credit platform. Institutional client demand for private credit continues to grow, particularly with insurance companies. This quarter, we signed a multibillion-dollar rotation into a high-grade private credit from an existing insurance client. This will drive revenue growth as it is deployed over future quarters. We have a multibillion notified insurance pipeline for similar mandate. Fundraising in HPS' junior capital strategy is tracking well, and we saw approximately $150 million in HLEND April subscriptions.

BlackRock is at the forefront of innovation and advocacy in retirement. That includes reimagining how people save and spend across longer lives. It's working with plan sponsors and policymakers to deliver better retirement outcomes. The Department of Labor's proposed rule is a major development towards a framework to include private assets and target date funds. BlackRock will be at the forefront of this opportunity. We have a $600 billion LifePath target date franchise, where we saw $15 billion of net inflows in the quarter. That included $4 billion into LifePath Dynamic, our active solution. Our LifePath Dynamic range is well positioned to eventually include private markets exposure along public equities and fixed income.

As private assets potentially enter the defined contribution market, plan sponsors need to partner with a target date history, long-term track record, private market scale and technology and data to satisfy their fiduciary oversight. BlackRock delivers on every one of those points. We have our leading DCIO business, a top 5 alternatives platform, a public and private technology and data platform. The DOL's proposed rule is clear that fiduciary standards will demand rigorous data and performance benchmarking for private assets. It reinforces what we've been saying all along. Plan fiduciaries will need institutional-grade data and performance benchmarks to make defensible allocation decisions. That's exactly what Preqin provides, and our leadership in target date, private markets investing and data clearly differentiates BlackRock with all our plan sponsors.

This has been one of our strongest starts in BlackRock's history. It's not that we were benefiting from a favorable moment. We're actually benefiting from a durable platform, one that has been built over decades, over long strategies, and we are equipped for this type of environment, an environment where capital is moving and fundamentals are being reevaluated. The pipeline ahead of us is among the broadest I have seen at BlackRock. Actually, momentum is accelerating. We're energized by these opportunities ahead. And most importantly, I would like to thank all of our BlackRock colleagues for the work they've done each day to deliver for our clients and our shareholders.

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

[Operator Instructions] Your first question comes from Michael Cyprys of Morgan Stanley.

I wanted to ask about the wealth channel penetration. I was hoping you could update us on the progress penetrating U.S. and international wealth channels, particularly for alternative products. What milestones should we be tracking over the next 12, 24 months? And what impact might we see from the uptick in redemptions across evergreen private credit products?

Martin?

Thanks, Mike. So we're proud to manage more than $1 trillion of assets for wealth managers across the BlackRock platform. It really covers every corner of a client portfolio from models to separately managed accounts, ETFs, private markets. We're a technology provider. Our Aladdin technology sits on the desktop of financial adviser that brings institutional quality portfolio construction right to the desktops. We have the largest client-facing team in the industry covering every corner of the U.S. marketplace from full-service brokerage and wirehouses to independent broker-dealers and RIAs. And we have very strong relationships with private banks all across the world in the United States, in the Americas, Europe and Asia.

We have a diversified product business, strong track records and great distribution. I think you really see that come through in the first quarter retail net inflows of $15 billion. That was driven by a record $13 billion into Aperio, $3 billion into liquid alternative strategies as well as demand for strategic income opportunities, active fixed income and our evergreen private markets. I'd call out that, that's 9 consecutive quarters of retail net inflows. So this continues to be a durable, strong growth channel for us.

Let me comment just on kind of 2 areas that I think are worth highlighting. So the first is that growth in this channel is being driven by demand for whole portfolio services, the move from brokerage to advisory, and that's led to a growth of ETFs and SMAs, 2 places where BlackRock is an industry leader. It's also put a big focus on after-tax investing. I think for a long time, the language of the industry was sort of pretax returns or asset class level returns. The fact is our clients pay for college, they pay for health care, they pay for mortgages. They ultimately pay with those things with after-tax dollars. So putting after-tax portfolio construction has been at the heart of what we're trying to do at BlackRock for taxable investors all over the world. It was at the heart of the rationale for the Aperio acquisition, and it's really driving growth in these businesses. Aperio net inflows were record levels for a fifth straight year in 2025, and we saw a new quarterly record in the first quarter with $13 billion. SpiderRock added a quarterly record of $1 billion of flows with options overlay on top of SMAs.

I'd call out just some interesting things there that I think are kind of high-growth areas. In that $13 billion of direct indexing flows, about $9 billion was long-only traditional direct indexing. $4 billion was in long/short strategies. Think of those as having additional abilities to create tax loss harvesting opportunities. We continue to see a lot of growth there in that platform, and we have a really unique advantage of bringing together the long-only capability with the long/short. So we continue to believe that long/short direct indexing with options overlay is going to be a great growth area, and we hope to double, triple that business over in the near term.

Second, model portfolios. Model portfolios in the Wealth Management segment is the same as OCIO in the Institutional segment. It brings professional management, it brings scale, it brings convenience, and customized and ETF-based models are really a huge part of an adviser's growing practice. Roughly 40-plus percent of our iShares flows, particularly in the U.S., come from model portfolios. So we're expanding those solutions to include private markets in the convenience of a model portfolio.

And then just last on your piece about evergreen. Evergreen wealth strategies are a big part of what we see as being retail access vehicles for wealth management platforms. And even with some moderation of private credit BDC flows, overall evergreen flows are pretty stable and steady. I think you see that in the industry data, whether that's on interval funds, tender funds, private equity, real estate, secondaries, infrastructure, so on and so forth. So we think there's a great opportunity to continue to expand our evergreen lineup. We have our HLEND flagship, and we're on track to bring an H series of vehicles to market for private wealth over the course of 2026.

You can actually find registration statements on the SEC EDGAR website for Real Assets or [ HREAL ] and net lease strategies with HLEND -- excuse me, [ HNET ]. And we launched [ HLEND E ] in Europe, and we're bringing a new GIP core infrastructure fund to market in Europe as well, which we think will be a great jumping off point for private wealth. So we have a lot of ways to grow in wealth. We continue to be really optimistic about our opportunities there in ETFs, SMAs, liquid alts, private markets as well as Aladdin Wealth and models. So we look forward to keeping you updated on our progress there.

Your next question comes from Craig Siegenthaler with Bank of America.

Two weeks ago, we received a proposal from the Department of Labor to help support DC plan sponsors' decisions to select privates in the $14 trillion 401(k) channel. So just given your size with your target date franchise, what are your initial thoughts on the proposal? And also, any thoughts on if you could launch a new series of target date strategies or use your existing strategies and just have a private allocation?

I'll have Martin start with that, and then I'll finish it up. But let me just say one thing importantly, every country that we are talking to are refocusing on how can they expand their capital markets through retirement. And they're seeing retirement as an incredible important component. And when you think about more and more countries that are focusing on how to become more self-reliant, whether that's in the form of technology or energy, there is more and more conversation about being more self-reliant on their own fundraising needs. And to do that is to move money from bank accounts into investable assets. And so retirement is a conversation we have in every country. Let me turn it to Martin specifically with the DOL question.

Thanks, Larry, and thanks, Craig. So we're really energized by this activity that we've seen from policymakers, consultants, plan sponsors. As I've said before, I've been doing this for 20-plus years. We've seen more advancements on private markets to 401(k) in the last 12 months than in the last 20 years. I would really applaud the leadership team at the Department of Labor for huge engagement with the industry, with the trade associations, with consultants, with plan sponsors, with companies. They've really sweated the details.

And I think the notice to propose rule that the department released, to be honest, is better than we expected it to be and really paves the way, I think, for healthy engagement in this comment period about opportunities to make this even more compelling for planned fiduciaries, and most importantly, to deliver diversified professionally managed portfolios that put together public and private markets for long-dated retirement portfolios.

More than half the assets that we manage at BlackRock are related to retirement. As Larry mentioned in his remarks, we're the #1 DCIO firm with over $600 billion in target date funds, and we're a top 5 private markets manager. So we see a great opportunity to really deliver for clients here. If you look at the Department of Labor notice to propose rulemaking, it sort of goes through and emphasizes ERISA and a process-based review of 6 factors: performance, fees and expenses, liquidity, valuation, benchmarking and complexity. And I think in Larry's comments from quarter-to-quarter, he's been very clear in talking about the value of things like Preqin data, especially on that part of benchmarking and how plan sponsors and consultants can make good fiduciary sound process-based decisions under the protections of ERISA by leveraging data. We think that's a huge opportunity to do good while we do well, to do good for plan sponsors and for plan participants while we do well.

Second, we think kind of delivering performance, value for money, liquidity, sound valuation, doing that in a target date fund, delivering these exposures in a target date fund, we think it's the best way to do it for DC plans. If you look at inflows into 401(k), they almost all come through QDIA, which is target date funds, balanced funds and managed accounts that look like those things. So ultimately, we think that as and when the new DOL rule takes hold, we believe that a broader range of target date funds are really going to benefit from the diversification of private markets in a professionally managed vehicle that has fiduciary sound decision-making.

We have our product coming to market with Great Gray this year. We're going to be launching a LifePath with privates, all of which is to try to build a track record so that plan sponsors and consultants can get more comfortable with these structures as the DOL rule hopefully takes hold towards the back half of the year and we get really running in 2027.

I would just add another macro view. I think if we are going to really excel as a country, but across all countries, the need for more citizens to grow with our country by utilizing savings and translating that into investing and have a complete range of investable products, whether they're passive or active, public or private, I think is very important. This is the type of conversations we're having across the spectrum of countries and opportunities. I think there's a huge awakening of understanding the power of retirement that flows through the capital markets. And so this is not just a U.S. phenomenon, but it's a phenomenon that is being discussed in all the corners throughout the world.

Your next question comes from Alex Blostein of Goldman Sachs.

I wanted to ask you guys a little bit of a bigger picture question. So you mentioned in your prepared remarks that in prior periods of dislocation, BlackRock tends to gain share. We've seen it in multiple cycles when there's more money in motion. Does that happen again this time around? And if so, I was hoping you could add a little more specificity in terms of which products or which asset classes BlackRock is best positioned to gain share if, in fact, we do see more money in motion on the back of all of this and ultimately implications for the firm's organic base of growth over the next 12 to 18 months.

Well, I think we've said it in different snippets, but I do believe our positioning in retirement, our positioning in now infrastructure and privates, our positioning in iShares and the breadth of the global footprint we have, we're just seeing more and more different types of opportunity. The speed in which we're deploying capital in GIP V and infrastructure, I talked about that.

The opportunities for more and more countries that are looking to and having a great need to build out their infrastructure, especially with this AI revolution going on, actually now getting back to self-reliance, more and more countries have a greater need to find different sources of power for self-reliance and dependent on the importation of energy. So the need for building out, let's say, solar, which I talked about in my Chairman letter a few weeks ago. But I do believe it's our positioning across ETFs, the scale of our ETFs, the granularity of our ETFs, which are unmatched by any other ETF provider, and then just the entire footprint allows us to have these different types of conversations globally.

In the U.S., as Martin just discussed, the role of Aperio in terms of tax advantaged portfolios as the threat of higher taxes and all these other issues are playing into the strength of the platform that BlackRock systematically built over the last 20 years. And I think if you think about the platform that we built across public and private markets and now the platform we've built across public and private markets, overlaying investment technology has given us this unique ability to have conversations in all the corners of the world. And I can't underscore enough the conversations we're having related to the growth and role of capital markets.

I have had conversations even in this week about the need for Europe to have a capital markets union. What does that mean? The conversations we're having across Japan and the Middle East and every other corners. I was in Mexico last week talking about that role and that opportunity. So we're involved in these conversations at the government level, we're involved in these conversations at the institutional level, and our platform also speaks to the wealth platforms worldwide. Martin, do you want to follow up with any more of that?

Yes. I think Larry captured the sort of gestalt of the client perspective, I think, beautifully. Alex, I'd note for you that March 2026 was the worst month for broad markets since September 2022. In September '22, broad stocks were down 10%, Broad bonds were down 4% to 5%. In March '26, stocks were down 7% to 10%, broad bonds traded down 2% to 3%. I think BlackRock is getting better and better and better through market environments of taking share and delivering more sustained organic growth. And we think we can confidently and consistently deliver 6% to 7% growth from our structural growth segments when markets are especially supportive or when clients rotate into higher fee segments in any quarter.

There's 2 broad vectors for this growth. The first is structural growers. The second is whole portfolio relationships. The structural growers are the products and services that have this all-weather growth. They're ETFs, they're private markets, models, tax-aware strategies like Aperio and SpiderRock and Systematic. They're the ones where I think we take disproportionate share as those structural trends advance forward. But the second avenue of sustained organic growth is whole portfolios, right? It's that clients want to consolidate business with fewer providers. They're looking for more from the platforms that they do business with. So share gains are a source of organic growth for scaled players like BlackRock.

I mean, if you look at the industry flows for the last several years, the top 5 asset managers, they're consolidating 80-plus percent of the flows. But this is still an extraordinarily fragmented business by assets and revenue. So this ability to consolidate share is another avenue of sustained organic growth. And my own sense of the markets today across some of the private credit tumult is that this is an opportunity for BlackRock to take share in that market, particularly in private markets across wealth platforms, where clients are saying, we want a more whole portfolio relationship, so that we can think about how to put our public markets together with our private markets, how we can manage our practices through these market cycles. So we actually think some of the shakeout in credit is actually good for our organic base fee growth profile away from the structural growers that we're confident in already.

Your next question comes from Mike Brown of UBS.

I have a bit more of a macro question here. With the Middle East conflict, that certainly presents some clear geopolitical macro challenges here that could perhaps shift some of the capital priorities. You touched on that a little bit here. But are you seeing any change in sovereign wealth behavior as they think about allocations? And maybe any read on Asia, just given some of the added pressure to their economies from higher energy prices?

Specifically in the Middle East, we have not seen any change in behavior. Just this week, I'm meeting 2 finance ministers from the Middle East. We can tell you in some of the co-investments that we've done already in the last few months, the Middle East has participated quite largely in some of our co-investments and the opportunities. So in actuality, we've seen actually no change in behavior. We have an announcement that's forthcoming in the next week or so related to retirement win we have in the Middle East. So actually, very little behavior change, but our dialogues are probably a little more constant, a little more talking about how should they play all this and what should they do. But at this moment, we have not seen any withdrawals from sovereign funds to the treasuries of these countries. If anything, I think the money is still continuing to flow into their own individual sovereign funds. But their investment behavior has not changed.

Now obviously, things could change if there's a prolonged uncertainty and a prolonged violence in the region. So on that note, we are working closely with our friends, our employees, everybody who is affected by this conflict. So we have spent a lot of time there. We've been working with our employees. Over the course of the last year, we built out our offices in almost every country in the Middle East with the idea that we see huge opportunities. We are continuing to build out those offices. Obviously, there is stress around that at the moment related to the conflict, but we see no behavior changes at all. And in fact, they're probably more -- they're articulating, I would say, more opportunities, not less opportunities at this moment.

Related to any places in the world where higher energy cost is a tax, as I said earlier, we are witnessing in some places where the increase in energy costs are being absorbed by governments, and that's happening in parts of Europe already and also in Asia. All that means is the deficits are probably going to be rising or a need to do -- as they build out infrastructure, a need for more public, private is more realistic. And so I would argue this all presents bigger and better opportunities across the board.

That being said, obviously, we don't have any insight as to how and when this conflict will end. But we are in constant dialogue with our partners and our friends in the Middle East. We probably have had more client calls, more calls with leadership and governments than ever before. And we need to be making sure that we're staying in front of our clients and remain a trusted partner. And I think the evidence speaks quite loudly that we are one of their key trusted partners.

Your next question comes from Brian Bedell of Deutsche Bank.

So a question on -- I mean, it's a 2-parter, one for Martin and then one for Larry. But it's around organic base fee growth and scaling that. So beta has always been your best sort of incremental margin opportunity. But as you grow the organic base fee growth faster, do you see a better ability to scale that over time? And are you seeing more demand from outside the U.S. Like you said, there was an incremental shift towards non-U.S. Are you seeing that continuing? And then if you could just comment on the expansion in the base fee rate, but if you can comment on what you're seeing as the exit base fee rate for the quarter. I don't think I heard that.

I'll pass that to Martin.

Thanks, Brian. I hope you're well. So maybe I'll start just on kind of margin. We continue to deliver industry-leading margins over the cycle, and as I laid out at 2025 Investor Day, we continue to target a 45% or greater adjusted operating margin with our margin on recurring fee-related earnings running higher. We expanded both operating and recurring FRE margins by over 100 basis points this quarter. We did that in an environment where AUM actually finished on a spot basis lower than average. Our operating margin for the quarter was 44.5%, while the margin ex performance fees and related comp was 45.6%.

I guess on the forward, what I'd say is we've run BlackRock at margins north of 45% before. We've run them close to 47% back in '21. And we did that at a time when we didn't have a large-scale private markets franchise. Now we've added these engines of infrastructure and alternative credit with our colleagues from GIP and HPS. Both of those franchises were north of 50% FRE margins when they joined BlackRock. So I think we can ultimately do 2 things. Over time, we'll see the margin on fee recurring earnings driving upwards towards the trajectory of what I'd say is the best-in-class private markets names, north of 50%. We think we can do that through the acquired businesses, but we also have these highly scaled franchises in ETFs, and digital assets and systematic equities that can help propel FRE margins higher.

And then second, with constructive margins -- excuse me, with constructive markets, with a higher fee rate on flows, which we've been driving and strong organic growth, we can pull the fully burdened operating margin of the company up as well. And as I said, we've run the company at 47%. So I don't see 45% or 46% as a ceiling. As you mentioned, we had 8% annualized organic base fee growth in the quarter, 10% over the last 12 months. That's 7 consecutive quarters over 5%. The fee rate was up 2/10 of a basis point sequentially. That's on strong market performance in our higher fee public markets book, particularly coming from EM and international equities, along with this client demand for international iShares exposures and the systematic growers that have higher fee rates like systematic equities, private markets, Aperio and active ETFs.

What I'd say is global equity markets have improved in April, and we always disclose the revenue-weighted indexes in the supplement, but the BlackRock Equity Index is up about 5% in the first 2 weeks of April. At the end of March, our base fee entry rate was approximately 2% lower than the first quarter base fees, but that's basically been recovered with the April market performance.

Your next question comes from Dan Fannon of Jefferies.

I was hoping you could expand upon some of the trends at HPS and just private credit broadly and distinguish between the institutional conversation activity versus what you're seeing in retail and also comment on deployment in this type of market as well.

Martin?

Yes. I guess I'll start with first that HLEND is one of the best-performing non-traded BDCs in the market. It's logged 10.4% annualized total return since inception. It's one of the only funds among major peers with positive performance in '26 with $840 million of Q1 subscriptions, including the DRIP and approximately $150 million for the April window. We continue to see good engagement with the HLEND base. We continue to see good engagement across wealth clients for evergreen structures, and we continue to believe that we can grow there through time.

I would offer just briefly that I think BlackRock is in a different place than other firms on these questions. For BlackRock, our 2030 strategy is to drive organic base fee growth at 5-plus percent through a broad public private markets platform and our track record showing that we can more consistently generate 6% to 8%. And so we're not reliant on any one engine. We're not reliant on any one product. So we may or may not go through a period of elevated redemptions relative to historical levels and more muted subscriptions in wealth channels for private credit funds. We don't know for certain.

We do see long-term demand for institutional-grade private credit as intact and HLEND flows and fee rates are just generally accretive to our 2030 plan, whether they're at 25% or 50% or 75% of historical levels. We're broadening out the evergreen lineup, as I mentioned, with real assets, with net lease strategies, with Europe. So we think we have great opportunities to grow in wealth.

What I'd say is, the business is generally about 10% retail private markets at BlackRock. So call it, 85% to 90% of the base is institutional. And there, we've actually seen strong demand. If anything, with some of the retail pullback, we've seen stronger institutional fundraising, stronger institutional deployment, and some of the spreads that we see today in direct lending and asset-based finance are some of the most attractive on this market pullback. So we generally are very constructive on institutional fundraising in and around private credit strategies.

Your next question comes from Brennan Hawken of BMO Capital Markets.

Curious to hear your plans. We saw that you guys filed for the IQQ. So curious to hear your plans around that and the NASDAQ complex and whether or not you guys are considering a fee holiday to help your product gain scale. Looking at the S&P complex, it's much larger. So if we see a chance for competing products to get launched there, do you have the idea that it would expand the pie versus cannibalize?

Martin?

Thanks, Brennan. I hope you're well. So we filed a registration statement with the SEC on the NASDAQ 100 Index ETF, the IQQ. So due to those regulatory filing restrictions, we're not able to provide a lot of detail beyond what's in the filing. What I will say is that at BlackRock, we have a long-standing and continuously growing partnership with NASDAQ. We're already the largest manager of NASDAQ 100 ETFs outside the United States. We manage $25 billion across ETFs listed in Europe, Canada and Hong Kong.

In the U.S., we also have the NASDAQ Top 30 and Next 70 Index ETFs as well as the NASDAQ Premium Income ETF. And now IQQ is similarly trying to facilitate access for U.S. investors with an iShares quality option in one of the most widely tracked indexes. We're differentiated at BlackRock. We've got 2 distinct global ETF ranges, the U.S. and Europe. These scaled platforms enable us to port proven growth franchises and distribution approaches across geographies. That's a meaningful differentiator for BlackRock. So we believe we can continue to grow access to these exposures with high-quality iShares institutional-grade management, and we look forward to keeping you updated on our progress once we get through the registration period.

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

Thank you, operator. Thank you for all joining us this morning and for your continued interest in BlackRock. We opened 2026 with one of our best starts to the year on record. We're aligning our platform alongside long-term client needs and structural growth drivers, and it's showing up in a meaningful way in our results. The strength of the firm, our breadth, our scale, our connectivity is positioning us well to continue to be delivering value for our clients and differentiating long-term growth for our shareholders. Thank you, and have a good quarter.

This concludes today's teleconference. You may now disconnect.

Welcome to Bank of America's 34th Annual Financial Services Conference. This is Craig Siegenthaler, North American Head of Diversified Financials at BofA. And it's my pleasure to introduce Martin Small. Martin is the CFO of BlackRock and serves as the Global Head of Corporate Strategy. He's also a member of BlackRock's Global Executive Committee. Martin, first, thank you for joining us here in Miami.

Thanks, Craig. Great to be here with everybody. Hope everyone is having an excellent day.

All right. So a quick background on BlackRock. I know you all know it, biggest asset manager in the world, over $14 trillion of AUM. More importantly, it's a leader, a first mover and scaled in all the major secular growth businesses, ETFs, technology and data, retirement solutions and private markets.

With that, let's get started on that record 12% base fee organic growth that you ended 2025 with. So seasonality and cycle may have helped a little bit, but for the full year, it was 9%, so a really strong number, well above market expectations 12 months ago. What were the key drivers of that acceleration over the past couple of years? And do you think it's sustainable?

We've seen really excellent momentum in organic base fee growth at BlackRock. It's been geared around the firm's long-term strategy of serving every corner of an investor's portfolio and marrying public and private markets, marrying asset management and technology. And you're right, Craig, it's 6 consecutive quarters north of our 5-plus percent target. It's every quarter in 2025, north of 6%. It's 9% for the year, 10% in Q3, 12% in Q4.

So we've seen organic growth really, really ticking up. As you said, I think there are some chunky enterprise wins that happened. So we had the Citi SMA portfolio solutions win that we had in the fourth quarter. We've had some big outsourcings. But even if you wanted to sort of remove some of those and say, what's just sustainable normalized organic base fee growth, we feel really comfortable that we're kind of clicking along at 6%, 7%, and we think we can sustain that in terms of the mix of the businesses that we have across ETFs, both active ETFs, traditional ETFs, digital assets, private markets, systematic equities.

We've really seen a lot of breadth in the organic growth. So when we think about the top 5 contributors we've had, they've been both businesses that we've built or acquired in the last 2 years, and they've been kind of foundational platforms that we've operated for a decade. I think there's 2 really important vectors for sustainable organic base fee growth for us. And both of them are entrenched in just making sure we're constantly organized around these structural growth engines, the movement from brokerage to advisory, the opening up of retail investments and 401(k) to private markets.

We're really well positioned in those structural growth areas. So I think those structural growers are the foundation of sustained organic base fee growth. And second, I think that the market is basically consolidating managers over time. Clients are looking to do more business with fewer providers. They're looking to extract more value from the platforms that they do business with. And so the stock of the industry's assets is a source of organic growth for the scaled players.

I think if you look at flows in the industry for the last several years, the top 5 asset managers are consolidating something on order of 80% of the flows. But there's still an extraordinary amount of fragmentation in this industry, both by assets and by revenue. If you were to compare the asset management industry to, say, credit cards or sales and trading or airlines, you'd find our industry is not at all concentrated. So the opportunity to consolidate share out of the industry stock and to consolidate revenue share, we think, is enormously attractive for BlackRock and how we're positioned.

Great. Martin, let's hit on your strategic priorities for 2026. So you've been very active on the M&A front, 3 sizable deals, private credit, infrastructure, alternative data. So I'm sure integrating them is probably kind of top of the list. But what are you working on this year? What are your major goals for 2026?

BlackRock is pioneering what we think of as the future of asset management, which is bringing together asset management and financial technology across public markets and private markets. and delivering that in the whole portfolio context. The acquisitions that we've done in the last 2 years are at the top of our list to integrate and realize the planned synergies.

That's Global Infrastructure Partners, which is an infrastructure leader, and that's HPS Partners, which is a leader in private and alternative credit, maximizing the synergies of that and being a scaled provider across public and private. That's at the top of our list to get right in terms of helping clients build integrated public and private portfolios. Private markets and alternatives at BlackRock today is $676 billion.

We're a top 5 player, present in all the fastest-growing categories, and we think our ability to grow organically there is very, very strong. At our Investor Day in 2025, we talked about the 4 or 5 $500 million revenue businesses that we're building. That's private markets to insurance, that's private markets to wealth, that's active ETFs, that's digital assets. Those are evergreen builds that we're continuing to work and are continuing to deliver in their growth.

But maybe I'll highlight a couple of strategic priorities that I think are top of mind for the management team in '25 and '26. The first is fundraising. So at our Capital Markets Day, we talked about $400 billion of growth fundraising out to 2030. We think we're on a good trajectory for that over the next couple of years. That's both kind of mining our institutional relationships, mining the wealth channels, also working with our insurance and wealth clients in order to grow there. The second would be iShares.

I find it pretty incredible that this industry continues to grow in exchange-traded funds at double-digits organic growth. We had $530 billion of organic asset growth in iShares last year, finished #1 across the world. But we're still opening up new use cases for ETFs in fixed income, in active ETFs, in nonlinear ETFs that incorporate options in terms of covered call writing or puts and calls that are structured note replacements. And I think of kind of the growth of ETFs around the world, in Europe, we have the leading ETF market platform. It's setting new records.

It set a record in '25. It's had a record January. And so the growth of exchange-traded funds outside of the United States, we think, is a very meaningful opportunity. They've built a big business in Europe without a national best bid, best offer system without a single capital markets regulator, the way we have in the United States. And so I think as those trends take hold in Europe, the opportunity to grow exchange-traded funds outside of the United States is a real strategic advantage for BlackRock.

I think the third is technology and data. Our Aladdin business finished 2025 at 16% ACV. We continue to target mid-teens ACV for our growth through the cycle, and it's an important part of reaching our 2030 objectives of $36 billion of revenue and doubling our operating income. And the last thing I'd highlight is just wealth everywhere. The opportunity in wealth, we think, for us is incredible. That is the movement from brokerage to advisory continues in the U.S. market. We continue to see an expansion of the independent RIA.

We continue to see big scaled wealth platforms at the full-service wealth managers, grow their model portfolios. We continue to see all channels across the wealth market, both in the U.S. and in Europe and incorporate more private markets. We think those are huge opportunities for BlackRock, where we can both be a great product provider, but also a provider of technology, custom models, SMAs, after-tax strategies, think of things like Aperio Long/Short, options overriding with SpiderRock. We have the largest wholesaling teams in the industry across the U.S. and Europe, and we think the opportunities in wealth are absolutely terrific.

Martin, let's stick with wealth for a second. You really upgraded your offering last year with both GIP and infrastructure in HBS and private credit. So maybe dig a little deeper into that one. And where do you think we are in terms of this migration long term for retail investors globally going into alternatives?

So think of our strategy in wealth as being around 2 major things. The first of which is products, the second which is portfolios. And we have a significant amount of product, obviously, across the public markets and mutual funds, ETFs, SMAs. And we've been growing our roster of evergreen products in wealth and retail for alternatives. As I've mentioned, we're growing in H-Series led by the flagship HLN, the nontraded BDC, capital solutions, triple net lease, multi-strategy credit, private equity.

We'll have all the building blocks effectively for wealth investors to build great public and private portfolios. So having all the building blocks is a part of the strategy. Where I think BlackRock has historically had disproportionate amounts of success relative to the industry is in bringing those things together in whole portfolio strategies. We've done that in models. We've done that in SMAs that put together ETFs and SMAs, but effectively building public-private model portfolios, we think, is the destination that ultimately puts a lot of scale in financial adviser practices and integrates that experience for advisers in such a way that allows them to focus on the things that add the most value for their clients, financial planning, tax planning, intergenerational wealth transfer.

And so our effectively being able to deliver institutional-grade OCIO-like services to wealth managers through whole portfolios. It's built on the products, but the products are just the building blocks of the strategy, which is ultimately to really deliver whole portfolio services that bundle asset allocation the product building and then all of the reporting and technology that goes along with it.

We think we can do that here in the United States, and we can do it in Europe. We launched in January, our alts completion portfolio with Partners Group as in all private markets, a set of models with balanced income and growth. Those are completion models that have a single sub dock that rebalance without financial advisers having to go do all that work. We think that is a really terrific opportunity. We've put up public and private portfolios on places like GeoWealth to be fully integrated. And then we have a whole custom model solutions business that can do that as well.

All right. Well, let's talk about crypto for a moment. Very quickly, you build a very large ETF business. You have a tokenized money market fund with BUIDL. And also you've integrated into Aladdin. So kind of really turn that around. I know crypto can be choppy, but what are your aspirations for that business?

So we ultimately see digital wallets as a new distribution channel. And many of the characteristics of digital wallets today feel to me like what retail brokerage looked like in 1991, which is people opening digital online accounts, starting with some amount of recreational stock trading, but ultimately amassing wealth and economic value that become managed accounts, that become professionally managed offerings.

And if I look at the business today of most of the big retail brokerages, they started with active traders and ultimately really built wholesale managed account businesses that drove a lot of growth and shareholder value. We see digital wallets shaping up to be the same way. When I talk about digital wallets, what I mean is there's 820 million crypto wallets. There's 820 million crypto wallets in the world that own Bitcoin and other coins. There's about $2.5 trillion of value. It's volatile. It's been $3.5 trillion to $4 trillion. It's been $2 trillion to $2.5 trillion, but there's a serious amount of economic value there that we will -- that we believe over time will be in search of long-term investment products.

There's 820 million crypto wallets. There's 4.5 billion digital wallets. So think of your Venmo, PayPal, Alibaba Pay, Apple Pay. All those are places where individuals are keeping economic value that ultimately are going to be in need -- we believe are going to be in need of long-term investment products and the same services that you would see in retail brokerage and wealth. $2.5 trillion of crypto, $300 billion of stablecoin, another $37 billion of tokenized assets, meaning tokenized stocks, bonds, loans, other assets. What we want to build at BlackRock is a digital wallet native asset management capability.

So all the same services we offer today in a model portfolio in the cash world and traditional capital markets, Craig, we want to be able to offer in a digital wallet. I want to be able to sign an investment management agreement. I want to be able to deliver a proposal. I want it to be able to invoice. I want to be able to research products to trade, to rebalance, to tax loss harvest, all of those portfolios. Tokenized iShares, I think, is our best spear tip to enter into the world of digital wallets and provide access to long-term investment products.

I just have a foundational belief along with my partners at BlackRock that there will be a growth in crypto assets and stablecoin. And eventually, someone will say, I should probably derisk half of this into long-term investment products like U.S. equities and the ag. And that, we think, is a tremendous opportunity that is unattached to the short-term volatility of crypto. This is a new distribution channel. There's already 4.5 billion people. There's already 4.5 billion people with digital wallets. Half the world has a digital wallet. So this is a channel that we think we have to get access to in order to continue to lead the market.

Or maybe even tokenized IAU might do pretty well right now.

I think we'll see some of that. Yes, sir.

But one more question on crypto. And you hit on this a little bit just then, but both you and Larry Fink, your CEO, talked about tokenizing your ETF suite to address that new growing channel. Where are you in sort of that? And is that still something you want to do today?

So I think it's worth observing. I've had the real privilege and honor of spending time with some of the new leadership at the SEC, Chairman Atkins, Jamie Selway, Brian Daley and I am. I give this team very, very high marks on their engagement with the industry. I'm a member of the Investment Company Institute Board. They have been there engaging, wanting to open up innovation. They've made a lot of time.

They've made a lot of time to come talk about how we build into a tokenized ecosystem, how distributed ledger technology can actually be an enabling agent to make markets better, how distributed ledger technology can actually free up collateral through near instantaneous settlement that can be channeled into the real economy. I think actually Mark Ueda, Commissioner Ueda had a speech on that today. So this commission, I give very, very high marks on engaging with the industry. We've spent time with the commission on what an operating model looks like for tokenized iShares, how creation and redemption would work, how the arbitrage mechanism would work.

And there were 40, 50 people from the staff in this working session with great questions. These are the guardians of the crown jewel of the United States, which is our capital markets. These are the guardians of the National Best Bid Best Offer system of the National Securities Investment Market Improvement Act. Like these are the people, and they are thoroughly engaged in how to do this. I can't tell you if it happens in 90 days or in 12 months, what I'm saying is there are real people working on this, and there is more progress in the last 3 months on this than I've seen in the last 5 years. in this space.

I would say the same about 401(k) and private markets into D.C. But this commission is really engaged, and I think we're going to make progress in getting tokenized investment products into digital wallets, which I think will be good for clients in the long term.

Just a follow-up on that. We've had a mutual fund since 1924.

Technically since the 1800s.

Yes. And the ETF and even the SMA, they -- there's a lot of improvements off the mutual fund vehicle with that. But with the tokenization wrapper, there's a few more, like 365, 24/7 trading, self-custody, maybe the expense ratio is a little lower because less counterparties. Is that the major selling point? Or is the fact that there's this growing ecosystem that asset management really isn't participating in today that BlackRock wants to address? Or is it everything?

I would overwhelmingly weight the growing ecosystem than anything else. And I think I'd flag kind of 2 -- think of the sources of where this growth is coming from, right? I think, number one, there are the true believers in cryptocurrency, right, who believe that cryptocurrency could be a long-term disruptor of fiat currencies and may be ultimately a better protector of value over time. There are those that are unbanked, right?

There's a significant portion of digital wallets in crypto for people who just can't get bank accounts or just aren't served by traditional banking system. They've ultimately been able to create economic value and should have access to long-term investment products. There are speculators and investors and traders who are active in cryptocurrency who ultimately want a vibrant ecosystem to be able to invest, trade, make markets in all the things that they make markets in, in the traditional capital markets to do so with digital wallets.

I think BlackRock has been at its best in making markets interoperable. So today, we're the leading manager of fixed income ETFs. When I sat at these types of conferences 10 years ago or 15 years ago, people talked about how you can never bring together over-the-counter markets in bond trading and put them on an exchange. Today, it's absolutely remarkable in how seamless that has been. It's provided more liquidity to the bond market. It's provided more pricing transparency to the bond market.

Everyone has figured out how to create more value for clients doing that. The idea of portfolio trading and fixed income didn't exist really before the fixed income ETF. I see all the same possibilities of bridging the traditional capital markets with the digital markets and distributed ledgers that will create lots of value and lots of opportunities. All the market makers who have made markets in the traditional capital markets will have to come to digital wallets in order to make markets.

Tokenized exchange-traded funds won't work unless we have market makers and authorized participants who can do business in the digital wallet and on digital exchanges. So it's a big part of work, but I think that's where the overwhelming amount of growth will come from, I think, is from bringing a whole generation of new investors who live in digital wallets that historically haven't had access through the traditional capital markets.

Great. Martin, let's change up the topic and go to quant. So your systematic active equity business really showed some strong flow improvement last year. And you're seeing across the industry from my seat, better hedged on returns, better quant hedge returns. Some of it is tax aware related. What is driving the improving demand that you're seeing in BlackRock?

So I'd offer the more macro thought first. I think there was high degrees of conviction that used to live in kind of our client base, used to live with consultants and asset allocators that somehow alpha could only really be achieved by small niche players that once you achieve large scale, somehow that would become impossible because you were too lumbering or slow or you weren't commercially nimble enough.

And I think what the ensuing decade has proven actually is that in Alpha, scale is a key engine. And that's true in the private markets. That's also true in the public markets. And so when you look at where the big drivers of alpha are coming from, it's coming from big scaled players that have ample technology resources, can drive alpha streams through multiple different types of investment vehicles through multiple different type of markets.

They can be more portable. And it's harder for smaller players actually to drive alpha. It's harder for them to drive alpha through pricing. It's harder for them to drive alpha through trading. And so I think that's a real change in the industry structure, and it really came through in 2025, which is that scaled players have an advantage when it comes to being able to drive alpha. We certainly saw that at BlackRock in our systematic business. We have $50 billion of inflows into systematic strategies.

I'd flag 2 things. These strategies are so different than traditional security selection. These strategies are using and deploying signals across thousands and thousands of securities. And if you were to open up the portfolio and just eyeball the list of 1,000 line items, and it wouldn't be immediately apparent to you what was going on without understanding what the signals are that are driving those overweights, underweights, longs and shorts.

And so just the idea of how you create alpha today involves macro themes that I think are really different than simply trying to pick overweights and underweights against an index. The second thing is you have to be able to distribute these alpha strains more broadly. So if I look at what's happening in our systematic business, it's not one flagship product. that is driving all of the flows in alpha, it's spread across a multitude of sources.

And by the way, it's spread across a multitude of sources that are kind of lower touch in kind of the teens basis point business and across things that are higher touch that are driving the north of 100 basis point business. But in our systematic business, we had at least 5 to 6 different products across kind of active ETFs, Liquid 40 Act hedge funds, traditional institutional hedge funds as well as mutual funds that all drove systematic flows. So being able to scale those alpha streams into kind of different alpha targets into different wrappers and vehicles into different parts of the world, I think, is a really key part of being able to grow in active management.

And I think that's really what we are able to do at BlackRock, and we're very bullish about the growth of the systematic equities business. One other thing I'd flag is like this is an engine of scale and portability for us at BlackRock. It's also an engine of operating leverage. So we launched a domestic asset management business in Saudi Arabia some years ago. What we started with was systematic strategies.

That's because that chassis of being able to deliver alpha signals into different markets is highly portable around the world. We launched a joint venture in India with Jio Financial and Reliance. We started with systematic strategies there because they're highly portable and are able to be transported around the world to different wrappers. So it's also an engine, I think, of really efficient growth at BlackRock that creates a lot of leverage for how we grow active management around the world.

Great. Two questions ago, you talked about this fixed income ETF bogeyman, which never sort of developed. Now let's take it a step further. You just did the Frequent acquisition, which is all data. Now with that long-term data, you can create indexes. And with those indexes, you potentially could create private equity ETFs. So where are you in that build-out with kind of 2 steps: one is, you need the indexes. And two, you need then the ability to put that inside of an ETF.

Right. So we closed the Preqin acquisition in March of 2025. And the strategy with Preqin is basically fourfold. The first of which is we'll continue to offer and it continues to be an attractive growth engine, Preqin Pro, which is the traditional subscription-based data business. That data business is the gold copy when it comes to LPs and GPs, connecting on fund terms, fund performance, track records, who are the investors in private markets. that data set has a lot of enduring value to the industry in it.

It's very, very hard to assemble. Many of the elements and attributes in it aren't even available anymore. You can't just go put a foyer or request out for something that's no longer in existence to come get it. So that data set itself continues to grow, improve and offer a lot of long-term value to our clients. The second is with the Preqin data and the Aladdin environment, our aim is to create more risk models in and around the Preqin data to help measure, define do performance attribution.

And if you think of what some of the index companies have done of creating this positive flywheel effect between their index businesses and their analytics businesses, we're aiming to do that with the Preqin data as well, which is to drive a real intersection between the language of private markets and the risk models that measure them, ultimately using the Preqin data. The third part of our strategy is to make that data factory more efficient. And interestingly enough, this is the intersection of things like generative AI and process automation in order to make the data factory more efficient. I would say Preqin was run really, really well, but we've run a big scaled data processing and information processing business at BlackRock for 30 years.

We think basic deployment of things we use in our data factory for Aladdin against Preqin can make Preqin even more efficient and put a lot more leverage in the business. And the last leg of the strategy is the one that you're getting at, which is ultimately to create investable indexes is to take the data that we have in Preqin to standardize to standardize it by cohort. So it might be private equity funds of a certain vintage.

It might be private equity funds or private credit funds or real estate funds covering a certain segment of the market to be able to standardize the inclusion, units of measurement, pricing and ultimately publish those indices and then create tradable products over them. The number one question I get there, Craig, often is, well, if you can't physically replicate all of the underlying funds that you put in that index, how could you ever make an ETF? Which is often like a head scratcher for me because most of what trades in the financial world is cash settled. It's not physically replicated.

So if I think about the S&P Mini contract, it's not really settled in stocks, it's settled in cash. But take something like the K-hiller Home Price futures contract, it's not settled in houses. Economic surprise indices are not settled in surprises. Like interest rate indexes are not settled in interest rates. They're settled in cash. And so being able to create prices, time series and cohorts that ultimately can have 2-way markets on them, if you can make futures, if you can make swaps, if you can have a contractual exchange of cash flows, that can be put in an exchange-traded fund.

Remember that the first exchange-traded funds and digital assets in Bitcoin were in futures. They were not in physical Bitcoin, whatever physical Bitcoin is. They were not in physical Bitcoin. They were actually in futures. So I think if we can get to a place where we have futures contracts, even if they have lighter 2-way volume, like they just need some volume. If we can get futures contracts on private markets indices, we can make iShares.

So let's talk about the op margin. At the last Investor Day, you talked about a greater than 45% target. Last year, on an adjusted basis, you basically got there. On a reported basis, it was lower because of performance fees, which come with a different carry ratio in there. How do you think about that long term? And then if we have a bear market or you have a lot of performance fees, I guess that year might be a little tough. And also, what happens when you get a little bit above 45%? Is that -- are we at a ceiling at that moment?

So we finished the year in the fourth quarter with our operating margin as adjusted. And that operating margin, that's a real operating margin. It's fully burdened for all of our stock-based compensation and everything at 45%. Our margin on recurring fee-related earnings was 45.5%. So we continue to drive industry-leading margins. This business has the industry-leading margins. And I think if you were to really dig through traditional managers and the alternative managers, if you were to really dig through their real SEC financial statements and Ks and Qs, you'd find BlackRock's every bit as profitable, if not more profitable, I think, than the peer group.

So we continue to drive industry-leading margins there. When I think about the margin dynamic, we have run BlackRock at margins north of 45% before. We've run them close to 47% back in 2021. So we've run the business there before. We've been able to put a lot of scale and operating leverage. We did that at a time in 2021 when we really didn't have a big scale private markets franchise, and we were able to propel the business there.

I think today, with the engines we have in GIP and HPS, both of which were north of 50% FRE margins when they came into the company, I think we can continue to propel kind of -- we can continue to propel 2 things. One is FRE growth at margins north of 50%. We can do that through the acquired businesses as well as highly scaled businesses we have like active ETFs, ETFs, digital assets, systematic equities, all of which I would say operate at north of our average margin, not below our average margin, they can be real drivers of FRE margin expansion.

And then ultimately, I do think that with strong markets and with higher fee rates and strong organic growth, we can pull the operating -- the fully burdened operating margin of the company up as well. And as I said, we've run the company at 47%. So I don't see 45% or 46% as a ceiling. What I do see as a natural governor on this is we will continue to invest in the business. We're going to continue to invest in the business. When I talk to our long-term shareholders, our long-term shareholders would say, we would prefer to see a point of organic growth over a point of margin.

They're both important. They're both important. We're very focused on driving profitable growth on dropping more earnings into the profile of the company, but we will continue to invest in the company. And at times when there are market pullbacks, those are the times when it's important to keep investing. I think it's when your competitors sometimes take their foot off the gas in investing, and we'll keep do that.

So we're always going to be balancing optimizing long-term organic growth in the most efficient way possible with driving more margin expansion through technology, automation, footprinting, higher value, higher fee rate strategies. Those are ultimately the pushes and pulls. And as you said, on the performance-related side, historically, I think the performance-related revenues at BlackRock had kind of a very defined margin as we've pulled in or a defined comp-to-revenue ratio, if you'd like to flip it around, as we've brought in these highly scaled private markets franchises, they have more market-based compensation practices and the comp-to-revenue ratio, the PRE margin, if you will, will reflect what you see out in the marketplace. But I still think we can hit our north of 50% FRE margin, and we can grow the fully burdened margin north of 45% out to 2030.

Great. Martin, at this moment, let me just look at the audience, see if anyone has a question. Please raise your hand, and we'll get your microphone. It looks like we have one over here.

So I guess after a very active period of M&A, I guess, including the 3 large deals that you've been speaking about, it sounds like you're now more focused on smaller tuck-ins over the near term. I guess like however should we completely rule out prospects of another larger deal?

Thanks for the question. So first, I'd say, important to note that we don't need M&A. We don't need more M&A to hit our north of 5% organic base fee growth target. We did 9% over the trailing 12 months. We did 10% in Q3. So the strategy is working in terms of driving more sustained and higher organic base fee growth. We're very focused on integrating the transactions that we've done in the last 2 years and driving those planned synergies.

That said, we're open to transactions that would be accretive towards our 2030 plan in private markets, in technology and distribution. A good template for that was the Elmtree acquisition in the net lease space that we announced last year in terms of adding capabilities that we ultimately think can really help grow the private markets franchises. M&A is notoriously hard to schedule.

So like you can never say never about things like that. But what I'd say is we're focused on integrating and realizing the planned synergies. We'll always be very selective and tactical. Any acquisitions that we do are going to be focused on growth. They're going to be focused on optimizing organic growth, not on expense control. So the M&A approach to the company, I think, is completely consistent with historical practices.

And so far, we're really, I think, very pleased with the progress we've made on the GIP, HPS and Preqin acquisitions. So we're going to continue to be very focused on realizing those planned synergies.

Maybe just a follow-up on that. No asset management in the world is as diverse as BlackRock and has a few white spaces as BlackRock. What are your white spaces setting? And do you maybe not want to tackle some of them due to secular growth challenges?

So I think we're always -- the acquisitions that we're best at, like the organic builds and the acquisitions we're best at tend to be around capabilities expansions, right, around product expansions. I think that's really what we're best at driving. And I think there's some white spaces, both in terms of build, buy, partner.

So one, I'd say secondaries, all things secondaries is an opportunity to expand our offering. We have a great team. We have a good track record. We've been building in that space there. But I'd say that market continues to be a growth market and a real opportunity. So there may be things there to do there across buy, build, partner. I think all capabilities of expansion around investment-grade, high-grade asset-based finance, whether that's kind of teams or firms, those are real opportunities for us. And then we look at, I think, a number of kind of data completion -- sort of data completion opportunities to Preqin that could be interesting. Those are, I think, are the big white spaces that we've got going across the list now.

Great. Well, with that, we are out of time. So Mark, on behalf of all of us at Bank of America, thank you very much. Great to see you.

Good morning. My name is Jennifer, and I will be your conference facilitator today. At this time, I'd like to welcome everyone to the BlackRock, Inc. Fourth Quarter 2025 Earnings Teleconference. Our host for today's call will be Chairman and Chief Executive Officer, Laurence D. Fink; Chief Financial Officer; Martin S. Small; President, Robert S. Kapito; and General Counsel, Christopher J. Meade.

[Operator Instructions] Thank you. Mr. Meade, you may begin your conference.

Good morning, everyone. I'm Chris Meade, the General Counsel of BlackRock. Before we begin, I'd like to remind you that during the course of this call, we may make a number of forward-looking statements. We call your attention to the fact that BlackRock's actual results may, of course, differ from these statements. As you know, BlackRock has filed reports with the SEC which was some of the factors that may cause the results of BlackRock to differ materially from what we say today. BlackRock assumes no duty and does not undertake to update any forward-looking systems.

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

Thanks, Chris. Good morning, and Happy New Year to everyone. It's my pleasure to present results for the fourth quarter and full year 2025. Before I turn it over to Larry, I'll review our financial performance and business results.

Our earnings release discloses both GAAP and as-adjusted financial results. A reconciliation between GAAP and our as-adjusted results is included in today's press release. I'll be focusing primarily on our as-adjusted results.

We're closing out one of the strongest years in our history. Clients awarded us nearly $700 billion in net new assets, 9% organic base fee growth and 16% technology ACV expansion. Our whole portfolio strategy is winning both mind and wallet share with clients. It's bringing even more momentum to the breadth of our organic growth. We had nearly 150 products across our ETF and mutual fund ranges with over $1 billion in flows.

We had over $24 billion in revenue alongside nearly $10 billion in operating income, both up 50% since 2020, and earnings per share was a new record. Our platform demonstrated resilience and growth even when markets were in turmoil back in April and captured steep upside when they rallied.

2025 was another proof point that BlackRock is a share gainer when there's money in motion. Our 10% increase to our 2026 dividend per share and increase in planned share repurchases to $1.8 billion are driven by our accelerating growth trajectory and platform success in 2025. That's our highest dividend increase since 2021 and comes after a record $5 billion payout to shareholders in 2025.

Supported by both 9% organic base fee growth and favorable markets, we entered 2026 with a base fees run rate that's approximately 35% higher than our base fees in 2024 and approximately 50% higher than 2023. This stronger entry point enhances our ability to deliver future earnings, return capital to shareholders and execute on our 2030 ambitions.

We delivered 6% or higher organic base fee growth in each quarter of 2025. We finished the year with 2 consecutive quarters of double-digit organic base fee growth, including 12% in the fourth quarter. That growth is broad-based across our systematic franchise, private markets, ETFs and digital assets, cash and outsourcing. And it's across capabilities that we've had for decades and others that we've built or acquired in the last 2 years. That gives us confidence we're on the right track with clients and we have a lot of optimism for the years ahead.

You've heard us say it's not that the big are getting bigger. It's at the best we're getting bigger. Size and scale are outputs and performance. We've wrapped a successful 2025 and now we're moving with speed and scale to go upward from here. We're building leading franchises in newer high-growth markets across the industry, private markets to insurance, private markets to wealth, digital assets and active ETFs. We think these can all be $500 million revenue generators in the next 5 years.

We already have industry-leading margins, and we see real opportunity to drive margin expansion through the FRE growth trajectory of our private markets and our highly scaled foundational businesses. We entered 2026 with strong momentum, and our first year as a fully integrated firm with GIP, Preqin and HPS. We're pioneering what we believe is the asset management model of the future. It's one that seamlessly brings together public and private markets.

It interoperates between traditional and decentralized financial ecosystems, and it's powered by technology and data with Aladdin, eFront and Prequin. BlackRock houses the world's #1 ETF franchise, a top 5 alternatives platform with more than $675 billion in client assets, $0.5 trillion in target data AUM, leading advisory services and a tech and data SaaS franchise with nearly $2 billion in revenue.

Moving to financial results. Full year revenue of $24 billion was up 19% year-over-year. Operating income of $9.6 billion was up 18% and earnings per share of $48.09 increased 10%. Fourth quarter revenue of $7 billion was 23% higher year-over-year, driven by the acquisitions of HPS and Preqin, organic base fee growth over the trailing 12-month period and the positive impact of market movements on average AUM.

Quarterly operating income of $2.8 billion was up 22%, while earnings per share of $13.16 increased 10% versus a year ago. EPS also reflected a lower tax rate, lower nonoperating income and a higher share count in the current quarter linked to the close of the HPS transaction on July 1. Nonoperating results for the quarter included $106 million of net investment losses primarily due to a noncash mark-to-market loss linked to our minority investment in Circle.

In mid-December, we contributed a portion of our stake in Circle to our existing donor-advised fund. Following this transaction, we maintained approximately 1.1 million shares of Circle common stock, which will continue to be marked through investment income. Our asset-adjusted tax rate for the fourth quarter was approximately 20% and benefited from discrete items. We currently estimate that 25% is a reasonable projected tax run rate for 2026.

The actual effective tax rate may differ because of nonrecurring or discrete items or potential changes in tax legislation. Fourth quarter base fees and securities lending revenue of $5.3 billion was up 19% year-over-year, driven by the positive impact of market beta on average AUM, organic base fee growth and approximately $230 million in base fees from HPS.

On an equivalent day count basis, our annualized effective fee rate was approximately one-thenth of a basis point lower compared to the third quarter. This decrease was primarily due to higher securities lending revenue in the third quarter, which benefited from specials. We're seeing client demand from our structural growers like private markets, systematic models, OCIO, ETFs and SMAs, and these capabilities provide positive leverage to average fee rates.

The fee yields on new asset flows this year are 6x to 7x higher than they were in 2023 and are at a premium to our overall fee rate. Fourth quarter performance fees of $754 million increased from a year ago, reflecting higher revenue from alternatives and included $158 million from HPS. Full quarter and full year technology services and subscription revenue each increased 24% year-over-year, reflecting the successful onboarding of a number of new clients, expanding relationships with existing clients and the closing of the Preqin transaction.

Preqin added approximately $65 million and $213 million of revenue in the fourth quarter and full year, respectively. Annual contract value, or ACV, increased 31% year-over-year, including the impact of Preqin. ACV increased 16% organically. Total expense increased 19% in 2025, primarily driven by higher compensation, sales asset and account expense and G&A expense.

Full year employee compensation and benefit expense was up 20%, primarily reflecting higher incentive compensation associated with performance fees as well as higher operating income. The year-over-year increase also reflects the impact of onboarding GIP, Preqin and HPS employees.

Full year G&A expense was up 15%, primarily due to M&A transactions and higher technology investment spend. Our fourth quarter as-adjusted operating margin of 45% was down 50 basis points year-over-year. Our full year as-adjusted operating margin of 44.1% decreased 40 basis points from a year ago. Both periods reflect the impact of performance fees and related compensation.

We continue to deliver margin expansion on recurring fee-related earnings. Excluding the impact of all performance fees and related compensation, our adjusted operating margin for the fourth quarter would have been 45.5%, up 30 basis points year-over-year. Our full year margin would have been 44.9%, 60 basis points higher relative to 2024.

As we execute on our organic base fee growth and operating margin ambitions, we'll continue to be disciplined in both our hiring and our investments. After annualizing for the impact of HPS and Preqin, we would expect a mid-single-digit percentage increase in G&A. Additionally, we would expect BlackRock's headcount to be broadly flat in 2026.

After investing for growth, we returned a record $5 billion to our shareholders through a combination of dividends and share repurchases in 2025. This includes $500 million and $1.6 billion of share repurchases for fourth quarter and full year, respectively. BlackRock's Board of Directors recently approved a 10% increase to our first quarter 2026 dividend per share, building on our track record of strong dividend growth and demonstrating confidence in our cash flow generation and durable earnings expansion. That represents a 13% increase in the dollar amount of dividends expected to be paid.

The Board also authorized the repurchase of an additional 7 million shares under our share repurchase program. At present, based on capital spending plans for the year and subject to market and other conditions, we are targeting the purchase of $1.8 billion worth of shares during 2026.

Full year total net inflows of $698 billion reflected positive flows and organic base fee growth across all asset classes and active and index. IShares led the industry and set a new flows record with $527 billion in 2025, representing 12% organic asset and 13% organic base fee growth. Net inflows were diversified across core equity and premium categories like fixed income, active and digital assets ETPs.

IShares net inflows of $181 billion in the fourth quarter once again demonstrated strong momentum into year-end, supported by seasonal portfolio reallocations. Full year retail net inflows of $107 billion were led by the onboarding of the $80 billion SMA assignment from City Wealth during the fourth quarter. Separate from this assignment, Aperio had its fifth consecutive record year of net inflows with $15 billion, active fixed income added $3 billion and alternatives generated $12 billion in 2025.

BlackRock's institutional active franchise generated net inflows of $54 billion in 2025, reflecting the onboarding of multiple outsourcing mandates, the above target close of GIP 5 and deployment in private credit. Institutional index net outflows of $119 billion were mainly driven by redemptions from low-fee index equity strategies. Our scaled private markets platform delivered $40 billion of full year net inflows led by private credit and infrastructure.

We're targeting $400 billion in gross private markets fundraising through 2030 powered by origination, strong investment performance and the depth of our client relationships. Our valuable position as a trusted long-term partner to corporates and sovereigns provides us with unique visibility and insight into capital markets and client activity, enabling differentiated deal flows, tailored solutions and long-term value creation for our clients and shareholders.

Finally, BlackRock Cash Management saw $74 billion of net inflows in the fourth quarter and $131 billion in 2025, driven by U.S. government, International Prime and Circle reserve funds. BlackRock's platform is anchored by growth engines tied to the long-term expansion of global capital markets and fast-growing client and product channels. The opportunity ahead is inspiring to reshape portfolios for more complex markets, to deepen partnerships with clients and to deliver durable profitable growth for our shareholders.

We entered 2026 with the combined strength of BlackRock, GIP, HPS and Preqin, now all on BlackRock, and we're excited to share our growth with clients, employees and shareholders.

I'll turn it over to Larry.

Thank you, Martin. Good morning, everyone, and Happy New Year. Thank you for joining. .

We entered 2026 with accelerating momentum across our entire platform. It will be the first full year with the combined strength of BlackRock, GIP, HPS and Preqin. We're coming off the strongest year and quarter of net inflows in our history. Clients awarded BlackRock with nearly $700 billion in new assets in 2025, including $342 billion in the fourth quarter.

And the consistency of our results stands out even more over the long term with nearly $2.5 trillion of net inflows over the last 5 years. Our pipeline of business has broadened across products and regions, spanning public and private markets, technology and data and client channels. We're seeing excellent fundraising activity.

We have an ambitious 2026 fundraising plan diversified across infrastructure, equity and debt, private financing solutions and multi alternatives. Our client relationships have never been stronger and deeper. We're a scale operator in public and private markets, investments and technology that's significantly enhancing our position with clients worldwide.

We're building off accelerating growth over the course of 2025. We delivered 6% or higher organic base fee growth each quarter, and we ended the year with 12% organic base fee growth and 16% technology ACV growth in the fourth quarter. These growth rates are both a 4 points higher than last year and 9% full year organic base fees growth represents $1.5 billion of net new base fees. That means we enter 2026 with base fees approaching $21 billion, 13% higher than 2025.

And we delivered a premium 45% operating margin. Our scale and Aladdin technology fuels growth and helps push down our marginal cost. We're in an upward trajectory in our margins on fee occurring, reoccurring earnings as we continue to drive growth in private markets, and scale businesses like ETFs and systematic equities.

Our belief in our future growth, increasing profitability and durability of cash flow led us to increase the dividend per share by 10%, and step up planned share repurchases. Over the last 10 years, we delivered a 10% compounded annual growth rate in our dividend and over a 15% annual return on our repurchases. And we're confident than ever in our model and the outsized opportunity we see across multiple growth engines.

Our foundational businesses like iShares are unlocking new markets like in active ETFs and digital assets. At the same time, we're a leader in emerging trends like private markets to wealth, 401(k)s, tokenization and private market data. In private markets, our investments in infrastructure and private credit and all the wealth underpin our ambitions to raise $400 billion in private markets by 2030.

BlackRock is already managing $3 trillion on behalf of insurance, wealth and OCIO clients. We have a significant opportunity to deliver better outcomes and experiences for clients in private market allocations. And for our shareholders, that shift represents new private markets AUM and potentially over $1 billion in new base fees.

For example, BlackRock is the largest general account manager for insurers with $700 billion in AUM. With HPS, we're now also one of the largest asset-based finance and high-grade managers. We're in about 20 late-stage conversations to help insurers build more dynamic and diversified portfolios across public and private markets.

Similarly, in wealth, we're focused on expanding access to private markets. We're bringing together strong investment performance track records with BlackRock's scaled global distribution model. We have the largest who selling team in the industry covering every corner of the United States marketplace. We have very strong relationships in private banks in Europe. Our more than $1 trillion of wealth platform spans and clients' whole portfolios for models and SMAs to ETFs and private markets.

We're also a technology provider through Aladdin Wealth, which brings institutional quality portfolio construction right to the desktops of our financial advisers. We continue to expand and diversify distribution of HPS nontraded BDC to U.S. wirehouses and RIAs. And we believe model portfolios will be another unlock. We're also planning to widen our product range through an H Series family of funds. That would be led by the flagship HLEND alongside junior capital, real assets, triple net lease, multi-strat credit and secondaries and co-investment strategies. We plan to bring all the building blocks to serve wealth investors through coordinated multi alts portfolios.

Then the retirement. We're seeing important progress towards a framework to include private assets and target date funds. We expect to launch our first LifePath target date fund with private markets later this year. Most Americans only experience with capital markets is through their 401(k) plan. I said many times that helping workers build and spend their retirement savings is one of the greatest challenges of our generation, with long associated for better retirement solutions and easier access to investment options.

BlackRock has also championed early childhood savings accounts and the policies that make them possible, and we're encouraged by and supportive of the launch of these accounts in the United States. For retirement savers, there's a real opportunity to bring additional returns and diversification to investors through private markets.

BlackRock will be at the forefront with our leading DCIO business, our $600 billion LifePath franchise, top 5 alternative platforms and definitely Prequin. We expect plan sponsors will need standardized benchmarking and performance data to validate their planned choices, and Preqin can be the central provider. Our leadership in all of these areas distinguishes BlackRock with plan sponsors and policymakers.

We've always been a leader in retirement and a first-mover in developing new solutions in retirement. We started innovating LifePath Paycheck in 2018, and it's been the fastest-growing lifetime income target date strategy in the defined contribution market. We believe it will be the default retirement investment strategy. Guaranteed income and private markets are not 2 separate conversations.

BlackRock can bring it all together. Our vision is not just for incremental addition of private markets, it's the design of an optimal target date solution, one that combines public markets, private markets and guaranteed income like LifePath paycheck. BlackRock has long-standing relationships and decades of experience in working with plan sponsors and building client-first retirement solutions for their members.

We're a bit over a year into closing our GIP transaction, and we're already seeing synergies through our combined expertise and relationships. GIP 5 closed above its $25 billion target in July, and our AI partnership, which was not part of the deal model, continues to attract significant capital. AIP has raised over $12.5 billion from partnership founders and clients. Our initial target is to mobilize and deploy $30 billion of equity capital with a potential of reaching $100 billion, including debt.

More broadly, we're seeing excellent progress across the range of infrastructure strategies, including mid-cap and emerging markets infra and equity and investment grade, high-yield and credit-sensitive infra debt. The current cash flow and inflation affected return profile of infrastructure makes it an attractive sector for our clients, especially those saving for retirement.

More broadly, income-oriented strategies are a critical component of our clients' portfolios. BlackRock manages over $4.5 trillion in assets across both public fixed income, cash and private credit. This means we can provide an integrated fixed income solution for clients that deliver scale benefits. In 2025, we generated over $45 billion of net inflows across our high-performing active fixed income franchise, led by Rick Reeder.

We believe 2026 is shaping up to be another year where returns may be driven primarily by income rather than price appreciation. We're well positioned to capture flows with strong performance and differentiated strategies across municipals high-yield, total return and unconstrained fixed income strategies.

And we're leveraging active ETFs to provide access to our portfolio managers inside along with the benefits of the ETF wrapper. Our active ETFs drove more than $50 billion in net inflows in 2025, nearly tripling their assets in the last year. Rick's flexible actives income ETF Bank, BINC; and our systematic U.S. equity factor rotation ETF, DYNF, led our active ETF flows for the year. DYNF was the highest inflowing active ETF in the industry with $14 billion of net inflows. It is our flagship of our systematic equity platform.

Overall, our systematic equity franchise raised over $50 billion in 2025, even as the active equity industry saw another year of outflows. Our systematic investments have been using data and AI for 20 years. We've invested in this business, and today, its IP delivers alpha to clients and helps portfolio managers across BlackRock to invest better.

As more investors are looking at how to use AI for investments, we already have one of the best platforms utilizing AI and Big Data to drive thousands of alpha signals. We're optimistic about our systematic platform, continued double-digit organic base fee growth potential and its position as a bright spot in the active equity industry.

IShares continues to be an innovation engine for BlackRock. IShares remains the market leader in ETFs in terms of organic assets and base fee growth country served and in product lineup. 2025 was another record year for iShares with $527 billion of net inflows. In 2000, with just 40 ETFs, BlackRock iShares set out to revolutionize investing. And over those 25 years, iShares has led the way in democratization of access to the growth of capital markets.

BlackRock shaped the industry and we continue to expand choice and access for investors around the world. We brought U.S. investors access to international markets, and we introduced ETF to Europe. We launched the world's first bond ETF. We provide over 1,700 ETFs today, more than 6x the next largest issuer, and we're focused on providing investors value for their money while driving growth and margin expansion for our shareholders.

IShares AUM was about $300 billion when we announced our acquisition in 2009. Today, it's $5.5 trillion, and iShares revenues have more than quadrupled to over $8 billion. IShares is delivering growth both through core channels and newer premium initiatives like active ETFs, digital assets and in international markets. In Europe, ETF net inflows of $136 billion was approximately 50% higher than 2024, and we're seeing more individuals coming to iShares through digitally enabled offerings and monthly savings plans.

We're seeing similar trends in India where our JioBlackRock joint venture operates through a digital-first direct-to-consumer model. JioBlackRock raised $2 billion upon launch, 6x the previous industry record and now manages 12 funds spanning cash index, systematic equities on behalf of nearly 400 institutions and already more than 1 million Indian retail investors.

More broadly, we're seeing great momentum in connectivity with clients in international markets. Both in Asia and in LatAm, we saw double-digit organic base fee growth in 2025. Growth in Asia was led by our active wealth strategies and $30 billion of ETF net inflows across our locally listed and global ETF range.

In Latin America, our local presence is similarly resonating through our onshore ETFs and wealth offerings. And in the Middle East, we have a strong history as a trusted adviser to countries looking to allocate capital or to build out their own local markets. It is one of our fastest-growing regions.

Our Aladdin technology powers and unites all of our platform and all our work. The fact that BlackRock is the largest user of Aladdin allows us to stay attuned to changes in the marketplace and adapt Aladdin for our clients. Today, we're enabling our clients to more easily manage their exposure through end-to-end integration across public and private markets. 16% technology ACV growth reflected several innovative multiproduct wins, which will drive future revenues.

Through Preqin, we're expanding access to actionable private market data, giving investors the analytics they need to build strong and reliable portfolios. The BlackRock platform is comprehensive. It's global. We're a leader in public markets, we're a leader in private markets and we are a leader in technology and data. We're a foundational provider in the traditional financial markets and the evolving decentralized financial ecosystem.

Most importantly, we bring it all together to deliver BlackRock to our clients in a comprehensive, consistent, determined way. We're entering 2026 with elevated momentum, and we're positioned to have a big future opportunities. We ended the year with 12% organic base seed growth, record flows and a new AUM high at $14 trillion. This already lifts our base fee entry level rate by 13%.

We are confident in our organic base fee growth ambitions. We plan to raise the cumulative $400 billion in private markets by 2030. We're focused on our margins and driving profitable growth. This all should translate to shareholder value through higher earnings and then multiple expansion.

I'd like to thank our employees for the work they do every day on behalf of our clients, each and every client that we stand by as a fiduciary. When we do well for our clients, we also do well for our employees, and then we do well for our shareholders. I believe they'll all be beneficiaries of our future growth.

Operator, let's open it up for questions.

[Operator Instructions] Your first question comes from Craig Siegenthaler of Bank of America.

I have to congratulate you on the record base fee organic growth because 12% is pretty impressive for a $14 trillion manager.

Well, I hope it's going to be impressive when we're in a much larger manager than $14 trillion.

As we look ahead to 2026, can you flush out what you're all seeing in thinking on the net flow pipeline? And a sort of follow-up would be your money market business, which, is not a new modern business, has done really, really well over the last 5 years. Higher rates has been a factor there. But with the Fed cutting do you see flows reversing in this business? And if it does, where do you think that liquidity goes?

Thanks, Craig. It's Martin. Happy New Year. Let me just start by saying that organic base fee growth continues to outperform our 5-plus percent baseline target, 10% in Q3, 12% print in Q4, 9% for the year. And it's the momentum, I think, that really gives us a lot of energy. The growth has ticked higher each quarter. We were 1% to start 2024, 6-plus percent each quarter this year and then ending with 2 back-to-back quarters that are at double digits.

That means clients want to do more business and are giving more business to BlackRock. I think the success we've had with this structural growth strategy, it's driving strength and it's doing it across market environments in an all-weather way. And with more growth coming from our pipeline of private markets, systematic strategies, models, SMAs, digital assets, we think we can power organic base fee growth. It's more consistently 6%, 7% or higher. And in supportive market environments, I think like Q4, where there's some risk on sentiment for higher fee international precision exposures, private markets can tilt even higher. But we've always talked about our strategy being grounded in the whole portfolio, it's always been about breadth and serving every corner of a client's portfolio.

This year, we had really excellent breadth in organic base fee growth, and we're seeing that same breadth in our pipeline. Our fundraising plan is diversified across infrastructure, private financing solutions, multi alternatives. And I think 2026, to your point, on money funds it's shaping up to be the year of a steeper yield curve, and we think that era of EZ287 fund income looks to be fading. We think that bond returns are going to be driven more by income rather than rate moves or spread compression.

And I think even though cash is always going to be an allocation in a well-balanced portfolios, we'd expect that rate cuts are going to cause money market yields to fall and that some of the best opportunities for investors to be locking in bond yields are going to be in intermediate-term bonds. I think if the bond team was here, they say there's a generational opportunity to earn high quality, steady income in the front and middle of the yield curve using that full toolkit in fixed income, credit, securitized, government bonds, munis, active and index.

And we're seeing that energy on our platform. We saw more than $80 billion of fixed income flows in Q4 and more than $40 billion outside the new city mandate. IShares' bonds had $52 billion in Q4, $175 billion, that's 18% organic growth for the year. We manage over $3 trillion in fixed income. So we think we can meet clients with fixed income offerings across sectors and durations wherever they need it and to do it in a vehicle that works best for them. That's an ETF.

It's a separate account, a mutual fund or even yield-oriented exposures being a top CLO issuer and manager and by blending public and private fixed income through direct lending BDCs like HLEND. Our field on new assets to the firm in this pipeline is running 6x or 7x higher than the field on new assets in '23. And we think clients want to do more with BlackRock across the platform.

We saw it in the 2025 activity and in the early momentum in '26. So it gives us confidence that we're on the right track and gives us a lot of energy about what 2026 can look like on the organic growth front.

Let me just add one more point. As global capital markets grow, cash is going to grow alongside of it. So the base holdings of cash will be elevated as long as the global capital market continues to grow. And if you overlay, if tokenization becomes more real and the opportunity to have a tokenized money market fund alongside tokenizing other assets, I actually believe you're going to see probably above-trend holdings and cash.

That being said, I agree with everything what Martin said, we're going to see much more -- you're going to see more and more investors going out the curve, especially if the yield curve become steeper and steeper, which probably is going to be the outcome. But I think we have to look at the overall scale of the capital markets and its growth globally, and that is one of the foundational reasons like cash holdings will -- they look larger than ever, which they certainly are, but I think as the capital markets grows, so does holdings in capital markets cash.

And I think that is important -- there's an important connection between that. And it's not -- it's -- cash is just not an outcome of people are nervous and holding and are not looking to do it. As the capital market grows and as more people's wallets are in the capital markets, the role of the money market fund just grows. And I think that is one of the foundational reasons why we continue to believe that money market holdings will continue to be quite large.

Your next question comes from Michael Cyprys with Morgan Stanley.

I wanted to ask one about Asia. I was hoping you could speak to your priorities across your footprint in Asia, from your local partnership in India, 2 initiatives you have in Japan, among other countries. How are you looking to accelerate growth and expand contribution from Asia over the next couple of years? And what aspects might be most meaningful to the overall firm?

Well, I would say, first and foremost, Asia capital markets grew faster than the U.S. capital markets. More IPOs in Asia, especially in Hong Kong. So let's just start with that foundational base. The capital markets are going faster there. You're seeing historical changes in Japan because the NISA accounts and retirement accounts, you're just seeing more of wealth entering the capital markets out of the banking system. And that just represents more and more opportunities.

So Japan has been an exceptional platform for growth. The insurance industry in Japan, the pension fund industry as the NISA accounts grow, so that's just one really good foundational example. As I said, IPOs in Hong Kong and the scale of wealth management in Hong Kong and Singapore the wealth that is being generated in Southeast Asia, all leads to bigger opportunities, not just bigger opportunities to manage the money, but bigger opportunities to invest like GIP invested in the airports of Malaysia.

In India, I believe we have the best single platform to grow in India with a JioBlackRock partnership. I talked about the growth in 2025, but we have -- we believe that the transmission of the growth of the capital markets in India is just at the very beginning. Historically, Indians kept most of their money either in gold or in cash. And I think the opportunities to develop a self-directed retirement platform in India is real.

And as the platform grows in terms of retirement, the opportunities for us are very large. But even in places like in Saudi Arabia, there's conversations going on now to really build a Pillar 2 retirement system there and then obviously, a Pillar 3, and we're engaged in those conversations and opportunities. So historically, we looked at a lot of these markets who are exporters of capital, but now, in many cases, there are importers of capital, but more importantly, they're developing their own capital markets.

This is a trend that I've been talking about for years, and I think it's just that we're at the early stages of the growth of the capital markets in every place in the world. If you look at our growth rates, the double-digit growth rates and base fees in LatAm, it is another example of the growth of wealth and the opportunity that we have. And so the key is BlackRock is going to grow as long as the world and global capital markets grow.

But I would -- what I would clearly, say, what '25 indicates and what '26 offers is the growth of these capital markets are very beneficial for platforms like BlackRock, and we are involved in these conversations. We're building our platform in each and every country. And I believe this is one of the real foundational opportunity for us in the future.

Your next question comes from Mike Brown with UBS.

So Larry, you touched on the insurance channel in your prepared remarks, and BlackRock is a major player in the space and about 5% of your AUM today. But certainly, competition seems to be rising in the space. Can you just talk a little bit about how your differentiated offering like a full spectrum cash to private credit differentiates here maybe unpack your comments about how the demand for the channel is shaping up here in 2026?

Thanks. Maybe I'll start, Martin, and then I know Larry will add some color. So I'd start with, yes, the balance sheets of the world's largest insurance companies were traditionally invested in public fixed income. BlackRock has been very successful at capturing those allocations, and today, we're the largest insurance company, general account manager in the industry with $700 billion in assets, more than 450 insurance relationships.

HPS also manages over $60 billion of credit assets for over 125 insurance companies. And I think with our combined platform, we're better positioned than ever to be a high-grade solutions provider. We also have a service to the largest insurance companies on our Aladdin platform as well as an array of middle office services and accounting services. We think that private credit and building great public private portfolios is a very important growth vector within private markets and there's an opportunity for growth with asset-based finance and private high grade with insurance companies.

Just the penetration in this market is much smaller when compared to the corporate credit market. We have over 20 conversations right now where we're working on high-grade SMAs with leading insurers and building private high-grade portfolios. A number are in later stages. We'd hope to start seeing deployments pull through through the second half -- and we're really focused on 3 things with them.

The first is delivering better outcomes for our insurance clients by working with them to migrate something on order of 10% of their existing public fixed income assets into private high grade. So think of a $700 billion base migrating to $70 billion on order of that in private high grade.

The second is expanding high-grade mandates, meaning new assets and winning new assets with clients away from our existing book.

And the third is also pursuing strategic partnerships, minority investments to increase the pool of insurance assets managed here at BlackRock, similar to the minority investment and strategic alliance that we announced with Viridian last year. I think on our competitive advantages. I'd note that insurance company asset management, it's a highly customized effort working with clients every day. It's not one of these mandates that give me a benchmark, and I'll beat it and give you a monthly report.

Teams are basically in-sourced by the insurance company to be looking at cash flows to be thinking about credit to be thinking about the intersection of accounting and capital and managing those portfolios. It is a highly interactive day-to-day thing. So being able effectively to blend turnkey full-service capabilities for insurance companies. That's a key competitive advantage for BlackRock.

Integrating public fixed income, private credit, Aladdin, accounting, middle office services makes working with BlackRock a performance enhancer, a scale enabler. So there's no doubt that this space has become more competitive, especially in private high grade. But I think our experience is that insurance companies want a full-service partner and that we're well positioned to play that role given our track record in public fixed income technology and world-class capabilities in private credit.

Your next question comes from Alex Blostein with Goldman Sachs.

So question to you guys about margins, Larry, you mentioned it a couple of times, and Martin did as well. Obviously, the business has grown really well. You outlined a number of really compelling initiatives how growth could continue for '26, '27. So when I think about the 45% operating margin, excluding performance fees that you sort of highlighted for 2025, how should we think about that progressing over the course of '26, assuming kind of normal markets?

And then Martin, just a follow-up for you, the specifics around G&A, I heard mid-single digits, but maybe you guys could just remind us what the right base is?

Sure. Thanks, Alex. Happy New Year. So BlackRock, as I mentioned, we continue to deliver industry-leading margins. As we talked about at our Investor Day, we continue to target 45% or greater adjusted operating margin profile with our margin on recurring fee-related earnings running higher. Our operating margin in the quarter was 45%. And as I mentioned in my remarks, we continue to deliver margin expansion on recurring fee-related earnings.

So excluding the impact of performance fees and related comp, our margin would have been 45.5%, up 30 basis points. Think of that as more akin to an FRE margin burden for stock-based compensation. This growth here at BlackRock is fueled by strong FRE growth in our private markets franchises, along with high value, higher fee rate and scaled strategies and active ETFs, digital assets, systematic equities and other areas.

So we think that over time, we'll see the margin on fee-recurring earnings driving upwards towards the trajectories of the best-in-class private market name, so think north of 50%. A couple of things I'd remind you that we defer a portion of compensation linked to performance fees for talent retention. So in years where we see higher performance fees, we also see higher deferrals, which impact comp in future years.

We continue to drive operating leverage and growth through technology and automation, using the benefits of size and scale to reduce costs, strategically footprinting our business. And as we set out in the Investor Day, we're targeting that 45% or higher greater adjusted operating margin. We're delivering steady operating margin expansion before the GIP, Preqin and HPS transactions.

As we talked about during the announcement of those transactions, GIP and HPS both have 50% or higher FRE margins. So that's accretive to our margin on fee-related earnings. So we think the growth in these franchises alongside the highly scaled platforms like iShares, cash, model portfolios, they can fuel higher margins on fee-related earnings and over time, our overall adjusted operating margin.

And just in terms of your question, Alex, on G&A. We've talked about our financial rubric and how we aim to align organic revenue growth and controllable expenses across base salaries as well as G&A. Ultimately, I think with the long growth, the market is a structural tailwind, that's going to deliver more beta to the bottom line in op income growth and the benefits of scale to our clients and shareholders.

As I mentioned on my prepared remarks, after annualizing for the impact of HPS and Preqin, we'd expect a mid-single-digit percentage increase in G&A. In 2025, we didn't see the full year impact of acquired HPS and Preqin G&A, so it will impact the year-over-year comparison in 2026. If you annualize our second half 2025 G&A results, which fully captures HPS and Preqin G&A, our 2026 expected G&A growth is in the mid-single digits.

Once we've lapped the 2026 results with a full year of integrated expense in our results, we expect you'll continue to see controllable expenses within organic base fee growth, as we drive our 2030 strategy forward, that implies future years are in the mid-single-digit percentage growth.

Your next question comes from Ken Worthington of JPMorgan.

I wanted to dig a little bit further into Preqin. The alternative data business is evolving, several alternative managers and index companies have launched private market partnerships over the last few quarters with plans to launch various private market indices. How should we view the evolution of Preqin and BlackRock's initiatives around private market data? And what sort of outlook do you see for Preqin and BlackRock to participate in investable alternative indices?

Thanks. I'd start with we're basically 9 months-plus past the close of Preqin. The integration has really been terrific. We're very excited about the plans going forward. The 4 big things to do as part of bringing Preqin into BlackRock is first, expanding the distribution, obviously, of world-class Preqin data across our client base.

The second is the build-out of data and models for private markets using the Preqin data, creating that great ecosystem where you have data and models being able to power how asset allocators think about investing in the private markets, how they think about benchmarking and comparing returns, effectively creating the language of private markets, both in risk models and in data.

The third is enriching the data and building scale in the data factory. And then the fourth is the opportunity, you're touching on, which we think is the larger long-term opportunity of leveraging our engines in Aladdin and iShares to build the machine for the indexing of the private markets.

And when I think about what the creation of public markets did to drive stock markets, which especially we see through iShares, we think BlackRock and Preqin to do that for the private markets. We see that opportunity as being particularly compelling. We're working on building investable indices that we hope to bring to market here in the next few years.

And I think the real opportunity is to try to standardize index rules to try, to standardize pricing frameworks and ultimately, publication so that you can create markets and transparency that ultimately can power futures contracts, can ultimately power iShares, and that's a big part of our strategy in the overall growth of Preqin.

Let me add one other point. Because more and more insurance companies, more and more pension funds and sovereign funds are deploying more and more private market strategies and more wealth managers are anticipating more private market strategies, the need to have a comprehensive risk management platform is even more imperative.

So having a separate risk management system only for private markets is not going to be workable. And I think what Aladdin is bringing across the world and the spectrum of public and private markets, we're in a position of very large growth, and you saw that in our ACV growth in 2025.

And we expect that to continue over the coming years, the need to have a comprehensive risk platform. And especially if the Department of Labor approves the utilization of private markets in the 401(k) and the defined contribution business, each and every firm is going to have to validate and authenticate the risk that is being implied when they add private markets.

We are still going to have to live under some prudent ruling, maybe still a fiduciary ruling of some sort; we don't know. But I could say with absolute certainty, the need to have a comprehensive risk tools to understand the risks associated with adding private markets to a, what is, all public market portfolio is imperative. And so the need for a platform like Aladdin has never been greater, especially with the addition of private markets in the defined contribution space.

Your next question comes from Dan Fannon with Jefferies.

So just a question on private credit. I was hoping you could first disclose what the HPS flows were in the quarter? And then more broadly, how you're thinking about the outlook for growth given the headlines and news flow around this asset class, has that changed at all as we think about 2026 and beyond?

Thanks a lot. So we deployed $25 billion in 2025 across private markets, led by private credit and infrastructure. The deployment trends have been strong. We had $7 billion of private credit net inflows in the quarter, primarily due to deployment activity. We're seeing good and building momentum for private markets investing and private credit, I think, in particularly.

So that number, I think, is in the tables. We're generally seeing stable credit conditions across the main HPS strategies that today form the core of our private credit platform. We think some of the headlines that we've read often highlight isolated stress points rather than painting the full picture. But we generally see stable credit conditions across the portfolios that we're managing.

But I think the context is critical. Like defaults and losses in the non-IG direct lending to corporates have been abnormally low for years following low rates. Default rates in the broader leveraged loan market are averaging slightly below the long-term average of 3%. And in economic slowdowns like default rates rose to 4% to 5%, the all-time peak in the GFC hit 15% on an issuer-weighted basis, and so direct lending defaults are rising, but they remain in historical ranges. So I think we see this period as do many of the other firms as a period of expected catch-up following a long period of very low defaults.

So returning to normal defaults is something I think we expect. When we look through the universe of BDC loans, the $400 billion across 20,000 loans sitting in the valuation databases, we see nonaccruals that are inside the historical average. We see PIC as a percentage of total interest income in line with historical norms, recovery rates that are in line with historical norms.

The data does show some stratification between smaller companies and larger companies. So a $0 to $50 million EBITDA company looks very different than a $100 million to $200 million EBITDA company in terms of the ability to generate earnings. So I think going forward, it's not that there's nothing to see here, it's just that we'd expect smaller borrowers, particularly those that were financed at very high or peak valuations and capital structures that didn't contemplate a 3% to 4% neutral rate.

Those are the credits that we'd expect to be more challenged. The HPS teams have focused very consistently over the years on larger companies. The weighted average EBITDA in the HLEND portfolio is about $250 million. But these are lending businesses. There will be normalized default rates through cycles. And I think the team is very fond of saying the promise of private credit is not that there will be no defaults, is that detailed credit work is going to be rewarded and that lenders will be in a better position to maximize recoveries.

We continue to see good flows. We had strong gross subscriptions of $1.1 billion in the fourth quarter in HLEND. Redemptions were 4.1%, which was higher than recent quarters, but in line with the broader industry. I think a mix of factors affected the Q4 flows. There's generally elevated seasonal redemptions. There was media attention, some profit taking.

And then I think forward expectations on lower base rates also plays in. But still, most BDCs posted positive flows. In our Preqin survey data, we see the structural pipeline for private credit fundraising and deployment as intact. In the Preqin data, over 80% of investors plan to maintain or increase their allocations to private credit in the next 12 months. It's just becoming a more standard part of our overall fixed income allocations to provide income and diversification.

Your next question comes from Ben Budish with Barclays.

Maybe just following up on Dan's question. Just curious if you could provide a little bit more color on your expectations for the wealth channel more generally in 2026. HLEND, obviously, some good, if not better than average trends in Q4. What's the latest you're hearing from advisers?

For GIP, I know there was some press indicating that there were maybe some challenges getting a product off the ground. So just curious if there's anything you can share there? And then I think in the prepared remarks, you talked about model portfolios using private markets. So anything you can share in terms of what those products might look like, what we should expect in terms of timing would be helpful?

Sure. I'll give that one a go. I'd start with the framing that, again, at our Investor Day, we discussed how our platform is going to target $400 billion in gross fundraising from 2025 to 2030. We raised over $40 billion in private markets in 2025, and we're entering '26, I think, with strong momentum, very excited about the integrated public-private capabilities that now include GIP, HPS and Preqin.

In private wealth and retail channels, we currently have the flagship private credit BDC HLEND, as you mentioned, been raising about $1 billion a quarter. And we have semi-liquid strategies in senior secured loans, junior capital and broadly syndicated loans. In 40 Act interval and tender offer funds, we have multi-strategy credit and private equity solutions that combine for about $1 billion in AUM under the tickers and And in Europe, we recently launched multi-alternative solutions products using the LTIP vehicles, which stand at sort of $600 million plus in AUM, generally offered through private banks and retirement plans.

Looking ahead, as Larry mentioned, we're bringing in H series of vehicles to the market for private wealth and retail channels versus '26. The H Series is going to give investors access to key private markets building blocks, direct lending, junior capital, real assets, triple net lease, private equity solutions.

And at our Investor Day, we set out a goal to grow the private markets to wealth series of products to at least $60 billion of AUM by 2030. So I think you'll see here in the near term, a real asset strategy coming to market in the U.S., European direct lending to European private wealth clients and following the triple net lease and other strategies in the U.S. later this year.

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

Thank you, operator. I want to thank all of you for joining us this morning and for the continued interest in BlackRock. Our results in 2025 validate the power of our integrated platform and the strength of our positioning with clients. We entered 2026 with differentiated momentum and opportunities ahead for us. I think we're well positioned to deliver for our clients and in turn, create longer-term value for our shareholders. Everyone, have a very good first quarter and enjoy the winter.

This concludes today's teleconference. You may now disconnect.

Okay. Wonderful. Okay. Thanks. Well, good afternoon, everybody. We're going to get started. It's my pleasure to introduce Martin Small, CFO of BlackRock, the largest global asset managers with $13.5 trillion in assets under management. Despite its size, BlackRock remains one of the fastest-growing companies in the asset management space with plans to still double the business by 2030. The firm is well on its way there with organic base fee growth accelerating to high single digits so far in 2025. Early signs of success from the recently closed acquisitions in private markets and a sharper focus on driving positive operating leverage. So lots to discuss.

Welcome back, Martin. always great to see you. Yes. Thanks for being here.

So why don't we start with a question on organic base fee growth. Not surprisingly, it's an important metric for you guys and the one that you really trained the market to really keen in on. So BlackRock has delivered 8% organic base fee growth so far or call it, over the last 12 months or so, exceeding the 5% plus, so really leaning to that plus part. With a few weeks left in 2025, how is Q4 organic base fee growth trending? And what are your early expectations for next year?

Great. Well, it's wonderful to see everybody. Thanks again for having me, Alex. And I know these things don't organize themselves. So thank you to you and all the staff for putting together such a great session.

I would characterize 2025 as one of these eye-watering like white knuckle roller coaster experiences for investors like Level 5, white river rafting. I mean you had Liberation Day. Do you remember Liberation Day? Liberation Day, sharp equity market declines. I think for the first time in quite a while, we had questions about U.S. exceptionalism. We actually had international equities outperform U.S. equity markets by like 10 percentage points. Does anybody remember those days, right? We had gold, a hunk of rock on a 30-year horizon, outperformed the S&P 500. We've had Sabre rattling on tariffs, trade, taxes, like real geopolitical tensions, the largest CapEx boom in history. I mean this was a big year. And so I'm really excited.

Everyone at BlackRock is very excited about delivering one of the strongest years in terms of organic base fee growth that we've seen in the history of the company. We're sprinting into the end of the fourth quarter here, which is seasonally the strongest for us. We've had 5 consecutive quarters of 5% organic base fee growth or higher. We've been running, as you mentioned, at 8% organic base fee growth over the last 9 months. We closed the HPS transaction early in the third quarter. So that's given us a boost from here kind of on the forward growth trajectory. So we're excited about it.

To me, what really stands out, though, is BlackRock's strategy has always been about the whole portfolio. It's about breadth in products and services. It's about serving every corner of a client's portfolio with excellence. And I'd argue to you, it's not just about the 8% organic growth over the last month. It's about the quality of that and diversity of that organic growth. Our top contributors to organic revenue growth are really diversified. It's our systematic franchise. It's private credit, it's cash, it's OCIO, it's active ETFs, it's models. So we're really seeing a lot of breadth in the business in terms of growth engines. And it's not just capabilities that we've had for decades. It's new capabilities that we've built in the last 2 years as well as capabilities that we've acquired in the last 2 years. And that's what we're looking for. The structural growers that have a lot of tailwinds behind them that we can get deep in serving client portfolios.

For the fourth quarter, we've seen about $100 billion of iShares flows so far through last Friday, the 5th of December. That's about $450 billion of iShares flows through the year. That would make for an annual record. We're #1 in asset gathering in iShares ETFs globally as well as the #1 organic revenue grower, 3x bigger than any of the other issuers or the next largest issuer.

So the fourth quarter is shaping up well. We've continued to see good deployment in our private markets franchises. We've had about $16 billion through the third quarter and a very good pipeline in the fourth quarter. We made a previous announcement about our mandate with Citi's private wealth business, which is about $80 billion of inflows, which should hit here in December. We're very excited about helping Citi grow its private wealth business, leveraging the best of BlackRock portfolio solutions. So we expect that to be a strong contributor to organic revenue growth in the fourth quarter.

And as we look out to '26, Alex, we've built the business around these structural growers, right? It's SMAs, models, systematic equities, private markets, Aladdin, cash, digital assets. And we see those growth rates really pulling through. So we think, as I mentioned at Investor Day, it's 5-plus with a real emphasis on the plus. I think we can more consistently generate 6% or 7% organic base fee growth with these engines really firing the way they have been. And if we get some positive market tailwinds and good structural, I think, support, we can do even better than that.

And the thing that I really track is if you look at the fee yield on new money to the firm, if you look at the fee yield on our organic revenue growth, it's running 6 or 7x higher than our fee yields were running in 2023. And so long as we're pulling up that fee yield on new money over time, it will pull up the average fee rate of the firm. And that's our whole strategy that we talked about at Investor Day of going from about $20 billion of revenue to $36 billion of revenue by 2030. Doubling operating income, doubling the market cap of the firm. What it implies is basically pulling the fee rate up what seems like 3 basis points. But on the magnitude of the assets, that's very meaningful. But we're very focused there on delivering high-value strategies that command those fee levels that are above the average fee rate of the firm.

Great. Well, that's really helpful color, both for the near term kind of as well as how you're thinking about '26. Let's talk about expenses and margins as well for a couple of minutes. The margin story has been maybe a little bit more noisy recently. You guys had a number of deals that kind of created a little bit of funny P&L dynamic. So one, I was hoping you could just walk us through your latest thinking for...

CFOs love it when you say funny P&L dynamics. Funny -- jump suit out.

Yes. So...

Fair point.

Fair point. So when we think about the sort of the core G&A trajectory for the firm into '26 and longer term, help us kind of level set what that looks like on a sort of pro forma basis, pro forma for the funny noise.

Thank you -- thank you for that. So I think through the lived experience of the management team and working with clients over a very long horizon, we've developed, I think, a good acumen about how to invest in the business through market cycles to optimize organic growth and create a lot of scale. BlackRock has continuously delivered industry-leading margins. We aspire to deliver margins -- adjusted operating margins of 45% or greater with our margin on recurring fee-related earnings running even higher. We've managed to do that and do that, I think, fairly consistently.

When we announced the transactions with HPS and GIP and Preqin, we were already delivering steady adjusted operating margin expansion. And GIP and HPS are over 50% FRE margin businesses. So they've been net accretive to our fee-related earnings, and we continue to see that pull through in how we're building the business. That's in addition to the businesses we have that have a lot of scale in them already, ETFs, highly scaled business, SMA, highly scaled business, digital assets, highly scaled business, our systematic equity and systematic and businesses, highly scaled franchises.

So when I think about the FRE growth trajectory of the private markets business, the highly scaled franchises that we see in the traditional platform, we really have that ability, I think, to continue to drive margin expansion and profitable growth for shareholders.

On the expense side, we've talked a lot about our systematic budgeting framework for how we invest the operating expenses of the firm. And in particular, we've talked about the financial rubric, and that's just basically a set of rules for how we think about systematically investing the expense base. And the basic principle is to align organic revenue growth and controllable expense, align organic revenue growth and controllable expense. By controllable expense, I just mean salaries and benefits and G&A. Salaries and benefits and G&A. Those are the expenses that we control. And so keeping them aligned ultimately with organic growth means that with stronger markets behind us, we'll have more of that beta that's driving revenue drop into operating income, creating operating income growth and creating more operating leverage for our clients as well as our shareholders.

You see that strategy pulling through, I think, very much in action. If you were to look at margins in the third quarter, excluding the impact of performance fees and related performance comp expense, our margin on fee-related -- recurring fee-related earnings was 46.3%. That's up 110 basis points year-over-year. So we really see that ability to continue to drive operating margin expansion in the business through scale and the financial rubric.

When you think about the cadence, I guess, of overall margin expansion, -- and just to double-click on that. I think you guys are at around 44% margin or so so far for the year, if you kind of look at where consensus, et cetera. 45% plus really doesn't seem that heroic based on the things you just described, even assuming like a normal level of market returns, right? So as you think about more of like an annual margin expansion trajectory on your way to that 45% plus, what does that look like over the next couple of years?

Yes. So I think we continue to target that 45% adjusted operating margin. Keep in mind, that's a fully burdened with stock-based comp margin. Where I really see the ability to continue to drive margin expansion is in the private markets and scaled businesses like ETFs, systematic equities, et cetera, where I really think we'll see that margin on fee recurring earnings being able to drive up towards those trajectories of the best of the best -- the best-in-class private markets names north of 50%.

Yes. I got you. Great. Okay. Let's pivot to some of the businesses, starting maybe with the institutional channel. And given your size and just the global reach, I would love to hear your perspective on this. One of the themes we've seen recently, perhaps most pronounced with CalPERS announcement recently kind of moving from strategic asset allocation to a total portfolio approach. It feels like that plays well into what you guys have established, but curious if you hear more institutions following their path, what does it mean for the market? What does it mean for your ability to source assets?

Yes. So I would -- I put in a small plug here for my colleagues at the BlackRock Investment Institute, who just last week released their 2026 market outlook. But one of the things that the BII group has talked about is just that markets are changing so rapidly. These megatrends that are driving markets whether it's AI CapEx, whether it's geopolitical fragmentation, whether it's changes in demographics have really changed the way investors need to think about building long-term portfolios.

For generations, institutional investors have been doing strategic asset allocation. Every 3 to 5 years, either themselves or through a consulting firm, they do extensive studies, what have been the historical risk and return assumptions and volatilities for international equities for high yield. They look at them and say, these are expected returns. They build a portfolio ultimately that's on an asset class silo basis, they put it together. And hopefully, when you combine it, it meets the long-term required output for their asset liability management purposes.

But imagine doing an asset allocation, Alex, like that's 3 to 5 years old right now. Like we did all the study. I mean 3 to 5 years ago, there were no large language models. There were no advanced GLP-1s, like the Taylor Swift Eras Tour was not affecting regional GDP market, right? I -- imagine every 3 to 5 years, we study what the expected returns are in capital markets. And I think what you've seen is this move away from SAA from traditional long-term strategic asset allocation to this idea of a total portfolio approach, which is basically to set a single reference benchmark and a set of risk budgets and ultimately to be more nimble about accessing sources of risk and return.

And it's interesting, you flagged CalPERS made a big announcement about this. There's a study that's referenced actually in the CalPERS press release about adopting TPA. And it talks about that study has 26 other very large institutional investors. that have also moved to a TPA approach or something similar, which are about $6 trillion of asset allocators in the world.

But I want you to think about like TPA changes the way investors and I think kind of asset managers have to talk to each other. So it's not a conversation about what does this asset class do. It's about what's the role of this asset class in a portfolio? How does it affect all of the other parts of the portfolio performance or even more complicated, TPA actually contemplates, for example, equity, exposure, equivalents like EEEs, right? What's an EEE? Well, it's things that have equity-like characteristics that on a relative basis, a CIO might say, I like that to fill up my equity exposure and my equity risk in TPA rather than buying outright equities. And I've seen -- we've seen certainly places like down in credit, where perhaps some of the risk return on a relative basis has some principal protection like in a junior capital structure, but has equity-like upside.

So thinking about EEE, equity, exposure, equivalents, it's like an entire new language. It has profound, I think, impacts for how asset managers and asset owners talk to each other, for how they dimension risk and ultimately, how they -- I think they access capital.

If you were to actually go Google beyond that press release, what CalPERS has done, you'd actually find that a lot of Aladdin risk models are being used to calculate those EEEs and other ALM models for CalPERS on the TPA, on the total portfolio approach. So I think this is a really important profound change in how investors build portfolios. But I also think that it's a huge opportunity for firms like BlackRock, where we have tools and technology and data, combined with kind of a language of whole portfolios. We've always talked to clients about whole portfolios and how adding a particular risk exposure affects the outcome of the whole portfolio. I think there's lots of asset managers that are excellent in their vertical and their sphere, but they've never really had to be whole portfolio conversers before. And that's a really big deal.

So TPA to me, like if you want to be a great firm dealing with asset owners that do total portfolio allocations, you need to be an integrated asset manager with financial technology across public and private markets. I really think BlackRock was built for TPA.

Yes. No, it certainly feels like that. Okay. Let's turn to some of the bigger growth engines for the firm and obviously, some of the recent acquisitions starting with HPS and private credit. There's been a lot of narratives in the market over the last couple of months related to all things private credit, even though the actual tangible evidence of a broad-based deterioration in credit has been pretty minimal, at least so far. So one, hoping to get an update from you on how integration with HPS has come along. And two, given what we've learned so far, what are they seeing on the ground in terms of underlying credit trends across their private credit exposures? How are they changing at all, if at all, the way they monitor credit exposures given some of the recent issues?

So we closed our combination with HPS Investment Partners in July. We've been closed about 5 months. I think we're already seeing really excellent synergies and really excellent opportunities as a combined firm that are better than we could have ever seen on our own. 5 months together, I'd say, 5 big workflows that are happening across the firm.

The first of which is bringing together all of the origination, all of the relationships across banks and corporates to really widen out that funnel. If you're a credit investor, you want to see everything. You want to see everything. You don't want to do everything, but you want to see everything and you want to be global. And I think the team at HPS that's come to BlackRock would tell you the funnel, the pipeline is at least twice as big by bringing together the BlackRock relationships across corporates, across sovereigns, across banks. So I think that's been a real win. And over time, including so far, will help us with deployment, will help us earn attractive risk and returns for our clients.

I think the second set of workflows has really been trying to scale this asset-based finance and high-grade business with insurance companies. We have about 20 SMAs that are in the middle of various states of becoming operational, and we expect to see some of that pull-through in 2026 in terms of base fee growth. The third is private markets to wealth. HPS has some real flagship strategies, including the flagship nontraded BDC HLEND, but we're really building out the product agenda there, sort of 5 to 7 products, I think, in the United States, somewhere at 3 to 6 in Europe and then taking advantage of what is a very big BlackRock distribution network, particularly in places that HPS hasn't traveled as much like the RIA network or independent broker-dealers where we at BlackRock have big business.

I think the fourth thing is really technology has been very exciting, has been including private credit capabilities in Aladdin. And for sure, I'll tell you, the Aladdin team has been focused on building out excellent private credit capabilities, having another set of world-class practitioners to really shape and engineer the platform has been very exciting. And otherwise, all things pulling the firms together, cultural, real estate, all that stuff going very, very well. So we're very excited. 5 months in, 5 great workflows going on.

I think on credit conditions, if you were to chat with the team, the first thing we'd start by saying is both BlackRock and HPS have a heritage that is steeped in rigorous underwriting and making sure that we understand the risks that we're signing up to for our clients. Our clients expect us to generate attractive risk and return in these markets and, of course, to protect their investments and their principal.

I would separate out what we read in the headlines. I think any industry that's had strong growth attracts some degree of appropriate scrutiny in terms of things that are going on. And so I think the growth of private financing markets across direct lending, asset-based finance and beyond have grown right alongside the growth of the private markets and they're going to attract appropriate scrutiny. But I think when you really start to look at fundamentally what's happening in the marketplace, the headlines don't really match what we see.

So I think broadly speaking, if we looked at the universe of BDC loans, $400 billion or so, 17,000 or 20,000 loans that are sitting in the independent valuation databases, we see nonaccruals basically consistent with historical norms. We see PIK as a percentage of total income in line with historical norms. We see recovery rates that are in line with historical norms.

Now like the promise of private credit is not that there will never be defaults, right? These are below investment-grade direct lending businesses. There will be defaults. The hope is that they are navigated better, that the recoveries are better, that they're ultimately managed better.

But when I look at the environment that we've come through, we've come through an environment that's had very, very benign defaults. So if you look at levered loans to private equity companies, we've been running at 1% to 2% kind of default rates through the cycle, normal default rates might be 3% to 4%. If we were to look at single B loans in the syndicated loan market, the long-term single B default rates, 3% to 4%. We saw low teens defaults in the global financial crisis. So I'd expect to see some catch-up in default rates from here, like even moving to the historical norms of 1% to 2% to 4% ultimately implies a doubling of the default rates from here.

What I do think we see that's interesting and we have our eyes on is if you look at some of the independent kind of loan databases as well as looking through our own portfolios, I think you're starting to see some stratification between much smaller companies, like a $0 million to $50 million EBITDA company looks very different than $100 million to $200 million EBITDA company, both in terms of the ability to generate earnings. So we've seen in 2025, the bigger companies are growing EBITDA 10%, smaller companies are actually shrinking in earnings. If we look at covenant defaults, for example, not monetary defaults, covenant defaults, smaller companies are having more covenant defaults than larger companies, it makes sense. Where I think the HPS teams have focused very consistently over the years is in larger companies. The weighted average EBITDA in the HLEND portfolio is about $250 million.

So I think similar to what you hear from some of the other kind of large private credit providers, where we'd expect to see some more of the credit stresses are in the smaller companies that have a more difficult time navigating, I'd say, trickier economic cycles versus larger companies have more ability to weather some of these economic cycles. But ultimately, like that -- I think that's good for this marketplace, being able to separate out those that have done good underwriting, those that can manage through a cycle that ultimately, I think, allows you to distinguish your performance from others. And I think kind of coming through what's been a very benign default environment, ultimately, this will be the cycle where I think the best firms get to distinguish themselves on performance.

Yes, it's pretty consistent with what we're seeing for what it's worth. So let's pivot to private markets for wealth for a couple of minutes. So you mentioned HPS obviously has 2 flagship products. They can sort of stand on their own 2 feet, and we've seen them grow really nicely. You just mentioned that you plan to expand the product lineup a little bit. Maybe talk to us a little bit about what you're thinking in terms of new products, whether it's in credit or perhaps other parts of the ecosystem. Do you have enough capabilities to do that internally? We've seen obviously folks launch products, whether it's in private equity and secondary, you have less capabilities there. How are you thinking about the holistic approach to private wealth?

Yes. So I'd start by saying both BlackRock and HPS historically have strong heritages in the wealth space. I'd say HPS has really been geared towards the private bank space. At BlackRock, we've built a very, very large wealth business across the United States and in Europe and in Asia, built on the back of the ETF business, on the mutual fund business, the SMA business. We have a big liquid alts business. We have the largest wholesaling team in the industry out covering every corner of the U.S. marketplace and a very strong relationship with the thousands of private banks in Europe that ultimately drive a lot of the discretionary flow.

Number one, we're going to bring HBS in an appropriate controlled way across all those channels to increase fundraising. Investment performance comes first. It's the license to go raise capital. So the idea isn't bring it everywhere and try to raise money as possible. It's to make sure that you're gearing your fundraising with what you believe you can deploy at the right levels of returns.

That said, we see an opportunity to really widen out the product funnel here. And the goal, I think, would be in the United States to be developing a family of retail alts funds and access vehicles that go beyond the flagship HLEND and some of the junior capital solutions. But imagine an H-series family of funds, an H-series family of funds that is led by the flagship HLEND, has junior capital, real assets, triple net lease. We have some existing vehicles that we've been retooling like CREDX, which is a multi-strat credit interval fund that we've had the HPS team repositioning that I think is going to be a really attractive multi-strat credit product.

We have a primary secondaries and co-invest vehicle, BPIF, the BlackRock Private Investments Fund that I think can really become a secondaries and co-invest vehicle that's interesting to take these platforms. But the idea would be to create a family of funds that somewhere between 5 and 7. That's an H series that ultimately, I think we can bring in a very coordinated way so that you have basically all of the building blocks that would serve an adviser to have a multi-alternatives portfolio.

And then second, the idea would also be to start scaling those through our models business. We have $450 billion of SMAs and managed models at BlackRock. So again, just being able to achieve 10% penetration there in terms of being able to use some of these products in the models would allow us to improve the quality of those portfolios while also being able to leverage the asset base to drive the growth of the retail alts business.

That makes sense. That makes sense. Where are you in the build-out of these additional products? Is that likely going to be a '26 event, '26 launch? Or is that going to come...

That's a '26 launch. I think you'll start to see kind of real assets and triple net lease kind of in the first half of next year. And then obviously, kind of HLEND is out in the marketplace today and junior capital and other exposures are places that we can bring as well.

Yes. Let's talk about the 401(k) opportunity as well sort of related to the wealth ecosystem, but particularly with respect to the target date fund solutions. As a major DCIO manager with both robust passive and obviously now private capabilities, you guys clearly have the right to win as that market continues to develop. What's the plan in terms of launching LifePath target date funds with allocation to privates? I think that's a '26 event, but maybe expand kind of what are you doing to build up into that? And what do you expect the adoption curve and pricing to ultimately look like for these kind of products?

So I have worked in this space my whole career in asset management. And I can tell you that we have seen more progress on this topic of private markets into 401(k) basically in the last year than we've seen in the last 20. We haven't seen such seismic changes in this space since the Pension Protection Act in 2006. And I think it's really exciting. The President's executive order directing the agencies to make progress on private markets to define contribution was signed in August. It has about a 6-month time line to start showing some actions. So that puts us in, call it, February, let's call it, Q1 of 2026, where you'll start seeing some action.

I'm involved along with many colleagues in a whole array of industry groups and working with the SEC and the Department of Labor. And I can tell you there's really high-quality people doing this in Washington, D.C. who are very thoughtful and very mindful of the outcomes. And there is real work being done. There is a draft model legislation for a safe harbor for what is the process a plan sponsor has to go through in terms of product selection, monitoring and the like in order to fulfill the duty of loyalty and prudence required by the regulation. There is model legislation and actual legislation that's been introduced in the House of Representatives in order to reform bleeding standards in ERISA. The Department of Labor has been filing amicus briefs and certain types of litigation to start showing how it could ultimately influence courts on bleeding standards and litigation. So there's real activity happening here, not just press releases about things that can be done.

And so at BlackRock, as you mentioned, Alex, we're the #1 DCIO provider in the market. We run about $500 billion plus of target date strategies. More than half the assets that we manage at BlackRock, over $13 trillion of assets, more than half the assets we management are for retirement accounts. So this is top of mind for us and top of mind for our clients about basically how to bring what's always worked in DB, right? Like if you were to go -- like when we're talking about CalPERS and CalSTRS, those are defined benefit plans for state workers and for teachers. But why is it if you work on the assembly line for a corporate, you can't get private markets?

And so what we're just trying to do is bring the DB model to DC. The way most individual 2-legged creatures in the United States who work in a corporate job access the capital markets at all, at all is through a target date fund. And so the idea that they should have 0 private markets exposure defies all of the Nobel research that's been done in the history of time about what it builds to be -- what it means to build a diversified market portfolio.

So our first foray here has been in the collective trust product with Great Gray that we're bringing to market. We have plans to bring a LifePath with private target date fund to the market in 2026. And then ultimately, I think -- ultimately, over time, I do think there will be the ability to integrate into the traditional LifePath strategies. But all those things have to go in sequence. They all have to be done with plan sponsors, with consultants and ultimately will require the input and approval of all those clients. That's going to take some time.

But in '26, we'll get to market and start seeing these strategies in action. It's important that they build a track record so that when you go out to talk to consultants and plan sponsors, they're supportive and have a real lived experience. I think this is a place we can be really great and we can do good for our clients as well as do well for our shareholders.

Yes. No, definitely a really exciting part of the market to watch. Okay. I probably have a question only for -- time for one more question. And I probably want to hit on tokenization. Just given the fact that Larry has helped spend a quite substantial amount of time on the last earnings call discussing this opportunity for you guys. And you -- BlackRock as a whole already touches this ecosystem in a number of different ways. Obviously, there's a crypto ETF, tokenized money market funds. You're the largest manager of circle stablecoin, right? So you're already in this ecosystem. The thing that I think a lot of people found interesting and intriguing is the way you talked about or the firm talked about tokenizing longer-term assets, iShares, et cetera. What's the vision here? What's the commercial model? In your best guess, what does this look like 12 to 24 months from now?

Yes. So our strategy here is just to do 3 things. The first of which is to bridge the traditional finance world and the DeFi world, right? The crypto world, right? That's what the IBIT ETF is. That's what the [indiscernible] is, which is to make all the crypto world accessible in the traditional capital markets.

The second is to be the best stablecoin reserve manager in the industry. Today, we manage, as you mentioned, about $65 billion in the Circle Reserve Fund. There's $300 billion of stablecoin out there. And ultimately, we see the growth of stablecoin as a big part of the growth in digital wallets. Digital assets, tokenized real-world assets are in their infancy. Tokenized real-world assets are about $36 billion, and we have the largest tokenized fund, which is a tokenized liquidity fund that invests in U.S. treasuries and cash that's BUIDL, BUIDL.

But ultimately, I really believe that this world of digital wallets is going to be much bigger in 5 years. And so we want BlackRock to effectively be a digital wallet native asset manager. Like we want to be able to manage a model portfolio of stocks and bonds and ETFs and do proposal generation and reporting and trading the same way that we would do it in a unified managed account in the physical world.

We're working aggressively to create long-term investment products which is to start by tokenizing iShares, for example, and working on the workflow for how you do creation and redemption. Like how do you mint a new token for an iShare ultimately. I believe these markets can be much bigger and having a digital wallet native asset manager that can do everything from operate mutual funds and ETFs inside the digital wallet to ultimately build client portfolios and have them go from their cash position in stablecoin or their cash position in something like BUIDL that's a money market fund and convert that into the S&P 500 or IEFA or Taylor Swift royalties, whatever it might be, to be able to do that natively in the digital wallet, that's where we want to be in 3 to 5 years.

Great. Awesome. All right. Well, unfortunately, we're out of time. Martin, thank you so much. Appreciate you being here.

Thank you.

Good morning. My name is Jennifer, and I will be your conference facilitator today. At this time, I'd like to welcome everyone to the BlackRock, Inc. Third Quarter 2025 Earnings Teleconference. Our host for today's call will be the Chairman and Chief Executive Officer, Laurence D. Fink; Chief Financial Officer; Martin S. Small; President, Robert S. Kapito; and General Counsel, Christopher J. Meade. [Operator Instructions]

Mr. Meade, you may begin your conference.

Good morning, everyone. I'm Chris Meade, the General Counsel of BlackRock. Before we begin, I'd like to remind you that during the course of this call, we may make a number of forward-looking statements. We call your attention to the fact that BlackRock's actual results may, of course, differ from these statements. As you know, 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. BlackRock assumes no duty and does not undertake to update any forward-looking statements.

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

Thanks, Chris, and good morning, everyone. It's my pleasure to present results for the third quarter of 2025.

Before I turn it over to Larry, I'll review our financial performance and business results. Our earnings release discloses both GAAP and as adjusted financial results. A reconciliation between GAAP and our as adjusted results has been included in the tables attached to today's press release, I'll be focusing primarily on our as-adjusted results.

At BlackRock, we always challenge ourselves to raise the bar and our results consistently reflect that mindset. We've been focused on building capabilities that we anticipate our clients will need in the future, while also implementing some of the largest and most multifaceted mandates in our history. This combination of forward-looking investment and consistent execution has fueled strong results across our business. The momentum we saw in the first half of the year accelerated in the third quarter. Our builds across ETFs private markets, whole portfolio and cash management drove 8% organic base fee growth over the last 12 months. That's our highest level in over 4 years, but even more importantly, it's broadly diversified.

We have great momentum across both our foundational businesses and categories that we've developed in just the last few years. That strength and diversification is resonating in meaningful opportunities across regions, client channels, prototypes and asset classes. We're entering what's typically our seasonally strongest quarter and coming off significant milestones in just the last 90 days.

Since July 1, we've closed our acquisitions of HPS and ElmTree, announced an $80 billion SMA solution with Citi Wealth and onboarded a $30 billion pension mandate. These represent just the start of what our newly integrated platform can unlock. We've expanded our capabilities across private markets, digital assets, data and technology. That strategy now moves forward with greater strength and scale. The opportunity in front of us far exceeds what we've ever seen before.

We finished the third quarter with record AUM, record units of trust of $13.5 trillion. Over the last 12 months, clients entrusted BlackRock with nearly $640 billion of net new assets powering 8% organic base fee growth. We generated $205 billion of net inflows in the third quarter, reflecting 10% annualized organic base fee growth, our highest quarter since 2021. This organic base fee growth was driven by broad-based client demand for iShares, private markets, systematic outsourcing and cash strategies. These are all capabilities we've invested in over recent years and demonstrate the success of our structural growth strategy.

Moving to financial results. Third quarter revenue of $6.5 billion was 25% higher year-over-year, driven by the acquisitions of GIP, Preqin and HPS, organic base fee growth over the trailing 12-month period and the positive impact of market movements on average AUM.

Operating income of $2.6 billion was up 23% year-over-year. Earnings per share of $11.55 increased 1%, reflecting higher operating income, offset by lower nonoperating income and a higher diluted share count in the current quarter compared to a year ago.

The higher share count included 6.9 million shares issued at the close of the GIP transaction on October 1, 2024, and 8.5 million BlackRock SubCo units issued at the close of the HPS transaction on July 1. The SubCo units are exchangeable on a one-for-one basis with BlackRock common stock and included as if converted in the company's fully diluted shares outstanding.

Nonoperating results for the quarter included $84 million of net investment losses, primarily due to a mark-to-market noncash loss linked to our minority investment in Circle.

Our as-adjusted tax rate for the third quarter was approximately 24% and benefited from discrete items. We continue to estimate that 25% is a reasonable projected tax run rate for the fourth quarter of 2025. The actual effective tax rate may differ because of nonrecurring or discrete items or potential changes in tax legislation.

Third quarter base fee and securities lending revenue of $5 billion increased 25% year-over-year, reflecting the positive impact of market beta on average AUM, organic base fee growth, higher securities lending revenue and approximately $215 million and $225 million in base fees from GIP and HPS, respectively.

On an equivalent day count basis, our annualized effective fee rate was approximately 0.5 basis points higher compared to the second quarter. This increase was primarily due to the onboarding of higher fee alternative credit assets of HPS, which was partially offset by $48 million of lower private markets catch-up base fees compared to the second quarter.

Performance fees of $516 million increased 33% from a year ago, primarily reflecting approximately $270 million of performance fees from HPS.

Quarterly technology services and subscription revenue was up 28% compared to a year ago, reflecting sustained demand for our full range of Aladdin technology offerings and the closing of the Preqin transaction, which added approximately $65 million of revenue in the third quarter of this year. Excluding Preqin, technology services revenue would have increased approximately 12% year-over-year.

Annual contract value, or ACV, increased 29% year-over-year, including the impact of Preqin. ACV increased 13% organically.

Total expense was 26% higher year-over-year, primarily driven by higher compensation, sales asset and account expense and G&A expense. Employee compensation and benefit expense was up 33% year-over-year primarily reflecting higher incentive compensation associated with performance fees as well as higher operating income. The year-over-year increase also reflects the impact of the onboarding of GIP, Preqin and HPS employees. G&A expense was up 18% year-over-year, primarily due to M&A transactions and higher technology investment spend.

Sales, asset and account expense increased 21% compared to a year ago driven by higher direct fund expense and distribution costs. Direct fund expense increased 22% year-over-year and 5% sequentially, primarily as a result of higher average ETF AUM.

Our as-adjusted operating margin of 44.6% was down 120 basis points from a year ago, reflecting the impact of higher performance fees and related compensation. We continue to deliver margin expansion on recurring fee-related earnings.

Excluding the impact of all performance fees and related compensation, our adjusted operating margin for the third quarter would have been 46.3% and up 110 basis points year-over-year. We provided additional disclosure in our earnings supplement on the contribution of performance fee related compensation to total expense.

In line with our guidance in July, we continue to expect a low teens percentage increase in 2025 core G&A expense. This year-over-year core G&A increase is mainly driven by the onboarding of GIP, Preqin and HPS.

Our capital management strategy remains consistent. We invest first in our business either to scale strategic growth initiatives or drive operational efficiency and then return cash to our shareholders through a combination of dividends and share repurchases. In the third quarter, we repurchased $375 million worth of shares. At present, based on our capital spending plans for the year, and subject to market and other conditions, we still anticipate repurchasing at least $375 million worth of shares in the fourth quarter, consistent with our previous guidance.

BlackRock's third quarter net inflows of $205 billion reflected deepening client engagement and were led by a new record flows quarters for iShares ETFs. We iShares ETFs generating $153 billion of net inflows in the third quarter. Core equity and index fixed income led the way with $53 billion and $41 billion of net inflows, respectively. Our digital assets ETPs raised another $17 billion in the third quarter. Our flagship offerings in IBIT and ETHA were among the top 5 inflowing products in the ETP industry. We're also seeing demand for our high-value higher fee active ETFs, which gathered $21 billion of net inflows.

Our institutional active franchise saw $22 billion of net inflows, driven by the onboarding of a $30 billion Dutch pension outsourcing mandate. This inflow was partially offset by a $15 billion single client transfer from quantitative to index equity with an immaterial revenue impact.

Institutional index net outflows were $14 billion, inclusive of this transfer. Retail net inflows of $10 billion were led by demand for active fixed income, liquid alternatives and Aperio. Across private market strategies, we saw $13 billion of net inflows driven by strength in private credit, multi-alternatives and infrastructure.

Our work with clients spans their entire portfolios from long-dated private market exposures to more near-term liquidity needs. Our cash management platform recently crossed $1 trillion in AUM, with $34 billion of net inflows in the quarter. The platform has grown 45% in just the last 3 years. We're seeing demand across scaled money market funds, customized and tokenized liquidity products and money market ETFs. And our partnership with Circle as the primary manager of their cash reserves is driving meaningful growth. Our mandate surpassed $64 billion this quarter.

BlackRock delivered some of the strongest organic base fee growth in recent history, and we entered the fourth quarter in an excellent position. The fourth quarter has traditionally been our strongest for organic growth.

In my nearly 20 years at BlackRock, I've never been part of deeper, more far-reaching client engagements than in recent months. We believe our strategy will continue to deliver for both our clients and shareholders, resulting in market-leading organic growth differentiated operating leverage, and earnings in multiple expansion over time.

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

Thank you, Martin, and good morning to everyone, and thanks for joining the call.

Our third quarter results reflect the strength of our global relationships and the deepening trust we've earned with clients. All of the high conviction growth themes we anticipated and invested ahead of are now leading in client conversations.

BlackRock is always thinking out to the future towards what our clients will need and want. ETFs, private markets, tech and data, digital assets are just a few examples. We were ahead of the game in recognizing their importance for clients, and we took leading positions. The accelerating activity we're seeing is the validation of the BlackRock business model. We nurture enduring and local client relationships, and we invest boldly. Total net inflows of $205 billion were positive across all asset classes and client types and powered 10% organic base fee growth in the quarter. That growth is even more notable than its diversification.

Just looking across our top 5 organic base fee contributors, it's our systematic franchise. It's our private credit franchise. It's a digital asset franchise, our cash franchise. And the whole business of outsourcing portfolios and general accounts to BlackRock. BlackRock's multiple source of growth differentiates us and makes us really optimistic for the future.

In April, tariff announcement shocked global markets. At the time, I traveled to several of our international offices to reinforce BlackRock's strong local mandates with each of our country managers. We bring our global expertise and tailored local insights to clients room and on the ground presence. That presence has strengthened our position as a trusted partner and adviser over many years, and it continues to further strengthen in 2025.

Over the last 12 months, we generated 8% organic base fee growth, excluding our target -- exceeding our target each quarter. Revenues grew

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new AUM records. Clients have entrusted BlackRock with $1.4 trillion of net inflows over the last 3 years and $2.3 trillion over the last 5 years.

When BlackRock acquired BGI and iShares, we gave investors the ability to blend active and index strategy seamlessly, something they hadn't been able to do before. Today, convergence of public and private markets is increasing. Clients are focused on strategies and solutions that work across the whole portfolio. Investors are seeking deeper, more dynamic partnerships across public and private asset classes. They're coming to BlackRock for a partner in portfolio management and in technology across a full range of capital markets.

As I meet with clients around the world, they've been excited about opportunity to do much more with BlackRock, and it's expanding the growth potential for GIP, HPS and Preqin. Our history of integrations is very different, and it has set us apart.

BlackRock's acquisition philosophy has always been about growth. What makes our acquisitions so successful is our belief in full integration. Our culture strengthens and evolves as we welcome new teams and new capabilities. But we continue to operate as One BlackRock, not a collection of boutiques. We do the work to make sure we are seamlessly connected to our clients with 1 platform, shared goals and a common Aladdin technology.

We're organized so the clients have access to all of BlackRock at a comprehensive, consistent way. We intentionally structured the GIP, HPS transaction so that the consideration was largely in BlackRock equity with long-dated performance milestones. We all have the same interest as significant shareholders alongside our broader shareholder base. Our acquired firms are becoming a part of the fabric of BlackRock, and I'm proud of the successes we see in just these early days.

Our closing of HPS just 3 months ago brought more than 800 colleagues to the BlackRock family. Our combined platform is becoming a first call for clients and borrowers around the world. Client engagement is even stronger than we expected, especially in the insurance and wealth channels. We're positioned to be a preferred capital partner with insurers while maintaining our balance sheet light approach.

In wealth, we brought together highly complementary capabilities that position us to be a leading player. On the investment side, our scaled franchises range from our nontraded senior bank BDC HLEND to credit solutions across the capital stack. HLEND continues to generate around $1 billion of net inflows a quarter, and from a distribution perspective, HPS has had strong connectivity to private banks and high net worth practices, that now -- that is now augmented by BlackRock's successive network across wirehouses, independents and RIAs.

Our $370 billion private financing solution platform alongside of our over $3 trillion public fixed income franchise positions us to be our clients' strategic partner across public and private debt markets. And just a year into our closing of the GIP acquisition, we made significant progress in both fundraising and deployment. GIP V closed above its $25 billion target in July, and it represents the largest ever client capital raise in a private infrastructure fund.

Our AI partnership continues to attract significant capital interest. Market-leading global technology, energy and financial organizations are considering -- are consolidating around AIP as a partner of choice. AIP includes MGX of Abu Dhabi, Microsoft, KIA of Kuwait and Temasek of Singapore and technology and energy advisers in NVIDIA, xAI, Cisco, GE Vernova, NextEra Energy. Our combined relationships and expertise are coming together to advance key discussions on fantastic investment opportunity for our clients.

GIP's track market in 1 of the largest data centers in the United States has been instrumental. There are significant opportunities for us ahead in the data center space, an estimated $1.5 trillion of capital is going to be needed in the next 5 years in just the core and shell of data centers, and that's not including the chips. The growth of cloud computing and AI propelling this capital demand and BlackRock with GIP is well positioned to expand our leadership.

Teams across BlackRock are exploring how AI can play a bigger role in making markets more accessible and more efficient. We see a future commercial opportunities in using tokenization to further bridge the gap between traditional capital markets and the growing digital asset space. This is 1 of the most exciting areas of growth in financial markets. There's over $4.5 trillion in value sitting in digital wallets across crypto assets, stablecoin and tokenized assets. We see this market growing significantly over the next few years.

Today, there is no access to high-quality traditional investment products in digital wallets. BlackRock plans to change that. BlackRock is a foundational player in the ecosystem. We manage the largest crypto asset ETP with over $100 billion in AUM. We're the largest reserve fund manager for stablecoin with over $60 billion in Circle's reserve fund. And we built a tokenized liquidity fund for digital assets native investors, which is available across multiple public blockchains. BUIDL has grown to nearly $3 billion in AUM. Now we're exploring tokenizing long-term investment products like iShares. We envision a future where investors never need to leave a digital wallet to allocate efficiently across crypto, stablecoin and exposures to long-term stocks and bonds.

The U.S. economy has been propelled in many parts by its leading market infrastructure. I believe the U.S. needs to accelerate regulatory clarity and investments in digital assets innovation. We need to be a leader in market infrastructure for much of the larger part of the world of digital assets. BlackRock brings technological and operational scale, client trust and a global footprint across 100 countries. We believe all these factors put us in a prime position to be a part of a global conversation around tokenization and digital assets. We've seen through ETFs how innovation and financial technology can unlock growth by making it easier for more investors to access the capital markets.

Our iShares franchise today has crossed over $5 trillion in assets during the third quarter with record net inflows of $153 billion. Double-digit organic base fee growth was once again led by digital assets, bond ETFs and active ETFs. Our digital assets and active iShares franchise are examples of how BlackRock operates as an innovation and scale engine. We build these businesses from the ground up to be a category leader in just a few years. Our digital assets, ETPs and active ETFs have grown from practically 0 in 2023 to over $100 billion, and digital assets in over $80 billion in active ETFs. The rapid growth of these premium categories is another proof point of our success in scaling distribution and quickly adapting to new offerings and in new markets.

In Europe, the growth of the ETF market is at an inflection point. Our 2025 net inflows of $103 billion have already surpassed last year's record full year flows. We're bringing learnings from our U.S. offerings to help grow the ETF market in Europe and better serve our clients in this region. And we're planting seeds for the future through our local investments as we facilitate the growth of capital markets and investing around the world.

In India, our JioBlackRock joint venture recently launched its first systematic active equity offering, building on our already high-performing global systematic franchise. The Indian market remains largely untapped and is today a country of savers rather investors. Through JioBlackRock, we're enabling individuals to more easily invest in their local economies and their local financial assets, and we're helping them build towards a more secure financial future. Many of our clients are investing on behalf of retirement savers and they're turning to BlackRock to scale and modernize the retirement plans options.

BlackRock continues to lead with innovation for retirement. With LifePath Paycheck, we're embedding lifetime income into plan options, and we're working to enable access to growth-oriented private market strategies in 401(k). Defined benefit pension funds, pension plans have been investing in private markets for decades, and we believe this opportunity should also be available for U.S. defined contribution plans. Even if a path clears for private markets in 401(k)s, the fiduciary standard rule still holds. Plan fiduciaries will need to carefully diligence all investments, just as they are required to do today. I think that could create an acceleration in demand for all the Aladdin products, including Preqin. Plans would need better data, better analytics on private markets to substantiate and justify their inclusion in 401(k) offerings, representing a large potential unlock for Aladdin and Preqin. We're already helping clients better manage private markets investments with eFront, alongside Preqin performance and investment data.

We recently signed our first whole portfolio technology mandate encompassing Aladdin, eFront and Preqin as a seamless public private workflow and data solution. And we're continuing to engage with clients on opportunities to integrate these capabilities to drive greater efficiency and growth for each and every 1 of our clients' portfolios.

I'm immensely proud of the connectivity we've seen from employees and clients alike as we fully integrate GIP, HPS and Preqin. As we've grown our firm, we've also evolved our leadership structure to help us meet client needs and develop our talent. We recently expanded our executive team to include a group of exceptional enterprise leaders to better serve clients and advance our long-term strategy. Together, we're both defining and fulfilling the future of asset management through a truly differentiated platform, one that is anchored by public private investment models backed by Aladdin technology united by a shared culture of performance and client service.

I have never been more excited about the future of BlackRock, our firm and the opportunities ahead for the entire worldwide position for BlackRock in the future.

Operator, let's open it up for questions.

[Operator Instructions] Your first question comes from Craig Siegenthaler with Bank of America.

Hope everyone is doing well. My question is on the breadth of the 10% base fee organic growth in the quarter. So we can all see that iShares was the major driver of the AUM flows. But I was curious on what the contribution looked like on a revenue-adjusted basis, really because it looked like alts, digital assets and systematic, all a pretty sizable when you look at it on a base fee basis.

Martin?

Craig, thanks for the question. I just think contextually, I go back to our Investor Day in June, we outlined our growth plan to 2030, targeting 5-plus percent organic base fee growth. Organic base fee growth continues to outperform that 5-plus percent target at 10% for Q3, 8% in the last year, 8% for the trailing 12 months. And that growth continues to take higher each quarter, Craig, from 5% in the third quarter last year, 6%, 7% in the last few quarters and now 10% for the third quarter.

BlackRock's strategy has always been a whole portfolio strategy. We've always been about breadth, but I'd say, this quarter and the way the strategy is playing out is what we're trying to do. That breadth is really impressive. It's every corner of a client's portfolio. And you see that in the contribution. The growth was highly diversified across franchises. Some of those are foundational platforms like ETFs that we've been in for years, and others are more recent innovations from just the last few years.

The top organic base fee growth contributors, you're right, they were in digital assets with IBIT and ETHA in the top grossing categories, active ETFs, where we've had $40 billion of flows year-to-date that basically doubles what we did in active ETFs last year, including 2 of the leading tickers there with DYNF that's managed by the systematic team. That's now a $30 billion franchise and BINC the flexible income fund that's managed by Rick Rieder and the team, that's a $13 billion franchise.

We had huge outsourcing wins that we noted, the Aperio direct indexing business continues to really grow a double-digit organic growth. And overall, we're seeing liquid alts also as a contributor from systematic and fixed income teams as well. With more growth coming from private market, systematic strategies and models, we think we should be able to power organic base fee growth. I think we're consistently at 6%, 7% or higher. And when markets are supportive like this, with risk on sentiment, we think that can tilt to even higher.

The last thing I'd flag is these strategies are contributing, I think, to the yield improvement we continue to see fee yields on flows increasing with these high value-add capabilities. We showed that at Investor Day in June. The fee yields on new assets to the firm are 6 to 7x higher than they were in 2023, and we'll continue to really aim at serving clients' whole portfolios and driving breadth.

Your next question comes from Michael Cyprys of Morgan Stanley.

Just wanted to ask about tokenization. I was hoping you could talk about your ambitions and steps that you're taking there, including how you might go about tokenizing ETFs. You already have the tokenizes money fund with BUIDL. So hope you could talk about some of the traction there you're seeing? And more broadly on use cases, how you see this all developing? And when we think about tokenization, curious your views on what's been the holdback from wider adoption of this technology has been around for some time. What do you see as the major unlock here?

So first of all, this is probably 1 of the most exciting potential markets for BlackRock. Let's just start off with our global footprint, with our scale operation in ETFs worldwide and our leading position in terms of digital assets we already are part of. We are having conversations with all the major platforms today about how can we move forward on the whole digitization and tokenization of traditional assets so they could play a role in the role of digital wallets.

The theory is, as I said in my prepared remarks, if you could keep all your money in a digital platform and a digital wallet, you could then seamlessly buy what we would traditionally say traditional assets like stocks and bonds. There was -- we had a survey related to the percent of young people are investing in equities that came out last weekend. And we believe if we could orchestrate a business plan around tokenization of ETFs. It is young people who are heavily users of tokenized assets. And then we can introduce them to more and more traditional assets sooner in their LifePath, the more prepared people will be related to long-term savings opportunities like in retirement. And so we are in deep conversations. We're spending a great deal of time on trying to develop our own technology related to this. And I do believe we have some exciting announcements in the coming years, on how we could play a larger role on this whole idea of the tokenization and digitization of all assets.

I mean it is our belief that we need to move rapidly, not just financial assets, but we need to be tokenizing all assets, especially assets that have multiple levels of intermediaries. So when you see the intermediaries in each and every intermediary is charging fees, for instance, like in real estate, the tokenization of these type of assets would eliminate much of the fees, and it would make it -- we're talking about homeownership and home -- the cost of home ownership, it would reduce the cost of buying real estate. That's something that we're not focusing on. But to me, that is just 1 of the great applications and the simplification. But if we could legitimately move towards a digital offerings of ETFs through tokenization. We could bring down the execution costs, the ability to deliver seamlessly remaining in a digital wallet environment. We believe this will begin a sooner and a broader pathway for more investments in our capital markets across bonds and stocks.

Martin, do you want to add anything that? You got it. That's it. Thank you.

We'll go next to Alex Blostein with Goldman Sachs.

Question for you guys around private credit. The market has grown increasingly anxious given some of the recent dynamics, both related to perhaps growth, kind of amid lower rates and data spreads as well as some of the kind of specific credit names out there. Curious what the HPS team is seeing on the ground, both with respect to kind of credit trends across their direct lending portfolios in the third quarter? And any growth implications you're seeing for the asset class broadly from lower rates and tighter spreads?

Thanks, Alex. I hope you're doing well. Listen, I'd start by saying just that the heritage of BlackRock and HPS and definitely the combined firms, it's steeped in rigorous underwriting. It's steeped in managing credit risk. Our clients, they expect us to generate risk-adjusted returns, attractive risk-adjusted returns, and they also, of course, expect us to protect their investments and protect their principal. So we've been talking a lot with the teams about the news. But I'd say the teams are generally seeing strong credit quality from borrowers. They're generally seeing a positive environment for credit investing. Even in syndicated loan markets, default rates have been declining.

We, of course, read the same headlines that you do around private credit bankruptcies. But those exposures are actually in syndicated bank loan and CLO markets they're not with large private credit managers and direct lending books. And in those very public cases, the ones that we're reading about, you're reading about potential frauds also been reported. But I think stepping back, when we talk to the teams, they always highlight the private credit market and outside of banks and public debt markets is a $2-plus trillion market. It's mainly focused on direct lending to corporates. Those are companies that borrow in private credit. They're not inherently riskier than those that borrow with banks or syndicated loan markets. And the team would highlight that private credit lenders have more control over credit agreements and terms. They tend to have more access to management teams. They have more information about company performance relative to the public markets.

I think they'd also flag on much of what we're reading in the news, that private asset-based finance is a smaller market, call it somewhere between $200 billion and $300 billion and the consumer receivables portion of that market is even smaller at maybe 10% of the total. It's smaller in scope and the reported cases look more like idiosyncratic pockets of stress and things like deep subprime or again, where there's been potential fraud reported, they don't look like broad stresses on asset-based finance or consumer credit. All that said, I know the teams are being very vigilant with our clients and monitoring credit conditions, but they're not seeing widespread credit stresses at this point.

We're seeing steady allocations to our nontraded BDCs in HLEND and BDEBT. You see the deployment numbers in the earnings release are strong and steady. And they would tell you the historical experience is that when syndicated loan markets and banks may reduce their lending activity and volatility tends to be some of the best opportunities for private credit deployment and the potential for wider spreads. That's generally, I think, good for continued access to credit for corporates, but it's also a good opportunity for clients to secure excess spread and long-term attractive risk-adjusted returns.

We'll move next to Ken Worthington with JPMorgan.

You mentioned throughout the call the success you're having in your active ETFs. There's been recent developments to potentially create ETF share classes for mutual funds. What could this mean for BlackRock? And do you think this could change the ETF landscape?

Thanks, Ken. So let me start by just saying that there's a proven track record that the ETF vehicle, the ETF wrapper, I think, is most optimal for the management of active equities and fixed income. We've launched almost all our active strategies that are new strategies in the last few years in ETF format. And you can see the results that we've highlighted in our active ETF book I talked a bit about DYNF managed by Raffaele Savi and our systematic team. That's a $30 billion ETF today, $10 billion of flows this year. BINC, the flexible fixed income ETF managed by Raffaele Savi and the fundamental teams, $13 billion plus, and our active ETF inflows are over $40 billion.

So there's a proven track record that this wrapper and vehicle is optimal for managing these strategies. That said, we view the introduction potentially of ETF share classes as a positive development, I think, for investors moving from brokerage to fee-based advice relationships and the ability of wealth and asset managers to serve them more efficiently in that context.

At BlackRock, we're definitely committed to providing clients choice on the investment products we offer. And we ultimately think the multi-share class structure will allow advisers and investors to choose share classes that best fit their needs. That's not just about investing. It's about their operational model. There's a lot of excellent work being done across the industry. I'm part of the operational teams and the investment company institute's that's working to operationalize ETF share classes, especially with service providers and intermediaries. And so there's really good progress there, but it will take some time for this to work its way, I think, through the product ecosystem.

For BlackRock and ETF share class would allow us to leverage our mutual fund AUM and track records to offer mutual fund strategies and ETF wrappers. It would allow us to expand distribution reach within fee-based models and self-directed accounts where ETFs are becoming more of a vehicle of choice.

As far as what we would pursue, we're going to evaluate that on a fund-by-fund strategy level basis, whether to offer an ETF share class. These considerations that we'd apply would be things like does the investment strategy fit well to the creation and redemption process. Does the portfolio turnover match well creation and redemption? How do we think about transparency and the shareholder base? For example, ETF share classes, they're not as relevant for fund shares, largely held in retirement accounts or brokerage. So this really is a bottom-up kind of building brick by brick by product and platform set of questions. I do think it could give us an opportunity to expand our share in the liquid active market, capturing money in motion as we continue to see a transition from mutual funds to ETF. Again, that will take some time to play out. But we've really been able to capture the flag, I think, in active ETFs, and this would give us another lever to do so.

We'll go next to Dan Fannon with Jefferies.

I just wanted to follow up a bit more on private credit. You talked about momentum in insurance and wealth with HPS. So I was hoping you could expand upon that opportunity a bit more in terms of what you're specifically doing in terms of expanding distribution as well as given the contribution of what HPS in terms of flows did in the quarter?

Great. Thanks so much for the question. Let me tackle each of those. So we've been really consistent on what we're trying to do, I think, on the private credit markets both in delivering private credit to insurance portfolios and in trying to deliver, I'd say, kind of retail also more broadly. We start with the fact that BlackRock is the largest insurance company general account manager in the industry with over $700 billion of assets across core fixed income. Insurance company asset management is a really highly customized effort working with clients every single day. It's not an arrangement where clients say, let's give you some money and here's a benchmark go beat it. You're highly connected. You're basically in-sourced by the company to be looking at premium cash flows every day, to be thinking about credit every day, to be thinking about the intersection of accounting and capital in managing those portfolios.

So we think we're in a great position effectively being extensions of the in-house team to help insurance companies rotate their portfolios to build great public private portfolios, in particular, with exposures to high grade. We have over 20 conversations going on now with the largest leading insurers in the general account about building private ABF and building private high-grade exposures. The team at HPS has brought some really terrific talent, both on the origination, asset management, but also the insurance solutions side. Those have been core skill sets with BlackRock as well, and being able to integrate all of that with Aladdin, we think will really allow us to grow and make meaningful progress here. Those discussions are all ongoing. We're starting to see some wins pull through, and I expect you'll see a lot more of that in the numbers into 2026.

When I think about kind of the wealth markets, HPS has a long heritage here of building, I think, a market-leading BDC in HLEND across the private wealth market. BlackRock has the largest distribution teams and great home office relationships across U.S. and Europe. We really see an opportunity to accelerate what we're doing here. We are accelerating the launch and marketing of semi-liquid products for wealth in both the U.S. and Europe across private credit, capital solutions, multi-asset credit and interval funds, triple net lease REIT, real assets, multifamily and senior housing and, of course, model portfolios. I think Scott Kapnick laid this out really well at Investor Day with our vision to go from probably what's about $30 billion of retail alts today on a fully consolidated basis with all these capabilities to $60 billion plus across private markets for wealth by 2030. We think there's real upside in that number. And we'll be looking forward to working on that with the teams over the coming quarter and into '26.

We'll go next to Brennan Hawken with BMO.

Larry, you spoke to this a little bit in your prepared remarks, but I was hoping to get maybe a bit more color on it. You guys have now done 2 rather substantial mergers with the private asset side. And BlackRock's got a very strong M&A track record. But these businesses are kind of different than a lot of the sort of platform approach given how alpha-oriented they are. So I was hoping to hear a little bit about how you're adjusting the approach to integration in order to maintain that One BlackRock approach even though these businesses are rather different.

Of course, they're different, but we were already in those businesses beforehand. And we had teams that are absorbed and part of the overall private credit team and the infrastructure team. We look at these integrations no differently than the integrations we did years ago with BGI or Merrill Lynch Investment Management. In actuality, those merger integrations were far more difficult than what we're accomplishing here because those were much broader enveloping the entirety of the firm. This is not enveloping the entirety of the firm by any imagination.

So the reality is, what I think is as our new partners join the firm and they see the power of the platform as we are participating in more and more of our presentations where we have conversations about Aladdin as an insurance company, we do have conversations about LifePath Paycheck, it is about how can we take on a part of their general account, let's say, in private credit. Or how can we invest in infrastructure to help their general account.

So I think what we've witnessed and now in October 1, we crossed the 1-year anniversary with GIP. And I would say across the board throughout the firm, the success of integration, the success of interconnectivity between all our parts of the firm, the interconnectivity with our clients worldwide, it has been a huge success. And we're going to have many, many more announcements over the coming year about all the successes we're seeing in infrastructure with GIP and BlackRock.

And I think, look, the HPS closing was 3 months ago, we're not as far down the pathway as we were at HPS, but these are -- these take time. And in some cases, they take 1.5, 2 years to fully integrate. As I said, the GIP integration was probably less than 6 months in terms of fully integrated onto the platform. So we actually feel very, very good about it, because I think as more and more of our new partners and more and more of our old partners who are now part of the new platform, seeing the virtue and the business logic and they're seeing it firsthand. It brings that spirituality of everybody understanding how this be built forward.

So it's early with HPS. We're far down the road with HPS. We're actually far down the road with Preqin, which is another one. I think we feel as strong and as good as ever related to the integrations of these organizations. As I said in my prepared remarks, we do all the hard work upfront. The key is if we are going to win whole portfolios, we cannot represent ourselves as a boutique. So I think across the board, our -- more and more of our teams are realized, we can't just go in there and selling a product, we're going there in a comprehensive way.

Now indeed, clients may only want 1 product, and that's what we're going to try to do. But then we then bring entirety of the firm together, and it expands the conversation and they see the breadth of the opportunity. And I could highlight many different insurance companies now where we had this legacy huge platform that Martin talked about earlier, where we had over $800 billion, $900 billion of insurance assets.

Now bringing those relationships into HPS, bringing those relationships with GIP, it shows the acceleration of our business and the opportunity. So I could not be more happy. That being said, we're not perfect, everything takes time. But I think our business model is intact, and it is going to -- again, and I want to underscore it again differentiating yourself versus all the other organizations that generally add on different businesses, but they keep them siloed, boutique, and we will not do that because we want to see each and every client worldwide as 1 firm. And through that, we are able to win more share of wallet by representing ourselves to this organization as 1 firm, 1 conversation.

Your next question comes from Brian Bedell with Deutsche Bank.

A lot of good things to talk about. I think you can tie 2 concepts together, the tokenization concept that you discussed and then tying that with maybe model portfolio. So as you think about exploring tokenization opportunities, do you envision having this the BlackRock centric digital wallets or rather participate in the broader intermediated ecosystem allowing your products to be tokenized there for sort of open distributed on an open architecture basis. And then tying it into model portfolios, is there an opportunity to create BlackRock centric digital wallet model portfolios?

Great question. Martin?

Thank you. So listen, the first thing I'd do is I'd echo Larry's comments. This is 1 of the most exciting areas in the financial markets. There's over $4.5 trillion of value sitting in digital wallets across crypto assets, stablecoins and tokenized assets. But Larry's point here resonates, which is there's really no access to long-term investment products. And so our goal is to basically replicate everything that sits in traditional wealth management, everything that sits in traditional finance in the digital wallet. So that an investor never needs to leave the digital wallet in order to build a long-term investment portfolio that's high quality. In order to build an asset allocation portfolio that can mix stocks, bonds, crypto, commodities and the like.

And we really think that, that model is best executed through partnerships, which is what we've been pursuing. We have successful partnerships with many of the leading exchanges and providers. And so that's pretty much what we expect and what we're actively working on, as Larry mentioned now. And so we do see a world where we could build great model portfolios that bring together crypto assets, tokenized long-term investment products and other exposures all natively in your digital wallet with all the same technologies effectively that we've used to build a scaled model portfolio platform. Tokenization can make that even better, faster, more efficient.

So when I think about some of the operational things that have to happen in managing the model portfolio today, especially 1 that's public private. It's having to deal with different settlement systems, it's having to deal with PDF subdocs for private markets and then dealing with cash markets for T+1 mutual funds or ETFs. The idea that all of these could be cleared and instantaneously settled in a tokenized market could make model portfolios even better than the ones that we know in traditional finance. So that's where we've aimed a lot of our energy.

Your next question comes from Ben Budish with Barclays.

I wanted to ask just a few housekeeping questions on HPS and the private markets business. I guess maybe two, I can wrap into one. First, just on the performance fees. I think the $270 million reference came in a bit ahead of what was sort of implied by the guidance last quarter. So curious what came in better than expected. And then just looking at your private markets flows, those sort of stepped up nicely sequentially as they did earlier in the year when you acquired GIP. Just curious if we're looking at fair sort of run rate as we think out over the next several quarters or anything unusual about this quarter?

Thanks very much for the question. So as I mentioned in my prepared remarks, HPS added $225 million in base fees in the quarter and $270 million in performance fees inclusive of Part 1 fees. HPS, GIP, they're both stable, high earnings power businesses. I think you've all had a chance to observe kind of HPS -- excuse me, GIP management fee run rates now for a couple of quarters, HPS now for this quarter, stable high earnings power businesses. I think the third quarter is a good starting point for modeling HPS management fees. The performance fees have some seasonality to them. I think we'd expect slightly lower performance fees from HPS in the fourth quarter. And so I think that's a good model.

Just in terms of, I think, kind of the deployment numbers and flow numbers that you've seen. I think this quarter, I think, in private credit is a good indicator of kind of the velocity that we've seen a mix between deployment that's coming from drawdown funds like the junior capital strategies as well as coming out of HLEND and the BDCs. I'd say in infrastructure, that can tend to have a bit more of periodicity to it. There's large transactions, and then there's larger realizations and you see some of that come through in the move of infra AUM. Those teams are tending to do kind of bigger, more episodic deals. So I'd expect those flows to have a little bit more periodicity to them rather than the private credit flows that are a little bit more regular way.

Your next question comes from Bill Katz with TD Cowen.

Maybe switch gears a little bit and talk about the retirement area. You seem to be ahead of many of your peers in terms of positioning as we look ahead. Could you speak to a couple of things, just how your conversations with maybe the consultant community, the regulators, the legislators are going around, so this change? And then how you sort of see pricing relative to maybe the legacy book of business that's sort of not retirement?

Thanks, Bill. I appreciate it. I have spent a lot of my time this year in Washington, D.C. I know Larry has as well. And so as our team I've had a lot of detailed discussions with policymakers, lawyers, trade associations for asset managers, plan sponsors. Let's not forget that this is about bringing the same portfolio of public and private markets that defined benefit plan investors have enjoyed for generations to the hourly workers that have defined contribution in 401(k) today. I've seen more momentum in the last 6 months than we've seen in decades of managing target date funds. There's the President's executive order, there's drafts of various safe harbor provisions that I think are making good progress. There's a draft class exemption under ERISA to address a lot of product level issues and address the obligations of service providers, and I'd say there's real interagency coordination and engagement between the Department of Labor and the SEC, which is so critical and important, and we really applaud all that work. All that said, still lots to do very significant word ahead, but the momentum is positive.

For BlackRock, more than half the assets we manage are for retirement. We're the #1 DC investment-only firm, $585 billion in target date AUM. And today, we have over $660 billion in private markets and alternatives, which allows us to bring the best of public and private to the target date funds. I think it's a great opportunity for BlackRock to do well for our clients in retirement, but also grow our business in target date and importantly, as Larry mentioned in his remarks, in data. We've got a leading presence in retirement channels. We've got relationships distribution, investment expertise. So the regulatory bodies coming into focus here, I think, will be a real accelerant for us.

We do think the vast majority of the opportunity is embedding private markets and target date funds. It's embedding private markets in target date funds. In that structure, there's a professionally managed qualified default investment alternative that fits well within the existing ERISA framework and it also fits well within the operational rails of the DC market. There's a reason that QDIA target date funds today capture the substantial majority, really the bulk of 401(k) participant-directed individual account plans.

And in target date, BlackRock, I think, is really well positioned against the market with our glide path design as a differentiator. Our glide path, meaning how we scientifically take clients from their mix and stocks, bonds, real estate, commodity, public, private, has more than 30 years of IP and experience. We've actually implemented it with a real track record over 3 decades. And we think that it allows us to build portfolios that take appropriate levels of risk across the working life and manage different levels of portfolio liquidity.

I think some of what we've seen in the market are ideas that a fixed 10% or 20% allocation to private asset classes, regardless of age and circumstances. Like those things we just don't think are right for every investor. Early career investors generally need growth assets, while later career and in retirement investors need diversification, capital preservation and income. And we think our glide path and our product lineup allow us to do that in a way that's really, really unique and differentiated.

The second thing is data where I think it's a real opportunity. As Larry said, like good fiduciary practice and all of the advice safe harbors, they're going to require some format for benchmarking and portfolio analysis like DC plan sponsors and their consultants are going to need more data and analytics to support a fiduciary decision that involves private markets and target date portfolios. We think that's a real another meaningful unlock for Preqin.

Just going to market and some of your questions about kind of pricing and product. Our initiative with Great Gray, the collective trust company that we told you about earlier this year. It's a great first step in providing more access to private markets. Pricing on that is firming up as it comes to market. We'd expect the smaller adviser sold plans to be first movers. They have the most familiarity with private markets and wealth management accounts. And historically, smaller plans have historically led faster on innovation.

We're expecting to launch a proprietary LifePath with private target date fund in '26. And depending on the status, I think, of legal and regulatory to more meaningful engage with our clients on exposures in the existing LifePath range. The executive order is a great positive step, and we look forward to kind of keeping you updated in this area.

Let me just add 1 last point. The sooner we could get young people to be investing in their retirement fund. And that's why we're so encouraged about what's going on digital wallets, where that money is if we could transform some of that digital liquidity into a retirement product to ETFs or whatever we can do, the better off the individuals will be, and they'll have -- will enjoy a much longer duration of compounding returns over time. I think it's essential that we elevate this call the action to get more and more people focusing on the needs to investing in retirement sooner. And this is a worldwide phenomenon.

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

Thank you, operator. I want to thank everybody for joining us this morning, and for your continued interest at BlackRock. Our third quarter results demonstrates again the depth and breadth of our global platform, our local position with clients our ability to provide them with whole portfolio analytics and research. We exhibited in the third quarter, the strong momentum, and we already are entering the fourth quarter with even stronger momentum. We're confident in our ability to deliver differentiated performance for our clients and our long-term value for our shareholders. Once again, thank you, and have a good quarter.

This concludes today's teleconference. You may now disconnect.

Good morning. My name is Katie, and I will be your conference facilitator today. At this time, I'd like to welcome everyone to the BlackRock, Inc. Second Quarter 2025 Earnings Teleconference. Our host for today's call will be Chairman and Chief Executive Officer, Laurence D. Fink; Chief Financial Officer, Martin S. Small; President, Robert S. Kapito; and General Counsel, Christopher J. Meade. [Operator Instructions]

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

Good morning, everyone. I'm Chris Meade, the General Counsel of BlackRock. Before we begin, I'd like to remind you that during the course of this call, we may make a number of forward-looking statements. We call your attention to the fact that BlackRock's actual results may, of course, differ from these statements. As you know, BlackRock has filed reports with the SEC, which list some of the factors that may cause the results of BlackRock to differ materially from what we say today. BlackRock assumes no duty and does not undertake to update any forward-looking statements.

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

Thanks, Chris. Good morning, everyone. It's my pleasure to present results for the second quarter of 2025. Before I turn it over to Larry, I'll review our financial performance and business results. Our earnings release discloses both GAAP and as-adjusted financial results, I'll be focusing primarily on our as-adjusted results.

At our Investor Day last month, we communicated our ambitions for BlackRock in 2030. Our leadership team and our employees have seen and contributed to that vision over the last 2 years. We anticipated where our clients and markets were going. We've established strength at the foundation of our platform in ETFs, Aladdin, whole portfolio, fixed income, cash management. They're the strong foundations to serve clients and deliver on our organic growth objectives.

We executed on organic business builds in structural growth categories, including digital assets, active ETFs, model portfolios and systematic equities and we've executed on 3 major acquisitions. We've built a premier investment and technology platform across the private markets, one that's only at the beginning of a durable long-term runway for growth.

Building on our record results in 2024, we continue to see the proof points of the success of our strategy into 2025. We generated 7% organic base fee growth and over $650 billion of net inflows over the last 12 months. This success has been built on multiyear sustained growth in iShares, fixed income, systematic tax-managed strategies in Aladdin and now expansions in private markets.

We believe these engines will enable us to more consistently rise above 5% organic base fee growth. We posted 6% organic base fee growth in the second quarter for our fourth consecutive quarter of 5% or higher organic base fee growth. We finished the second quarter with record AUM, record units of trust of $12.5 trillion. We once again delivered double-digit year-over-year growth in revenue, operating income and earnings per share. GIP V closed above its $25 billion target, making it the largest private market fund raise in the histories of both BlackRock and GIP.

We took early commercial steps to bring a first-of-its-kind public-private target date solution to retirees with great Gray, a leading collective investment trust platform. And earlier this month, we closed our acquisition of HPS Investment Partners, a major milestone as we evolve towards our ambitions of 30% revenue contribution from private markets and technology by 2030.

Second quarter net inflows of $68 billion were impacted by low fee institutional index redemptions, which saw $48 billion of net outflows. Excluding that activity, BlackRock delivered approximately $116 billion of net inflows in the quarter. Turning to financial results. Second quarter revenue of $5.4 billion was 13% higher year-over-year driven by the impact of organic growth and high on average AUM, base fee is consolidated in the GIP transaction and higher technology services and subscription revenue, which includes the onboarding of frequent.

Operating income of $2.1 billion was up 12% and earnings per share of $12.05 was 16% higher versus a year ago. EPS also reflected higher nonoperating income, a higher tax rate and a higher share count in the current quarter. Nonoperating results for the quarter included $433 million of net investment gains driven by mark-to-market noncash gains on minority investments, including Circle and in our. We own approximately 2.3 million shares of Circle common stock, which will continue to be marked through investment income going forward.

Our as-adjusted tax rate for the second quarter was approximately 25%, and we continue to estimate that 25% is a reasonable projected tax run rate for the remainder of 2025. The actual effective tax rate may differ because of nonrecurring or discrete items or potential changes in tax legislation. Second quarter base fee and securities lending revenue of $4.5 billion was up 15% year-over-year, driven by the positive impact of market beta on average AUM, organic base fee growth and approximately $240 million in base fees from GIP.

On an equivalent day count basis, our annualized effective fee rate was down 0.4 basis point compared to the first quarter. This was partially due to the impact of catch-up base fees associated with private markets fundraising, which were $36 million lower relative to the first quarter. Significant intra-month equity market declines in April were also a contributing factor.

As a result of market and FX movements into the end of the quarter, we entered the third quarter with an estimated base fee run rate approximately 5% higher than our total base fees for the second quarter. That's excluding the impact of HPS. The closing of HPS added $106 billion of client AUM and $118 billion of fee-paying AUM on July 1.

We expect HPS to add approximately $450 million of revenue, including $225 million in management fees in the third quarter of 2025. We expect HPS to positively impact BlackRock's overall effective fee rate by approximately 0.6 of a basis point. Performance fees of $94 million decreased from a year ago, reflecting lower performance revenue from private markets, liquid alternatives and long-only products.

Quarterly technology services revenue and subscription revenue was up 26% compared to a year ago. Growth reflects sustained demand for our full range of Aladdin technology offerings and the impact of the Preqin transaction, which closed on March 3. Preqin added approximately $60 million to second quarter revenue. Annual contract value, or ACV, increased 32% year-over-year, including the Preqin acquisition. ACV growth increased 16% organically, also including the impact of currency exchange tailwinds.

Total expense increased 14% year-over-year, reflecting higher compensation, sales asset and account expense and higher G&A. Employee compensation and benefit expense was up 12%, reflecting higher head count associated with the onboarding of GIP and Preqin employees and higher incentive compensation linked to higher operating income.

G&A expense increased 16% primarily driven by the GIP and Preqin acquisitions and higher technology spend. Sales, asset and account expense increased 14% compared to a year ago primarily driven by higher direct fund expense and distribution costs. Direct fund expense was up 23% year-over-year, mainly due to higher average ETF AUM and net inflows.

Our second quarter as-adjusted operating margin of 43.3% was down 80 basis points from a year ago, partially due to the impact of lower performance fees. We'll continue to execute on our financial framework of aligning organic growth with controllable expenses. This approach has yielded profitable growth and operating leverage in good markets, and we believe it adds more resilience to our operating margin when markets contract.

We welcomed approximately 800 new colleagues to BlackRock following the close of the HPS transaction. Inclusive of the HPS acquisition impact at present, we would expect a low teens percentage increase in 2025 core G&A expense with the onboarding of GIP, Preqin and HPS as the main driver of the year-over-year core G&A increase.

In addition, we'd expect our adjusted compensation to net revenue ratio to be modestly higher due to compensation associated with performance-related revenues from HPS. Our capital management strategy remains, first, to invest in our business to either scale strategic growth initiatives or drive operational efficiency and then to return excess cash to shareholders through a combination of dividends and share repurchases.

At times, we may make inorganic investments where we see an opportunity to accelerate growth and support our strategic initiatives. At the closing of the HPS transaction, we issued and delivered approximately 8.5 million BlackRock Subco units subject to 2- to 3-year lockup periods. SubCo units are exchangeable on a one-for-one basis with BlackRock common stock. We also issued approximately 1 million BlackRock restricted stock units, primarily for retention of HPS employees.

Additional subco units may be issued in approximately 5 years subject to achievement of certain post-closing conditions and financial performance milestones. If all contingent consideration is achieved, all subco units are exchanged for shares of common stock and all RSUs best and are settled this common stock. We do not expect to issue more than approximately 13.8 million additional shares of common stock in aggregate.

Subco units issued will be included in our as-adjusted diluted shares outstanding and will be captured in our as-adjusted results going forward. We repurchased 375 million worth of common shares in the second quarter. At present, based on our capital spending plans for the year and subject to market and other conditions, we still anticipate repurchasing at least 375 million of shares per quarter for the balance of the year, consistent with our January guidance.

In May, we made a minority investment and established a strategic alliance with Generation Life with the goal of developing investment solutions for Australian retirees. Last week, we announced our agreement to acquire funds a real estate investment firm was $7.3 billion in client AUM, of which $3.1 billion is fee paying. The transaction is expected to close in the third quarter of 2025, subject to regulatory approvals and customary closing conditions.

In the second quarter, BlackRock generated total net inflows of $68 billion. Excluding low-fee institutional index outflows, BlackRock's net inflows were $116 billion. ETF net inflows of $85 billion were diversified by channel, and over 1/3 were driven by our clients in Europe use local ranges. Fixed income ETFs led inflows with $44 billion and active ETFs and digital asset ETPs added $11 billion and $14 billion, respectively.

Retail net inflows of $2 billion reflected continued strength in Imperio and our systematic liquid alternatives. Institutional active net inflows of $7 billion were driven by insurance client fixed income mandates and strength in infrastructure, private credit and liquid alternatives.

Institutional index net outflows of $48 billion were impacted by a single client redemption of $52 billion, primarily from fixed income. Our institutional channel delivered 3% long-term organic base fee growth in the quarter, benefiting from client demand for active and alternatives.

Finally, our scale and our active approach with clients around liquidity management are driving sustained growth in our cash platform. Cash AUM is up 25% over the last year, and we generated $22 billion of net inflows in the second quarter. The BlackRock platform is powered by foundational growth businesses linked to long-term growth in capital markets and fast-growing client and product channels.

By combining BlackRock's capabilities with GIP, Preqin and HPS, we've laid the groundwork for an exciting future. We're already steadily delivering above 5% organic base fee growth and our new colleagues from HPS are only going to help us build from here. There is a bright feature ahead to grow with clients, build great careers for our employees and deliver profitable growth for our shareholders.

I'll turn it over to Larry.

Thank you, Martin. Good morning, everyone, and thank you for joining the call. Over many years, BlackRock has worked to serve the ambitions of each and every client around the world from the largest asset owners to individuals just getting -- with a start with investing. We design and deliver strategies and products that fit their unique long-term needs and aspirations. .

We delivered in a way that best serves each client, whether it's through whole portfolio solutions, opportunistic investments or customized models and SMAs. Throughout BlackRock's history, we've been relentless and anticipating the future needs of our clients and taking strategic actions to evolve for them.

Our sustained multiyear growth has been powered by our whole portfolio approach. We were the first provider to blend active and index at scale through our acquisition of BGI and iShares. Our integration of active and index investing propelled the next 15 years of success for our clients and shareholders. iShares AUM was about $300 billion when we announced our acquisition. And today, it's approaching $5 trillion. And now we're building on our fundamental -- our foundational platform to redefine the whole portfolio again by bringing together public and private markets across both asset management and technology.

That foundational platform has powered performance for clients and sustained organic base fee growth through cycles. We believe our expansions can drive even higher growth. Our trust and comprehensive relationships we have clients across our core businesses like Aladdin, ETFs, fixed income and retirement are now driving even a broader -- with even a broader opportunity set.

We're seeing secular demand for capabilities we developed in recent years like digital assets, active ETFs, systematic strategies and customized SMAs through The strength of BlackRock platform is also expanding the growth potential of GIP and HPS. They're both premier firms in their own right, but they recognize how our client relationships and the completeness of our platform could help as all achieved new heights together.

BlackRock's ethos of change, the integration of firms and the best parts of their culture, that's what allows us to be more adaptive with our customers. Our history of integration is very different, and it sets us apart from any other public or private markets firm in the industry. BlackRock's breadth and scale has differentiated us with our clients of all sizes worldwide.

We're delivering an integrated approach to help our clients across all aspects of public and private markets investing. We enable a seamless view into investment management into technology and data on one single platform. We remain steadfast in our One BlackRock culture, making sure clients have access to all of BlackRock in a comprehensive, consistent way in every region with every client.

Our long-standing relationships and history of reinvention are resulting in a higher, more diversified organic base fee growth, we're now generating 6% organic base fee growth for the second quarter and the first half of 2025 and 7% over the last 12 months. Revenues, operating income and earnings per share each grew double digit. Total inflows were $116 billion, excluding the index activity Martin mentioned.

Growth is being powered by both our largest core businesses and newer initiatives. iShares ETFs have had a record first half inflows. Our technology ACV growth reached a fresh high of 16%. These strong fundamentals alongside client demand for private markets, digital assets, Aperio and systematic strategies propel another consecutive quarter above target organic growth and a record AUM of $12.5 trillion.

Our global reach delivers diversification and upside to our platform with gains in international currencies lifting AUM by over $170 billion in the quarter. We manage $4.5 trillion for -- in AUM for clients in the United States. Many of our largest growth opportunities are outside our home market, including our work in India and the Middle East alongside our established presence in Europe and Asia. BlackRock is executing on a deepening set of opportunities across technology and data in public and private markets. Momentum is only accelerating, and many of our recent milestones have not yet reflected in our results.

Two weeks ago, we closed our acquisition of HPS Investment Partners. We're excited to welcome Scott, Scott and Mike and the entire HPS team to BlackRock. We see immense growth ahead for our combined franchise. Together, we'll be able to serve investors and borrowers across all of the private financing needs. Client feedback has been extremely positive as we integrate GIP, HPS and Preqin.

For many companies, periods of M&A contribute to a pause in client engagement. We're seeing the opposite. Clients are eager to put more capital to work with BlackRock. They appreciate our reputation as long-term investors and partners were not transactional.

We're helping them invest in compelling long-term growth themes like the global needs of new infrastructure investments in the fast-evolving debt financing landscape. These are creating differentiated private market opportunities for our clients. At the end of June, we marked the major milestone with a final close of GIP V's flagship infrastructure strategy. It surpassed its target raising $25.2 billion.

That's a validation of how clients are embracing the logic of the BlackRock GIP combination. Many would expect a change in ownership to dampen fundraising. In our case, it ultimately ended up driving an even higher fundraising ability. GIP V represents the largest ever client capital raise in a private infrastructure fund and our AI partnership continues to attract significant capital interest, including the recent additions of Preqin Investment Authority and Temasek.

The diversification benefits and potential for higher returns offered by private markets also make them an attractive investment for retirement accounts, a space where BlackRock has been a leader. We were recently selected by the great, great trust company to provide a custom target date fund glide path that strategically allocates across public and private markets. We have a wealth of expertise in the defined contribution space, and we're looking to expand across to private markets across a variety of retirement solutions.

Retirement is core to BlackRock. In the United States and internationally, we are a trust expert in advising clients, advising governments and policymakers on how they can help their constituents, achieve a more secure future and retire with dignity. Demographic shifts and financial pressures are driving governments and corporations to rethink their retirement plans and the retirement systems, putting significant money in motion.

In the Netherlands, for example, I transitioned from defined benefits to a hybrid form of defined contribution is well underway. BlackRock is working with clients to manage this transition and improve investment outcomes for plan members. We had a related $30 billion outsourcing mandate with a Dutch client fund in early July. We take a blended approach of being deeply local and powered by our global platform. We deploy capital in a public and private markets in every country in which we operate and beyond. And we are consistently studying what's driving capital flows both within each country and within each region.

Our ability to execute at scale at the local levels differentiates our international business. We're bringing a global framework to India through our Jio BlackRock offering in partnership with JFS and Reliance, who already serves hundreds of millions of individuals across India. There are huge advancements taking place through the digitization of currency and identification, but India remains a savers, not investors. Our joint venture, Jio BlackRock recently launched its first funds, raising over $2 billion with over 67,000 customers.

We look forward to helping more and more people participate in the growth of local and global capital markets and global connections. Our acquisition of Preqin will be a key to enabling more transparency and clarity in private markets. In just the first few months since our closing of the Preqin acquisition, we've seen strong early demand from both GPs and LPs as they are looking to better analyze and benchmark their private market allocations is through better analytics, standardized benchmarks and more widely available performance data, we can close the information gap and enable even more future growth in private markets investing.

In the public markets, our iShares business continues to be a powerful growth engine and a key driver of industry innovation. After nearly 30 years in approaching $5 trillion in assets, innovation remains at the heart of our franchise. Our newest investments and product launches from just over the last few years are driving outsized growth, contributing to record flows in the first half of 2025 and 12% organic base fee growth in ETFs this quarter. Our active ETFs delivered $11 billion of net inflows, and our digital asset products continue to set new records. IbiT, at quarter end, crossed over $75 billion in AUM with another $12 billion of net inflows. As of this morning crossed over $80 billion.

iShares ETPs are bridging the traditional capital markets with fast-growing cryptocurrency markets. They're also bringing new investors to the iShares brand. Nearly 1/3 of the investors who first named the BlackRock for IbiT have gone on to purchase other iShares products. It's this type of capability expansion that drives durable growth and new client opportunities for our business.

From category innovation and iShares to new ventures across the world, the events we made across our platform are paying off. Many of the categories that are leading our growth barely existed 2 years ago, categories like active ETFs, digital assets and our scaled private markets franchise. Just as importantly, BlackRock's core businesses like ETFs, Aladdin and Cash Management continue to be a growth engine for the firm and are cornerstones of many client relationships.

A lot of firms got out of the cash business after the financial crisis when fee waivers were in place during a sustained period of low rates. But we recognize a simple thing. Every client needs to hold cash. Cash management has been the first entry point for many of our clients, who have gone on to build large mandates with BlackRock. Our cash AUM is nearly $1 trillion, and I think it's remarkable considering we're not a direct retail business or a DTC bank.

At BlackRock, we think of cash as another avenue for innovation. We see a great untapped opportunity for cash and liquidity, where people want to use the technologies of digital assets to access traditional instruments like treasuries. Our tokenized liquidity fund now has $3 billion in AUM and what started as a small corporate investment and asset management relationship with Circle in 2022 has grown meaningfully.

We delivered a significant gain to shareholders this quarter in connection with the IPO and subsequent trading activity, and we now manage more than $50 billion for Circle stable coin cash reserves. We're entering our seasonally strongest back half of the year with considerable momentum and a robust pipeline.

Our recent closing of HPS will help us offer even more to clients. We believe our clients and shareholders will be beneficiaries as GIP, HPS and Preqin are now all coming together in a shared BlackRock story. We are intentionally organizing to bring clients under one unified firm, not a collection of enterprises, and we have aligned our cultures and aligned each and everybody's interest.

The opportunity to deliver the full reach of BlackRock's capabilities to more individuals to more companies and governments and regions is greater today than ever before. Our comprehensive platform is deeply connected to our clients to the capital market and to the future trends that are driving portfolios. These are just the early days in our next phase of growth at BlackRock. Operator, let's open it up for questions.

[Operator Instructions]

We'll take our first question from Michael Cyprys with Morgan Stanley.

With the number of acquisitions closed over the last year now under your belt, I was hoping you could talk about the progress that you're making here, bringing HPS, in particular in GIP together with BlackRock, how the conversation is progressing in particular with insurance clients, to what extent you're seeing new mandate wins or expanded relationships there? And then can you just update us on the traction in the wealth and retirement channels as it relates to private market and multiliquid strategies and talk about some of the steps you're looking to take over the next 12 months.

Great question. Thank you, Michael. Well, I think as we showed in the closing of the second quarter, the client feedback has been extremely strong. It actually was in Asia this past week and the opportunities we have with insurance companies with wealth management across Asia and every other region is stronger than we ever imagined. As we said, GIP V closed above our target of 25.2%. Our AIP fund will have a lot of positive announcements in the coming quarters. .

We announced in the past quarter that we added Investment Authority as a part of our investment team. And we are confident that we'll be able to raise the full $30 billion that we announced in equity. And once we then begin those projects, we'll have to raise another $100 billion in associated debt to finance those type of projects. And we're working with the hyperscalers as we speak right now on this, and we have some really great opportunities ahead of us in that. Those are just 2 examples the opportunities we see with GIP. There is no question in my mind that with rising deficits with more and more governments, the conversations we're having, whether it's in Europe or the United States or Japan that the role of public private financing and the role of infrastructure financing is going to grow dramatically.

And so we see some huge, huge opportunities. Another big opportunity that GIP just closed was purchasing all the Malaysian airports. It's just another example of the opportunity. And we are still progressing with the proposed announcement of our Ports transaction with Hutchison. So all of that is just a good example of some of the growth opportunities we see.

But the resiliency in the conversations have never been greater. Related to private credit and HPS, we're just at the beginning. But we could -- we'll have a lot to discuss in the third quarter, but the flow opportunities of HPS during the period of time of announcement and closing did not abate at all. So we are seeing across the board a very large acceptance of the industrial logic of the combination of HPS, GIP and BlackRock.

And I would say that was quite a big difference than when we did the the BGI transaction in 2009. Today, clients are looking at the merits of what BlackRock can do, our history of integration, our history of bringing one culture together, bringing the best of all the acquired organizations to be part of us to build a new foundational structure around BlackRock.

On insurance, with having $700 billion of AUM with insurance companies, and that is continuing to grow. We are continuing to see more and more opportunities where we could be driving private markets with the insurance companies that we already manage. In wealth, very, very exciting. If there is a change in the opportunity related to the 5 contributions, it is only going to accelerate the opportunities we have in the private market space with retirement.

50% of our assets that we manage is in retirement. And so the relationships we have with plans is enormous. If you look at our success in LifePath, if you look at our success in our target date products, if you look at our success in what we're trying to do now a LifePath paycheck where now we have over $500 billion in that alone, our relationships with these supply contribution plans is as strong as ever.

We're innovating. We're creating opportunity. Now if you overlay the opportunity for wealth worldwide, whether it's wealth in Japan, wealth in the United States, wealth in any region, the need, especially here in the United States because you have a much higher threshold related to fiduciary responsibility is going to be analytics and data.

And if that moves forward, if there's that opportunity, the need for analytics and data will more than ever create huge opportunities for Preqin and the future opportunity of growth with Preqin eFront. And so we believe all these changes, the integration of -- and blending of both public markets and private markets is going to all be centered around having a base of great analytics and data. And I am more certain than ever the acquisition of Preqin alongside eFront is going to be generating much more opportunity for BlackRock. And I believe we are well positioned, whether it's well positioned because of the product profile we have with HPS and GIP and what -- but with the foundational position we're in, in the retirement space in the defined contribution space, overlaying all the analytics data that we have under Aladdin now puts us in a position that we could have broader, deeper conversations with our clients, and I'm very much looking forward to having those deep conversations with each and every client.

Your next question comes from Craig Siegenthaler with Bank of America.

So I actually want to continue with that retirement commentary to Mike's question. So our question is on the potential migration of private into Target and the U.S. 41k channel. We did see the great gray win news in late June. That was a positive sign. But I think BlackRock may be getting ready to launch its own target date fund with private allocation. So I was hoping you could update us on your strategy time line. And also, what are you willing to see from the Department of Labor, the SEC or Congress before you launch your own target date fund with private allocations?

Thank you. Martin? .

Thanks, Craig. Thanks so much for the question. As Larry mentioned, Craig, more than half the $12 trillion of assets plus that we manage at BlackRock related to retirement. And so building better portfolios retirees is at the heart of what we do. I think we have real ambitions also to bring the same tried and true portfolio construction characteristics that built the DB market. So defined benefit has long been allocating to both public and private markets.

If you think of the largest public plans across corporate and across the public sector, they've always been private market investors. That opportunity should be there for individuals and their long-term tax-advantaged accounts as well. We're the #1 DCIO the defined contribution investment-only firm. We're a top 5 private markets manager following our recent acquisitions.

So we think we have all the building blocks here. As I said on the last call, and I think Larry alluded to, for the opportunity, I think, to be most tangible in larger plans, we'll likely need to see litigation reform or at least some advice reform in the U.S. to add private markets exposure into DC plans. What I would say relative to the call last quarter is we're really encouraged by the recent dialogue with policymakers on these topics and some of the activity by trade associations that I think has been helpful in really building a fact base and consensus around this there's still significant work to do, but we feel positive momentum is certainly building.

We're really proud of our recent announcement with Great Gray to build and power the glide path for their public private target date solution. As I mentioned on the call, I think the real advantage that BlackRock brings here is that we've been doing glide path technology across target date funds for 30-plus years. We feel that this is a place that we have particular strength and can add a lot of value rather than just road allocations of x percent to public markets and y to private markets.

That glide path is so important as you go from the accumulation to the end of the target date and ultimately to a decumulation phase. So with Great Gray, we're going to provide the underlying index equity as well as fixed income exposures as well as our private equity exposures through our product, BlackRock Private Investment Fund, BPIF. We're ultimately working on other products, and we would expect to launch a proprietary LifePath with private's target date fund, I believe, sometime in 2026. So we're excited about that as a way of continuing to bring public-private whole portfolio investing to the retirement market.

Let me just add one thing, just the industrial logic and why this is so imperative if through broadening the investment profile of what could be included in a defined contribution plan, if you believe over a 30-year horizon, you could add 50 basis points, which is not an unrealistic target. It adds 18% to the Corpus 30 years later.

So that should be compelling enough. Now the reality is, though, there is a lot of litigation risk. There's a lot of issues related to the defined contribution business. And this is why the analytics and data are going to be so imperatives, way beyond just the inclusion. And so this is one thing that we are very certain on. As this moves forward, the need for analytics and data and the role of Preqin, eFront, Aladdin is only going to be a larger set of opportunities for BlackRock in this space.

We'll go next to Alex Blostein with Goldman Sachs.

I wanted to ask you guys around profitability. You've made a number of acquisitions, obviously, now they're kind of coming into the run rate. As you think about the adjusted operating margin for the back half, curious to get your thoughts. But also as you pointed out at the Investor Day, the 45% plus adjusted operating margin, obviously, is quite healthy.

So maybe help us sort of think through the cadence and scaling of the business as these 2 acquisitions kind of come into the full run rate and you continue to grow some of your faster-growing growing areas of the business.

Great. Thanks, Alex, for the question. I'll take that one. So we talked about the strategy at Investor Day in terms of growing the business. BlackRock continues to deliver industry-leading margin. The margin in the second quarter of 43.3% was about 80 bps lower year-over-year. That's really partially due to the impact of lower performance fees.

Over the cycle, we see a very clear path to continue to target a 45% or greater margin profile. About 75% of that second quarter margin decline is really due to lower performance fees as well as the lower performance-related compensation in the quarter. Just as a reminder, we defer a portion of compensation that's linked to performance fees for talent retention. So in years where we see higher performance fees, we also see higher deferrals, which impact comp expense in future years. The remainder is really just a margin impact from higher expense offset by acquisitions.

So what I'd say is with the HPS acquisition now closed on July 1, as I mentioned in my remarks, we expect low teens percentage increase in our 2025 core G&A. That's primarily driven by the onboarding of our 3 acquisitions. Ex HPS, G&A would remain in our mid- to high single-digit percentage increase range. And at Investor Day, I talked a lot about how we've executed on our financial framework by keeping controllable expenses with inorganic growth since 2023. That's really driven profitable growth and margin expansion.

And we aim to continue to align organic revenue growth and controllable expenses. That's compensation -- that's compensation across base salaries and benefits as well as G&A, right? We think of controllable expenses, traveling together, comp and base salaries and benefits as well as G&A. For the second quarter, our controllable expenses, excluding acquisitions, are in line with our last 12 months of organic revenue growth of 7%.

On a go-forward basis, I'd say we're in a period now where expense consolidation from recent acquisitions, it's coloring obviously, the comparisons. And next year will really be a full year where we get the impact of HPS and Preqin. Those acquisitions are essentially self-funding, GIP, HPS and Preqin. They've all been double-digit FRE and ACV growers.

So once we're through this period of consolidation in the back half of the year, we expect you'll continue to see controllable expense in line with organic base fee growth. That's what we've delivered since we introduced this framework in '23 over the last 12 months. And so as we start to see that really strong FRE and ACV growth, overall organic growth, I think you can expect us to continue to be able to drive towards our 45% or greater margin profile.

The last thing I'd say is just we have a really strong entry rate, as I mentioned, into Q3. Our entry rate is 5% higher going into Q3. That's pre-HPS. With HPS, it's more like 10% higher in terms of the base fee jumping off point. So I think we have a really sound entry point into the back half of the year, even though we get some more consolidated expenses from bringing these acquisitions together.

It's really important to bring people together. We've got a lot of energy about co-locating people on real estate. We know we need to do events where we bring people together. We have to go see our clients. All of those things in the long term are both growth in revenue accretive for BlackRock.

We'll go next to Dan Fannon with Jefferies.

I was hoping just on HPS now closed, Larry, you mentioned the growth there has been strong. I was hoping you could put some numbers around recent flow trends there. And as we think about the second half of the year, what products are in market and how we should think about organic growth or fundraising for that part of the business for the remainder of the year?

Good. I want to turn that to Martin. .

So thanks for the question. Definitely, an exciting time at BlackRock and for our clients in private. I think we talked a fair amount about this at Investor Day, but I'll give a little bit more color. We're obviously looking to scale private markets fundraising through a systematic approach to our clients. Now integrating GIP and HPS, we have a really robust and I think exciting road map for '25 as well as the out years, which includes the next vintage of several strategies, thematic products.

Let me just give you sort of a list of the things that are out in the marketplace today. We have fundraising going on across mid-cap and emerging markets infrastructure equity. We have investment grade, high-yield and credit-sensitive infrastructure debt direct lending and junior capital, private equity secondaries, real estate debt and some more targeted strategies in Europe and Asia on real estate equity.

As Larry and I both mentioned on the call, we successfully closed GIP V, surpassing its $25 billion fundraising target. We also closed our secondary and liquidity strategies to SLS 2, the next of our secondary fund at over $2.5 billion. At Investor Day, we talked about targeting $400 billion in gross private markets fundraising through -- from 2025 to 2030.

We believe that will be led again by our infrastructure and private financing solutions platforms. We're really building on very strong absolute and relative performance, I think very strong DPIs on the platform relative to the peer group. This power of vintage, LP re-ups and track record, we really feel we're in the best position that we've ever been in there to get closer to clients.

I wouldn't expect that $400 billion to be a straight line average for 5 years. So don't just take this last 6 months and average it. We'd expect more of a ramp-up to higher fundraising levels in the later years, call that 2028 through 2030. And again, as Scott Kapnick said, as Adebayo said, as Larry said, as Raj said, consistent investment performance is the license to grow.

So all of our teams are going to be blisteringly focused on delivering for clients as the key input to our fundraising goals. So I think between now and the end of the year, we'll continue to execute on those targets, bringing us towards our $400 billion in gross fundraising out to 2030.

We'll go next to Ben Budish with Barclays.

Maybe just a follow-up on the private markets strategy. So you announced the acquisition of, a smaller tuck-in, but just curious, how are you thinking about inorganic opportunities? Is this sort of an acquisition that had been on your radar -- is it something that's sort of that you had been seeking or came across how does it kind of fit in? And should this be indicative of maybe future M&A? Or do you feel pretty good about the assets that you have today as they are?

Thanks so much for the question. So our main focus right now is fully integrating our acquisitions and realizing the planned synergies. It's about delivering great integration experiences for all of our clients that are seamless and our employees. I think as we've shown in our results, we don't need M&A to meet or exceed our organic growth targets.

We were doing that before M&A. And now we're running on the trailing 12 months at 7% organic base fee growth. So these capabilities are helping us lift through our targets. So we're going to continue, I think, to be very prudent, selective, tactical with our capital and financial position and in how we look at M&A.

We've made several smaller tactical acquisitions to bolster certain areas of the business. The planned acquisition of, which we're very excited about, which brings triple net lease, the intersection of real estate and credit, which we think is very germane to our insurance clients and our wealth clients.

And also previous acquisitions like in growth-oriented lending and Spider Rock, which helps extend our capabilities and SMAs. We also announced a minority investment in Meridium earlier this year, which also, I think, is accretive to private credit and alternatives. So these acquisitions alongside with our minority investments, they bring incremental capabilities to better serve clients and generate attractive shareholder returns. And so as I said at Investor Day, I think because of large-scale M&A in the near to intermediate term, we've rounded out that agenda. We're going to continue to look at things that we think are complementary in terms of capabilities. across private markets and technology.

I would just add a few other things that we've been building, but organically, and the opportunities we see, we believe fundamentally that every country in the world who is going to be attempting to build out their own capital markets. They see the success of the United States, one of the great reasons of the U.S. position in the world today is having a strong banking system and a strong capital market system.

We talked about this at an Investor Day. But the -- what we saw in India -- and what we're trying to do and bring out and expand its retirement system platform there is a good example of the expansion of the global capital markets. Yesterday, we had a conversation with another very big organization and a strong position in a growing developing country with huge opportunity to do the same thing we're doing with Reliance and Jio BlackRock.

We've already announced what we are trying to do in the Middle East and Saudi Arabia related to expansion of a mortgage-backed securities market. So we are not just looking at tuck-in acquisitions, but the opportunity we have to expand our position as more and more countries are expanding their capital markets and playing a bigger role in that. And I think India is just the beginning where we believe we're going to build out a very large-scale asset management platform in India itself is going to be -- these are the seeds that we are doing that are probably being obscured by all the inorganic things we are doing. But I want to just give you that color that we see the expansion of the global capital markets as a primary driver of future success for BlackRock over the next 5 years. And having our global footprint being in 100 different countries, just gives us a unique opportunity to be working with more and more governments worldwide is helping them think about how they expand their capital markets and how do they expand their own Pillar 3 retirement system as a leader in retirement. This is a conversation we're having with everybody. And I mentioned in my -- in one of the prior questions related to what's going on in Netherlands, moving from DB to a hybrid DC.

These are all big changes, but they present huge and unique opportunities for BlackRock. And so inorganic opportunities are still going to be -- if they're compelling, we will still be doing those types of transactions, especially tuck-in areas in private markets or tuck-in in technology. But the opportunity to grow organically as the capital markets grows worldwide is something that we are very excited about over the next 5 years.

We'll go next to Bill Katz with TD Cowen.

So maybe switching gears a little bit. Just thinking through from here. In a world of consolidating the recent transactions and being more prudent going forward. How do you think about capital returns? It seems like you're going to be generating a ton of free cash flow over the next several years. Just trying to think through the interplay between dividend and buyback and maybe the total payout ratio?

Martin should be taking.

Bill, thanks so much. I appreciate the question. Hope you're having a great summer. As I mentioned at Investor Day and again a little bit today, our capital management strategy continues to be to invest first in the business and then return cash to shareholders through dividends and share repurchases. We repurchased 375 million worth of common shares in the second quarter and expect to purchase at least 1.5 billion worth of shares for full year 2025, subject to market and other conditions.

Our share repurchases, again, they're an output of rather than an input to our capital management strategy. We invest first and whatever falls out is the shareholder return. I'd say on dividends, we recognize very much that dividend income and growth is an important part of many of our investors' portfolios. We continue to target a dividend payout ratio between 40% to 50%. And over the last 5 years, we paid an average of 50% of our GAAP net income and dividends.

We steadily increased the dividend since we started in 2003. And over this time, our dividend per share has grown at a CAGR of over 15%. Over the last 5 years, we paid on average 50% of our GAAP net income and dividends and our dividend payout ratio is intended to ensure that the growth in operating and net income under our 2030 strategy that we talked about at Investor Day, will translate into commensurate dividend growth at high single to low double-digit rates.

And as I mentioned at Investor Day, and I'll say it here again to avoid the payout ratio impact from the noncash amortization of acquisition-related intangibles, we'll adjust this amortization in calibrating our dividend to the payout ratio. But again, we think that the 2030 strategy that we discussed at Investor Day should translate into dividend growth at high single to low double-digit rates.

We'll go next to Brian Bedell with Deutsche Bank.

Just if I can maybe switch gears a little bit to iShares in Europe and fixed income in particular. If you can just talk about how you're continuing to see -- you're continuing to see strong organic growth in the fixed income, iShares franchise. Maybe if you can talk about where you see yourselves on the long-term development of substitution of fixed income securities for iShares ETP? And then especially in Europe, I think you talked about this at Investor Day. You see pretty strong growth potential as Europe sort of democratizes their retail investor base. How do you see that progressing here coming into the second half? And you see that more just on the equity side or the alternative iShares or also on the fixed income iShares side.

So thanks for the question. More growth, more people using iShares ETFs along the active side of the world, alongside of active using the wrapper for hedging purposes, just more and more and more use cases that we're seeing, and it is really caught on in Europe now as a primary wrapper end market to be involved in. So we continue to show industry-leading results. We have the #1 share of global ETF flows year-to-date as the iShares and ETF become the vehicle choice, and we're the industry leader and probably have the most diversified offering of anyone. That diversification is reflected in our organic revenue, which is nearly 3x the next largest issuer and inflows where 38 iShares products had over $1 billion of net inflows this quarter. So that diversification is working for us.

We're seeing outsized strength from our highest conviction growth areas like fixed income, active now digital assets and European listed ETFs. And Martin mentioned before, bond ETFs led the way at $44 billion, followed by digital assets, $14 billion, active ETFs, $1.1 billion and precision and other at $1.8 billion. Europe, as you highlighted, saw $29 billion of net inflows.

So we will continue to evolve our ETF business and increase access to all kinds of markets more efficiently, more transparently and conveniently. So this is a business that we continue to capture the flag globally and also help our clients expand the use of that product to areas that we didn't think of that we're responding with solutions to our clients with this wrapper.

Let me just add a few more things. As the European markets evolve and change, and as regulation really focused on the remunerations, the beginnings of the access to ETFs in Europe is only just beginning. Europe is 5, 6 years behind the United States in terms of access. It's just all evolving now. iShares is about $1 trillion in Europe, 40% and we are in a position now, especially in like countries, as we said, changing away from defined benefit to defined contributions in Europe.

You're going to see more and more the financial advisory organizations of Europe. You're going to see more and more of the digital organizations in Europe, adapting more and more ETF-based strategies. Similarly, as we've seen in the United States. So we believe Europe is just starting to launch the same type of growth rates that we saw in the United States in terms of the adaptation of ETFs. And if you now intersect the role of digital ETFs, to me, that is creating more and more enthusiasm, more access to ETFs, more interest in ETFs.

And as I said in my prepared remarks, we are seeing more and more clients who first started using ETFs or IBIT are now looking at ETFs and iShares as a vehicle to expand way beyond their first entry into a digital platform. So we're very well positioned. And I look at the opportunities in Europe similarly to the type of growth rates we saw in the U.S. over the last 5 years

We'll go next to Patrick Davitt with Autonomous Research.

You touched on this briefly, but stable coin is obviously top of mind for many investors on the back of Circle's IPO, and you're imagining that money has been a strong boost to those flows for you. So through that lens, could you speak to how you see what looks like a fairly significant emerging opportunity for asset is to manage these reserves, is there a pipeline of other potential mandates like the Circle 1? And then finally, within that, maybe some color on why these platforms can't or don't want to just invest the treasuries directly versus using your money funds or other people's money funds?

Yes, in my world tour, working with central banks and regulators, conversation about stable coin is vibrant right now. And so what we are going to see is more competitive type of stable coins they may have some role in diversifying away from dollar as we digitize more and more currency. But the opportunity for BlackRock in our world in both stable coin or all the entire role of tokenization of financial assets, tokenization of real assets like real estate is going to be the future.

And we believe more than ever before that we are as well positioned as any organization in the world to be part of the conversations as stable coins are going to be growing and developing. Related to buying money market funds or buying -- having a role playing a role as a manager. Those conversations are broad.

But if you're going to show that a stable coin truly is a substitute for a currency, it must be invested in those currencies bonds. And so I would hope that will remain as a consistent feature of each and every stable coin. And I believe that is going to be one of the big issues. There is questions remaining with some other stable coins as to what is the collateral backing some of that. And if we're going to put our name associated with it, we believe each and every stable coin should be invested in short-term government bonds of that back that stable coin.

We want to make sure it's legitimatized, but it's also safe and it's a great digital substitution for each and every country's cash as a cash substitute. And I think that is going to be moving very rapidly, but it is surprising even to me, the dialogues that we're having with central banks and how they are looking to now use their own digitized currency or using stable coins to digitize their currency. And so we believe this is just the beginning, and we will be playing a significant role as stable coins are developed in each every country. They believe it will fit the needs of their own monetary policy and there are policies related to their capital markets.

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

Yes. Thank you, operator. I want to thank all of you for joining us this morning and for your continued interest in BlackRock. Our second quarter results demonstrated the strength of our global relationships and how our platform is powering the portfolios of the future. We're so excited to welcome our new colleagues from HPS to our global offices in the coming months, and we're working closely together to better serve our clients across all their investment needs, which in turn should drive stronger and more durable results as we did in this quarter for you, our shareholders.

Everyone, thank you. Have a good summer. Enjoy the quarter. Bye-bye.

This concludes today's teleconference. You may now disconnect.

Please welcome BlackRock's Head of Investor Relations, Caroline Rodda.

Good morning, everyone, and thank you for joining us today. I'm Caroline Rodda, and I look after Investor Relations at BlackRock. We've had a few things going on since our last Investor Day in 2023 and we're glad to have you here with us for an update on that journey.

A few housekeeping items before we get started, you can find a PDF of all our presentations on BlackRock's Investor Relations website. And as they say, it's hard to predict the future. We encourage you to look after our disclosures. Throughout the event, we will make a number of forward-looking statements. We call your attention to the fact that BlackRock's actual results may differ from these statements. 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. BlackRock assumes no duty and does not undertake to update any forward-looking statements.

We're scheduled to take two 15-minute breaks around 9:40 and 11:15 a.m. Eastern Time, and we'll host a live Q&A session immediately after our presentations conclude at approximately 12:15 p.m. You may also submit questions throughout the day through webcast or by e-mailing the Investor Relations alias at the bottom of the screen.

Thank you again for joining us today. And it's now my pleasure to introduce Rob Kapito, BlackRock's President and Co-Founder, to get us started.

Hello, and thank you for joining BlackRock's 2025 Investor Day and for your continued interest and support. This is a very, very proud moment for Larry and I and the entire BlackRock team that will be presenting today.

Since our last Investor Day in June of 2023, a lot has transpired in the world, ongoing complex, further polarization of political landscape, some loosening of global monetary policies, sharp escalation and trade protectionism and potential rewiring of global trade. We saw record equity markets while also experiencing volatility and steep declines and rebounds.

Over the same 2 years, clients have entrusted BlackRock with $900 billion of net inflows translating to over $800 million in net new base fees. Everything we do is on behalf of our clients. We listen to them. We learn from them, and we put their needs first. Since BlackRock's founding, everything we have accomplished reflects our commitments to understanding client needs and the outcomes that they are seeking. We've been willing to reimagine and reinvent ourselves to fulfill the clients' needs of the future.

2024 was one of the most transformative years in our history to date. It was a year marked by record results and client activity and also a historic year when we made bold strategic moves to connect public and private markets through portfolio management and technology. We generated over $640 billion of client inflows and reached $20 billion of revenue in 2024. We found big ideas in products like IBIT, which now has $70 billion in AUM. Our global iShares AUM surpassed $4 trillion. We brought Aladdin to new locations like South Korea and the Middle East, we celebrated the 25th anniversary of BlackRock's IPO.

We welcomed more than 2,000 new colleagues from GIP and Preqin and we'll onboard another 780 from HPS following the close of the transaction. With the addition of Preqin, we significantly broadened Aladdin's reach, tripling the number of individual desktops we operate on, and we landed on another big idea alongside our GIP partners, the formation of the AI infrastructure partnership. These bold strategic moves are all a part of our ambitions for the year 2030. All of us at BlackRock have embraced this 2030 vision as our North Star. However, the long-held foundations that inform our strategy and help drive BlackRock's success remain unchanged.

We are here to help more people invest to live better lives and retire with dignity. We are a local fiduciary that delivers global scale for our clients. We provide greater access by making investing easier and more affordable. We provide our clients with more choices to meet their individual needs, and we constantly evolve and diversify our global platform to serve clients across their whole portfolio.

As you listen to today's presentations, we hope you'll gain a deeper understanding of our ambitions, the opportunities in front of BlackRock and the people who are leading us forward. We will highlight the power of our integrated public and private markets platform and how it enables us to deliver better outcomes for our clients today and in the future. In turn, this will lead to differentiated growth, unlocking earnings and multiple expansion for our shareholders. And no matter what, we are not afraid to change the way we compete and operate to succeed. What you will hear today is more than a strategy. It's an all-hands exercise as we reimagine what is possible. I am confident that the best of BlackRock is still ahead of us.

With that, I want to turn it over to our CFO and Global Head of Corporate Strategy, Martin Small, to talk more about our strategy and our ambitions for 2030. Martin, over to you.

Thanks, Rob. Good morning, everyone. Are we feeling good today here? We're feeling good. Great. Since 1988, BlackRock's embraced growth, change and innovation, building a market-leading platform to deliver performance and scale for clients. Our successful track record of shaping and navigating change, while expanding market leadership is built on guiding convictions that have been consistent through time. They are the foundations of our strategy. We believe in the long-term growth of the capital markets, we give access, we connect our clients, investors, corporates, the public sector. We connect them to the power of the capital markets. This connection has this positive flywheel effect of creating global growth, more shared prosperity, well-being, more investors for tomorrow, more future clients of the firm.

We're a fiduciary business. we serve only clients. We give our clients undivided loyalty. We deliver them excellent performance across whole portfolios and products. Excellence in performance means excellence in investment performance, excellence in risk management, operations and client service. We look to create scale everywhere and in everything we do. We create scale through network economies through our One BlackRock platform that's built on trusted long-term client relationships and technology. We share the benefits of scale with our clients, providing better access to everything from new markets to data insights, from proprietary origination to lower trading costs.

Our scale also benefits BlackRock's shareholders, we've expanded operating margin by 170 basis points since we introduced our financial framework in 2022. BlackRock's value creation formula combines strong organic growth and operating leverage with recurring revenues positively linked to the long-term growth of the capital markets. It's a proven formula with a track record of delivering compelling value for clients and shareholders.

Our strategy is rooted in client needs. Our $11.6 trillion of assets under management are measures of trust that clients have placed with BlackRock. We've achieved our organic growth targets with 5% organic asset and base fee growth on average over the last 5 years. We've delivered above target organic growth even in less supportive markets, such as the first quarter of this year.

Following our clients, we're investing to build our platform around higher multiple, less market-sensitive products and services, private markets, technology, ETFs and whole portfolio solutions. This should drive long-term relationships with higher and more durable organic growth. So consistent with this ambition, we're raising the bar targeting 5% or higher organic base fee growth alongside 45% or higher operating margin through the market cycle.

Private markets and technology comprised under 1/5 of our total revenue at the end of 2024. They accelerate to approximately 20% upon the close of the HPS transaction. We see our evolving mix taking us to 30% or more of BlackRock's revenue from private markets and technology businesses. We've already taken significant steps towards this goal with our inorganic moves in the last 18 months. We aim to drive the balance of this revenue through successful integrations and execution on synergies.

The ambition of our BlackRock and 2030 strategy is to deliver more than $35 billion in total revenue and to double both our operating income and market cap. This ambition all assumes a flat market environment, and it's built on premium organic growth in base fees, technology ACV and on investment performance. Even with modestly positive markets, just 3% to 5%, we'd expect revenues and operating income to be meaningfully higher.

We've built BlackRock around structural growth meaning the products and services that benefit from fundamental advancements, the durable long-term changes in how clients are using BlackRock as a platform, a scale enabler to manage and grow their businesses. We're executing to expand share in all these structural growers. We're top 5 in private credit and SMAs, top 3 in each of infrastructure, cash and outsourcing, and we're #1 in both ETFs and our Aladdin technology platform.

We see our existing $11.6 trillion units of trust as among the best opportunities to grow. Over 90% of the top 100 asset owners work with BlackRock and asset owners are looking to deepen their partnerships with fewer firms, aiming for more holistic strategic relationships. They require breadth of capabilities across asset classes and styles, global access and expertise and excellence in public and private markets. Leading asset owners want to work with platforms, not monoline product providers.

BlackRock's platform presents exceptional breadth and global capabilities. Our institutional index business is built on long-standing relationships with the world's largest sovereign wealth funds, pensions and other institutions. We have leading platforms across outsourcing, retirement, insurance and wealth. There's over $3 trillion of client assets in these franchises trusted to BlackRock today. These clients all aim to increase their allocations and their insights into the private markets for diversification, income and returns.

We believe BlackRock's private markets capabilities are now positioned to deliver best-in-class outcomes for clients. We have leading capabilities in infrastructure, private credit and private equity solutions. Our focus is delivering for clients. So imagine we're successful in helping existing insurance, wealth and OCIO clients allocate even a modest portion, say 5%, of their BlackRock relationships to private markets. That represents a meaningful growth opportunity of over $150 billion in new private markets AUM and over $1 billion of estimated new base fees just within our walls.

Beyond our existing business, we're building leading franchises in newer high-growth TAMs across the industry. We're building at least 4 new potential $500 million revenue businesses, private markets to insurance, private markets to wealth, digital assets and active ETFs. And we're building them from the ground up. All of these businesses barely existed at our 2023 Investor Day. As we power towards our 5-plus percent organic growth target, it's innovative and fast scaling businesses like these that should help deliver higher and more consistent organic growth.

In the 9 months since closing the GIP combination, we've made major progress across the capital raise and return life cycle. We've expanded our offerings for clients and announced landmark transactions in digital infrastructure, utilities and transport and logistics markets, and will mark another significant milestone towards our 2030 goals with the closing of the HPS transaction. We expect to close on July 1. We're excited to bring a group of talented new colleagues from HPS to BlackRock and deliver a leading private credit platform to clients.

With GIP and soon HPS, BlackRock is a top 5 private markets platform with leading cornerstones in the double-digit growth segments of infrastructure and private credit. We're aiming to raise $400 billion in private markets through 2030, it's powered by exceptional origination reach, strong investment performance and depth of our client relationships.

So first, origination. As a large active and index investor for clients in public stock and bond markets globally, BlackRock is recognized as a long-term, highly aligned capital partner, not a short-term transactional counterparty. This valuable position of long-term alignment with corporates and sovereigns puts BlackRock in a privileged position to see everything. It powers strong deal flow, the ability to customize income and growth solutions and create long-term value for our clients and our partners.

Second, wealth and insurance, wealth managers and insurance companies across the globe are aiming to fuse public and private markets. That's insurers involving core fixed income general accounts into public and private credit that's financial advisers transforming 60-40 model portfolios into something that looks more like 50-30-20. BlackRock's expert in deeply serving whole portfolio relationships. We're expert in delivering specialist capabilities across private markets and technology right alongside public fixed income, index ETFs or systematic investing. This expertise should power fundraising synergies with GIP and HPS capabilities.

Third, powering capital formation through new extended road maps and to serve clients. Investment performance is the license to scale and grow successor vintages. We'll build on the strong track records of the combined businesses to do just that, but we also see big opportunities to expand our product road map based on client demand. Examples range from extending infrastructure investing across mega cap in the middle market and from emerging markets to new energy and digital technologies. Our AI partnership with hyperscalers and asset owners is a good example of this product extension.

And in technology, we're expanding our opportunity set in the fast-flowing river of private markets data. Aladdin's technology has been the backbone of our own growth, and it's enabling other investment firms to support larger scale growth and increased customization. So with Preqin, we're bringing that ethos to the private markets, supporting the growth of our clients and the growth of the industry itself, strengthening the connection between GPs and LPs and increasing private market allocations.

Think about the data, the benchmarks, the risk models and analytics that transform public markets. They created a language. They made markets more accessible from developed to emerging, from stocks to bonds. They made the drivers of risk and return more understandable, which supports growth in the capital markets. Our aim is to do all of that in the far less mature data analytics and index business for private markets with Preqin.

So we've rooted our BlackRock strategy -- our BlackRock strategy to 2030 and client needs, investment capabilities, technology and scale. We're well positioned to deliver strong investment performance, win client trust and deepen those relationships through a One BlackRock platform. When we do well for our clients, we do well for our employees, and we do well for our shareholders.

Our Investor Day presentations detail the building blocks to 2030, Aladdin, iShares, active investing, private markets and expanding in new client segments all around the world. My partners will take you through the capabilities and actions that we believe will take us to over $35 billion in revenue by 2030 at north of 45% margins.

So with that, I'll turn it over to my friend and partner, Rob Goldstein, to build on how we're executing our platform strategy to power the BlackRock of 2030.

Thank you, Martin. Good morning, everyone. Thank you all for joining. I can't tell you how exciting it is to be here in front of you in this fantastic space to share the vision for BlackRock. I'm Rob Goldstein, BlackRock's Chief Operating Officer, and over the next 15 minutes, I'm going to put more context around Rob's remarks and around Martin's remarks. I will share the vision of how we're powering scale for our clients' whole portfolio across both the public and the private markets.

Scale is a tool to build solutions for clients. Scale is a tool for managing costs and importantly, scale is a distinct competitive advantage for BlackRock, such that the sum of our capabilities allows clients to grow and expand across the ecosystem that we operate within. It's not that the bigger getting bigger. It's that the best are getting bigger. Big is an output. It's becoming increasingly less about a client simply buying a fund and more about helping clients achieve specific objectives from model portfolios to technology to co-investments.

Clients are seeking more from their providers, the best can meet this demand, but it's client behavior that's driving the consolidation. The top 5 asset managers have gone from 21% to 25% of industry AUM in 5 years, and we think that's only going to continue. Our clients want the scale benefits of doing more with fewer. And they're also organizing themselves around this trend. They think of their top asset managers as partners, not simply product providers. And this means that One BlackRock is the key requirement. There are benefits to expanding with BlackRock. Clients should want to stay in and do more within that network. One BlackRock is more than a core cultural principle. It's a key commercial enabler. It's a commercial catalyst in this new environment.

BlackRock has been designed, as Rob said, with one simple goal to meet our clients' needs. These needs have always centered on investment performance, and we view it as our mission to provide that via exceptional access, expertise and service. That access starts with that whole portfolio mindset and client choice. Building portfolios is hard, we want to make it easy. Asset owners throughout the world have their own opinions on how to build their own unique portfolio. We want to enable them. We want to help them to simply combine our puzzle pieces, our investment products and strategies into solutions that solve unique client problems. That is how we deliver choice.

Our expertise is built through the close to 23,000 employees we have in 30-plus countries, 80-plus offices who speak 100-plus languages, attracting and retaining the best talent in our industry globally is core to our ability to deliver and connecting them together in an integrated firm as One BlackRock, that is the key ingredient. This enables us to bring global insights and global investment strategies locally and bring local insights and strategies globally.

And from a service perspective, it's the foundation of One BlackRock. We are not an organization that operates in silos. Our greatest value proposition, our One BlackRock value proposition is the benefits we create for clients by bringing together the various pieces of the puzzles of BlackRock to develop investment insights, to design unique client solutions and to create scale across our platform, all while delivering excellent investment performance.

So since the last Investor Day, we've been a little bit busy in case you haven't noticed. But importantly, so have our clients, our client needs are continually changing. The markets are continually changing. And it's our job to stay ahead to continuously reinvent BlackRock. And there are 2 primary axes that we want to ensure we highlight when we think about the past 2 years.

First, we have been investing in the building blocks to serve clients across that whole portfolio. GIP, Preqin, HPS, those are great examples. Each of those decisions is a step-function game changer. We have always set out to define a new standard for our industry and for our clients, but these acquisitions are absolutely core to that.

At the same time, there's been a lot of other things also going on. We've implemented our digital asset strategy. LifePath Paycheck is live and helping hundreds of thousands, hundreds of thousands of U.S. workers invest for retirement. We've built an accounting capability within Aladdin, and we've been doing a tremendous amount with respect to AI, including launching Aladdin Copilot, you could actually watch Jensen Huang at NVIDIA's conference in March of this year, go online, where he talks about and highlights Aladdin Copilot as a great case study of implemented AI.

And as personalized portfolios at scale have become more important to our clients, we've brought in overlay capabilities like SpiderRock and our SMA solutions through Aperio.

Now when you look at how our presence has evolved since we last convened, capital is also concentrating and growing. The bigger getting bigger with regard to asset owners. The world has changed, and we've invested in our footprint accordingly, reflecting the increased importance of local presence in an increasingly complex world.

So if you look at a place like the UAE, at this point, we have 60 employees across a whole spectrum of functions. Why? Because that's what our clients are requiring. We believe that the notion of being able to walk to your clients anywhere in the world will be a critical competitive advantage in a world where globalization is being rewired.

So we are on a continuous quest across four key themes: Ensuring that clients benefit by growing within the BlackRock network, this is One BlackRock as a commercial principle. Establishing ourselves across the ecosystem, our capabilities add value well beyond asset owners and wealth managers. Building something once and monetizing it multiple ways, and importantly, continuously driving marginal costs down. All of this and the license to do everything that we do as a firm starts with excellence, serving our clients with excellence across investments, technology, operations and across any solution that they may need.

Now I wanted to share a real-life case study of each of these four themes. So first, making sure that clients expand within the network. This is how they gain more and more benefits of working with BlackRock. And I like to think of this as a value proposition that doesn't grow linearly, it grows exponentially.

So here is an example of a relationship that started within the past 5 years. In fact, I distinctly remember it because it was Thanksgiving 2020 that the initial opportunity really started to come together, it was literally as I was picking up my Turkey, so I really remember it. So think of this client as a roughly $100 billion general account for a global insurance company. Their portfolio, as you would expect, includes public fixed income, public equity, cash, private equity, private credit.

So the first step in the relationship was BlackRock delivering a holistic strategic asset allocation. We modeled their whole portfolio on Aladdin. We analyzed the risk, and we provided a series of optimizations. Then the relationship expanded to BlackRock being the core fixed income manager. We were entrusted with the majority of their fixed income assets, tens of billions of dollars.

Next, we began working with them on private credit, from there, we started implementing Aladdin. We also started to provide investment accounting and operational outsourcing. And finally, we began managing their private equity portfolio, helping them understand how they could optimize and grow their portfolio to achieve better investment outcomes.

So what does this make us? This makes us a strategic partner across the whole portfolio. And I wanted to show this example specifically because a lot of times when we talk about the whole portfolio, people immediately default to OCIO, Outsourced Chief Investment Officer. When the client mandate effectively starts with outsourcing the whole portfolio.

But whole portfolio also means starting then expanding, then expanding more within the BlackRock network. It's the story that I just told. It's about a leveraged value proposition where the more you do with BlackRock, the greater the scale benefits are that you can achieve. We now manage over 2/3 of this client's portfolio, and we know there's room to grow even further. That is powering scale for the whole portfolio.

So now let's talk about ecosystems. And I'm going to use digital assets as an example, but it could have been bond ETFs. It could have been model portfolios. It could have been ETFs in the Kingdom of Saudi Arabia. At its core, our digital asset strategy is about how do we connect, how do we bridge the traditional capital markets with this developing digital assets ecosystem in a bidirectional way, and there are four elements to BlackRock's digital asset strategy.

So the first is connecting networks. Aladdin is among the leading networks in the traditional capital markets. Coinbase, which is actually right across there is among the leading networks in the digital assets ecosystem. Connecting these networks, linking Aladdin with Coinbase's platform. It positions Aladdin at the center of this continually evolving whole portfolio, publics, privates and crypto.

Second is stablecoins. We recognize the important role that stablecoins would play in digital assets and ultimately in the capital markets. And this led to our relationship with Circle. We are the preferred asset manager for the underlying reserves of Circle's USDC stablecoin. And today, we manage over $50 billion for that, and we see tremendous opportunity for growth there.

Third is access. Our ambition continues to be to provide institutional quality access to Bitcoin, Ethereum and ultimately, other digital assets with the convenience and efficiency of the ETP wrapper. IBIT, our Bitcoin ETP, we think of as the bridge enabling Bitcoin exposure through the traditional old boring capital markets with BlackRock's quality. But IBIT has been anything but boring. It's the fastest-growing ETP in history to get to $30 billion, $40 billion, $50 billion, $60 billion, and this week, $70 billion. Today, IBIT is the only one of the world's largest 25 ETPs to be less than 12 years old. It's 1.5 years old.

And finally, we're focused on tokenized funds. We think over the long term, the technology of tokenizing funds can be very transformational. But right now, it's still very early days. We are focused, in particular, on our tokenized liquidity fund, BUIDL, which is the largest tokenized funds in the industry at over $3 billion. So imagine a world where iShares are tokenized and can actually sit and live within digital wallets.

Overall, our digital asset solutions are at a premium offering. We've built a $0.25 billion revenue business through this strategy in a reasonably short time. But importantly, BUIDL, IBIT and USDC, they all have something in common. All of them are effectively utilities that have become cornerstones of the digital assets ecosystem, each of them has brought and will continue to bring new clients to BlackRock -- to that BlackRock network outside of traditional finance.

We also see great opportunity for them to ultimately become utilities within the traditional capital markets ecosystem. This is the story of BlackRock bridging ecosystems, the capital markets and digital assets.

So shifting gears, the next case study. We wanted to provide some examples of build once and monetize in multiple ways. To me, this is the ultimate definition of scale.

So first, alpha signals. Our systematic investing business has over 1,000 individual alpha signals. And what we've been able to do is combine and optimize subsets of these relevant signals to effectively quickly enable and launch local investment products in places like India, Saudi Arabia and Japan. So it enables us to instantly scale in local markets by bringing our world-class capabilities.

Second, our global trading and markets capabilities. We are internalizing roughly 1/4 of our equity trades per year. So to put that in perspective, that quarter is roughly the same size as the DAX in terms of notional traded volume last year. Through liquidity offset like this, we're saving clients approximately $600 million a year in transaction costs.

And finally, for something that is still in the lab, we've built an agentic AI research platform. We call it Asimov, and it's used today across our fundamental equity business. This is a virtual investment analyst. So while everyone else is sleeping at night, we have these virtual AI agents, they're scanning research notes, company filings, e-mails to generate portfolio insights. And I expect that by the next BlackRock Investor Day, Asimov is being used all over the firm, helping scale our people to drive better investment outcomes.

And our final case study is about operational excellence. This is effectively the starting point for everything we do at BlackRock. What's changed since our last Investor Day? A lot. We've had a busy couple of years. We've been awarded approximately $1 trillion in assets by clients. These are units of trust that we need to reearn every day. We've onboarded 3,000 new employees, but over 2,000 of these were through acquisition, we've only grown our employee base by less than 5% total organically since 2023. And at the same time, our as adjusted operating margin has increased by almost 300 basis points.

Martin just walked you through the 2030 plan. There's a lot of financial metrics as part of that vision, in terms of growth and aspiration. But another lens for the 2030 plan is the lens of operating scale that's required. We look at this bottoms-up based on what our clients are requiring of us, what will BlackRock require in terms of scale as we look to 2030. We are actually building our technology in anticipation of these new scale vectors. Our objective is that the marginal cost of this growth, it be as low as possible. And our objective is and will continue to be as we enhance as we invest in our technology to meet these requirements, we'll provide these capabilities to the Aladdin community, so they do even more with us. And importantly, it will enable us to sell more Aladdins.

So finally, I want to close with what you need to remember about BlackRock. One BlackRock is a commercial model just as much as it is a cultural principle. This is scale and action. First, it's about excellence in everything that we do for our clients across investments, services technology, you name it. Second, we want to be our clients' first call for all things investments. Third, we want to create the surround sound effect to working with BlackRock. Our aspiration is that clients gain tremendous benefits by growing and expanding within the BlackRock network. And lastly, we are on a long-term journey for Aladdin to be the language of portfolios and for eFront now or Preqin to be the language of the private markets.

One BlackRock is and has always been that key requirement. So as we look ahead to the rest of the day, you'll hear more from my colleagues about the concepts of clients staying and expanding within the network, the power of doing more with BlackRock.

And our next session is actually on technology, and there are no two better leaders to share our strategy, then my partners and friends, Tarek Chouman and Sudhir Nair.

Great. Thank you, Rob, and good morning, everyone. My name is Sudhir Nair, and I'm the Global Head of Aladdin here at BlackRock. And as you've heard from my colleagues, our Aladdin technology is and always has been at the center of the firm. In fact, we often say BlackRock is Aladdin and Aladdin is BlackRock. Together, we grow stronger, more innovative and better positioned to serve our clients. The fact that BlackRock is both the largest user of Aladdin while at the same time, providing its capabilities through our Aladdin business allows us to stay uniquely attuned to the changes in the marketplace and our adapting client needs. This user-provider model in many ways, continues to be our special sauce.

Through one lens, Aladdin is an investment system that helps people manage portfolios from risk to trading, to operations, to accounting but through a different lens, Aladdin is more than just a technology. It's actually an important part of our identity. It's the operating backbone, as you've heard, that helps BlackRock achieve the unparalleled breadth and scale that Rob and Martin spoke about.

It's a pillar of our culture. It's an ethos of disruption and challenging the status quo. Aladdin's spirit is all about this relentless pursuit of process improvement, better, faster, cheaper. It's part of the fuel that powers this perpetual reinvention machine, while at the same time, helping us drive down marginal cost. And lastly, it's a high-growth global SaaS technology business that's an increasingly important engine within BlackRock's overall growth strategy.

Over the next 20 minutes or so, Tarek and I are going to double-click into this third pillar, with a focus on Aladdin as a commercial business, where we are, where we're headed and why we're so excited for what the future holds.

Okay. Let me start with a little bit of a snapshot of the business today. In 2024, BlackRock generated technology services revenues of $1.6 billion, annual contract value, or ACV, grew 14% year-over-year in Q1 2025, and we remain committed to our guidance of long-term organic ACV growth rates in the low to mid-teens.

What began as a risk management system supporting fixed income at BlackRock has grown to cover the end-to-end investment life cycle across an increasingly interconnected financial services landscape. Our goal is to have Aladdin be the common language across all portfolios, making it easier and more efficient for investors everywhere to serve their clients and help them achieve their financial goals. Whether you're an asset manager onboarding a new OCIO mandate or a pension fund, managing against a liability target or a financial adviser, building a new investment proposal for a high-net worth client, we believe there's an opportunity for Aladdin to help make your process better by creating an even tighter connection between your teams, your partners and ultimately, your clients.

And now with Preqin, our most recent acquisition, which closed in March, we're expanding our business model. We're shifting one lane over from our core into the high-growth area of private markets data. Preqin brings over 4,000 clients, new segments for Aladdin, including law firms, consultants and tax advisers on and across over an additional 200,000 user desktops. Preqin creates several new exciting growth opportunities, and Tarek is going to talk about those in more detail later in the presentation. Aladdin's revenue is not only growing, but like many enterprise technology businesses, it's also long term and durable.

Our technology revenue is 98% recurring contracted over multiyear periods. We've built long-term client relationships by focusing on client satisfaction and delivery with client retention averaging 97% over the last 3 years.

The recipe for serving our clients is actually quite simple. First, we focus on innovation, continually investing in the technology to anticipate the needs of our users. Of the roughly 7,500 BlackRock employees who support Aladdin, nearly 5,000 of them are technologists, data professionals and engineers.

Second, we're maniacal about execution. We've never thought of what we do with simply implementing a new technology at our clients. Instead, we're partnering with them, helping them on their transformation journey to achieve new heights and new levels of scale. This is both as fun and as hard as it sounds, but we've built a world-class capability to manage these large-scale tech transformations. To us, it's really important that you start the process to transform, but it's even more important that you successfully finish.

And lastly, we've invested in building a community, by offering Aladdin as a service, true SaaS across so many segments, geographies and users, including BlackRock, it allows us to bring people together to tap into their collective intelligence, all of the feedback, all of the ideas so we can create a shared view of where Aladdin needs to go. This allows us to make Aladdin better, innovate faster and create deeper partnerships with our clients.

These guiding principles continue to serve us well. In fact, if you look at the nearly 5,000 global software businesses today, and then you filter for those with over $1.5 billion of annual revenue, growing at 10% or greater. Aladdin ranks in the top 1.5%.

So from this strong position of trust with our clients, we see even more opportunity for growth. The macro trends impacting our industry are a tailwind for Aladdin. Individually, each of these is a fast-moving river. But collectively, they're a tidal wave of change, change that is prompting each and every one of the clients that we speak to, to ask a very simple question, is the operating model and the tech stack that I'm using today going to support my future growth? Yes, everybody wants to increase their portfolio allocations to private markets. But in order to do so, they need access to better data, more transparency and industry standard workflows.

Wealth managers want to offer their clients even more personalized portfolios that go beyond the traditional 60-40 with the collection of stocks, bonds, model portfolios, ETFs, SMAs, insurance wrappers and now private markets, but they need new tools, better analytics and technology to build, manage and distribute this new customized portfolio at scale. And of course, the world is excited about AI and the potential that it brings to revolutionize the investment process.

But as firms work with these new technologies, LLMs and other generative models, they're quickly learning that their success will be less about the models that they choose, and more about their own ability to collect, curate and maintain what is a rapidly expanding set of data. With all of this complexity increasing across the board, new asset classes, new technologies, new ways of doing business, clients are looking for ways to scale and unlock efficiency, and we believe that technology is that unlock.

So against all of this change, we're going to capture the opportunity by leaning into Aladdin's growth and innovation flywheel. We're going to focus on three things: One, by expanding the suite of Aladdin's capabilities, helping our clients to do more -- sorry, to solve more. By opening the platform, attracting new partners from across the industry, allowing them to connect more. And finally, by continuing to drive more efficiencies, changing the way work is done, including by leveraging AI, allowing our clients to do more.

When it comes to expanding the suite of capabilities, our road map has actually never been more robust. The more we do, the more there is to do. The next chapter of the whole portfolio will be all about how we bring it together. For more capabilities that integrate public and private, including eFront and now Preqin to building new tools to support wealth management's transition from advisory to discretionary, to completing the build-out of Aladdin's native accounting capabilities, to pioneering innovations across digital assets and tokenization, to enabling new ways of managing data in an AI-first world, including continuing to open Aladdin for more integrations and interoperability.

We've never been busier, but also more excited about all of the ways that we're expanding Aladdin's footprint and ultimately, its value proposition for our clients. This concept of interoperability is actually an important part of the strategy. Clients -- they want the best of both worlds. They want to benefit from Aladdin's many capabilities, but they also want choice. They want Aladdin to make it easier for them to integrate with the preferred partners that they want to work with. So by opening Aladdin, having a world-class suite of APIs and connection points for third parties, we continue to build out Aladdin as a platform.

I mentioned the thousands of BlackRock engineers that we have working on Aladdin. But if you look today, there's actually many more non-BlackRock engineers who are working on top of and alongside Aladdin. Clients integrate their proprietary tools with Aladdin's data and underlying technology services, truly making Aladdin a perfect fit within their organization and an extension of their technology.

We've expanded our partner integrations with third-party providers, supporting every step of the investment process from client onboarding, account setup to trading with over 15 broker-dealers, market makers and liquidity providers to custody and settlement working directly with the leading asset servicers as well as a collaboration with various technology partners, including Microsoft, Snowflake, NVIDIA and ServiceNow. We want to make it easy for clients to use Aladdin as the common language to make their operations smoother and more efficient from front to middle to back.

Okay. Before I hand it over to Tarek, let me spend a minute on what we're doing with AI. It's worth noting, as you've heard, BlackRock is not new to AI. But with the explosion of possibility provided and unlocked through generative AI, we're building a whole suite of new capabilities across a variety of areas. We're looking to embed AI into every aspect of Aladdin, which allows us to really reimagine the way portfolios are being managed today, but also how our users will spend their time.

Today, if you look across BlackRock, we're starting to think about generative and implement generative AI agents working alongside portfolio managers, as Rob mentioned, helping with investment research and portfolio commentary, streamlining and collapsing operational tasks such as investment compliance rule coding and custody reconciliation, supporting our engineers as they write the next million lines of Aladdin's code, allowing them to work more efficiently, helping our relationship managers with every aspect of managing the client relationship from the most basic frontline service ticket, to a nudge of a potential sales opportunity to a rep out in the field, to authoring the first draft of a global account plan that brings together this One BlackRock best of our capabilities. The potential for AI is becoming increasingly clear. And with that, our level of enthusiasm, investment and commitment is growing accordingly.

Let me now hand it over to Tarek, who is going to bring all of this to life with a series of examples.

Thank you, Sudhir, and hello, everyone. I am Tarek Chouman, the Global Head of the Aladdin Client business. You've heard from Sudhir today about our multiple growth areas. But we are also seeing significant opportunities to expand. Our journey in the public market started with building tech to answer a foundational client question, what do I own today? Over time, that evolved into a more forward-looking question, which is now that I know what I own today, how can I decide what to own tomorrow? This shift has shaped how we think about clients' needs for transparency, insight and support in decision-making across the platform.

We then saw our client portfolios changing and increasingly include private market assets. From there, we expanded our capabilities into technology that supports these assets. Initially, we accomplished this via our acquisition of eFront, and we continue to build upon the offering.

Now with the acquisition of Preqin, we are further expanding our total addressable market into an entirely new segment, which is private markets data. The TAM for data includes opportunities to expand through workflows as well as through data distribution partnerships.

Overall, the core factors influencing and driving our growth are largely tied to what you have just heard from Sudhir, whole portfolio, data, opening our platform, accounting and wealth are all key to our success. Today, we have captured roughly 10% of the $20 billion plus of our addressable market. Our ability to add to our platform solutions is fundamental to expanding our TAM. This allows us to solve more and more client needs.

As you can see, we started our private markets journey with the acquisition of eFront. This enabled us to deliver a technology solution that services private investments. We then integrated it into our public markets technology to build a blended investment book of record. This established a unified way of managing what we call the whole portfolio.

Next, we realized that clients need better access to trusted data. With our acquisition of Preqin, we added private market data, strengthening our pre-investment capabilities. Further, we also needed to enhance our platform with specialized asset classes with GIP and soon to be HPS as part of BlackRock, we are enhancing Aladdin to support more nuanced asset types like infrastructure as well as private debt.

Throughout every step, we have been in deep conversations with our clients to not only understand their needs, but to anticipate them. They are helping us to improve and in turn, they are doing more with us as a result. Across the technology landscape, most providers focus on individual point solutions. Aladdin's strategy differentiates itself by integrating workflow and data to deliver more seamless client experience.

Let me show you how we are growing our business and expanding our footprint. First, and as I just mentioned, as more clients joined Aladdin, the entire client community benefits from the asset class nuances we are building. Our whole portfolio offering continues to expand to cover more and more asset classes with more and more sophisticated analytics that are fundamental for all investment activities.

Second, with data at our foundation, we can provide new clients with a wide range of possibilities for how they choose to interact with Aladdin. Our API-driven workflows allow our clients to connect to Aladdin in a flexible way that works for their operating model. Third, we can configure the platform in ways that optimize for many different client needs. As Sudhir just mentioned, we have a wide variety of client segments. Within these segments, there are many flavors. Openness, flexibility and connectivity of our platform are key to our ability to integrate into the investment life cycle.

Finally, we are entering into new geographies. This includes new countries in the Middle East, to new countries in APAC, South Korea, Taiwan, Philippines, et cetera. As we expand into those new regions, we are operating locally with client nuance and regional complexity integrated into our approach. To bring this to life, I'm going to take you through a case study that touches on all four of these points with the insurance client segment.

In the grand scheme of all client types, that Aladdin services, you might think that insurance is a dormant or slowly moving market segment, not at all. I would like to show you how within this segment, Aladdin needs to adapt and integrate differently to serve evolving insurance client needs.

Let me share with you some trends that are impacting the insurance industry. Unsurprisingly, we are seeing a rise in allocations to private markets within insurers portfolios. We are also seeing the emergence of private equity-backed insurers, which is a new operating model shift that has technology implications. What used to be distinct lines between insurance and asset management is becoming more and more blurred over time.

To keep up with growing end investor demand, we are seeing insurers develop new and innovative reinsurance investment vehicles, which provides a new set of complexities for technology. All of this exists in the macro landscape of evolving regulatory framework that vary regionally despite these insurers often operating on a global scale.

So in light of these trends, we are seeing insurance clients fall into three different client profiles. The first one is what we call the whole business outsourcing. These clients are looking for a mega partner. They are often global organizations that have multi-asset strategies. In some cases, BlackRock is the asset manager, Aladdin serves as the technology backbone and operations have been outsourced to Aladdin, including accounting.

Then we have another profile of insurance clients that are focused on business expansion and tech transformation. These clients often come to us to partner in building solutions as they look to expand and grow rapidly. We have enhanced Aladdin over time with insurance-specific capabilities like SAA, strategic asset allocation; RBC, risk-based capital to help scale for these clients' bespoke needs.

And lastly, the third profile ties into the trend of private equity entering the insurance domain, which is increasingly reshaping the industry as PE firms continue to enter this space through the acquisition of insurers, we observed the rise of public debt as well private [ debt. ] This creates opportunities for Aladdin to play a role as the technology platform to manage their whole portfolio.

As you can see, we have built end-to-end solutions for our insurance clients by responding to their distinct needs, industry trends and evolving challenges. These capabilities, in turn, benefit the whole entire community today from the front office to the back office, including both standardized and customizable workflows plus accounting, plus data, and this is the combination that makes Aladdin, the solution of choice for the insurance segment.

I will leave you with these four things. Number one, we have a resilient technology business with strong recurring revenue. Number two, we have continued the trend of both growing within and expanding our addressable market, all under the overarching purpose of solving more and more client needs. Number three, Aladdin has never been more well positioned to combine both public and private markets across data, across workflows to provide a unified experience for all clients. And four, this is all underpinned by our commitment to achieve low to mid-teen ACV growth over the long term.

Thank you. And now I will pass it to Steve Cohen.

My musical intro. Okay. Thank you, Tarek. Good morning, everyone. I'm Stephen Cohen, I'm our Chief Product Officer, and I lead our Global iShares business. So you've heard throughout this morning how BlackRock's platform serving clients across the whole portfolio delivering scale through technology will power our business towards 2030. iShares is going to lead that charge.

The ETF industry is evolving, expanding into new asset classes, investment styles and regions. And at iShares, we are uniquely positioned to drive the next wave of growth and adoption. With over $4 trillion in assets and generating $6.7 billion in annual revenue, iShares as an all-weather platform built to deliver for clients in every single market environment. So together with Jessica Tan and Jane Sloan, U.S. and EMEA businesses, we're going to share why we're so energized about what's next and the three big levers that will unlock our next chapter, building new product categories, creating millions of new iShares users and expanding our global reach.

Now the world of investing is changing. It is shifting towards greater transparency, efficiency and choice. People increasingly demand the same convenience in investing that they experience in all other aspects of their lives. Some of these traditional silos are dissolving. Convergence of index and active, convergence of public and private, convergence across product wrappers. And as Rob said earlier on, scale is increasingly critical to all aspects of this business. The ability to leverage technology, to leverage AI that can power investment platforms, power innovation and ultimately drive great performance. ETFs are increasingly at the heart of all of these trends.

Now to put the ETF industry in some context, I'll draw a parallel to another industry transformation we've been through, which is e-commerce. So if you think back to 2010, you didn't expect to do your grocery shopping on your phone. But technology changed habits, and e-commerce went from 6% of U.S. retail sales to over 18% today. And it was powered by this relentless innovation touching every product category.

Today, ETFs are 6% of global capital markets. We are on our tipping point. And we believe the ETF industry will double -- nearly double from $15 trillion to $27 trillion in the next 5 years, and that's before accounting for any sort of market beta. But it's not just about more ETFs, it's about a fundamental shift in how the world invests. What's driving this? Two things.

One, indexing is still early. Penetration remains low in regions like Europe, asset classes like fixed income, and we're not just indexing more. We're continually rethinking what index can be for markets as they change. So if you go back to 2000, the entire U.S. stock market was worth $15 trillion. Today, the top 7 companies are worth around that much. So investors are going to always need new tools to navigate this ever-changing landscape that we live in.

And two, ETFs have moved beyond indexing. Newer segments are just at the beginning of their journey. These new use cases for the ETF wrapper have emerged like active ETFs and digital assets, which we're going to talk about. And it is now that adoption is really accelerating, driven by new technology, driven by evolving regulation.

This is a very special year. It's -- there's a second 25th anniversary, and that is the 25th anniversary of the iShares brand. In 2000, with just 40 ETFs, iShares set out on a very bold mission to revolutionize investing, and over those 25 years, we have done just that. iShares has led the way in expanding choice, access for investors around the world. We set the standards, we shaped the industry, and we continuously evolve our offering. We brought U.S. investors access to international markets. We introduced ETFs to Europe, and we launched the world's first bond ETF. And today, iShares serves clients in over 25 countries, offering the broadest range of ETFs in the market, more than 1,600 in total. And that includes over 400 iShares, each with over $1 billion in assets, our billionaire ETFs as we call them, more than triple our next closest competitor.

Our reach across asset classes, across regions, across client segments is what sets the iShares platform apart. Core ETFs remain a foundational part of our growth story, but a new wave of opportunity and revenue is coming from higher growth, more premium segments, fixed income, active strategies, digital assets. In fact, last year, active and digital assets accounted for almost half of our net new base fees. Together, this positions iShares as a broader, more diversified platform than ever before, one that's built to deliver 6% plus organic growth through the cycle.

Now I know pricing dynamics are at top of mind for many of you. And as you've heard from Martin and Caroline throughout the year, we have a clear overall pricing approach where we consider investing up to 1.5% to 2.5% of iShares revenues annually into growth opportunities. In fact, as our platform has expanded into some of these higher-value proposition categories where we are uniquely positioned, our actual investment in pricing has been meaningfully below that range in recent years, and that includes the current year during which we have made a few targeted investments.

The power of BlackRock's platform is the bedrock of iShares leadership. It's becoming even more critical as we expand the ETF industry into these new areas. Wrapping new innovative strategies in iShares while maintaining our gold quality standard is absolutely essential, and it requires the best technology, and that is our ETF engine. It is the secret sauce to delivering performance, delivering innovation and maintaining product integrity at scale.

For clients, it means better liquidity, closer tracking, tighter spreads, ultimately, a lower total cost of ownership. In Europe and the U.S., iShares ETFs trade with bid-offer spreads nearly 2x tighter than the industry average. And with the most liquid options offering in the market, iShares is the go-to ETF provider for banks, for hedge funds and other large-scale investors.

Let's look to 2030. The next era of iShares is going to be powered by three strategic levers. The first will be building new categories. We have done this repeatedly throughout iShares' history, bringing differentiated capabilities to investors in a wrapper and a brand that they trust. We're continuing to do this in indexing. And now we're doing it in some of these newer investing areas as you just heard, like digital assets. Jane is going to talk about how we're building the ETF market very much in its early stages in Europe.

And then there's beyond indexing, where we're combining our leading active investment teams with the power and the brand of iShares. And you're going to hear more from Jessica and later from Rich, Rick and Raffaele about the role that active ETFs play, not just empowering iShares, but also empowering our liquid active platform's future. And then there's the recent acquisition of Preqin, which we're super excited about. It's going to bring even more ingredients into iShares.

The second lever is expanding client adoption across things like models, digital wealth and institutions. Demand for iShares from portfolio builders will continue to accelerate with model portfolio is going global as wealth distribution evolves catalyzed by this business model change and this regulatory change.

The shift to digital in wealth management is a huge change and it's going to see tens of millions of people become first-time investors around the world through iShares, including widespread adoption of iShares ETF savings plans. And institutions will continue to look for more efficient ways, more efficient tools to navigate these changing markets, especially in areas like fixed income, where already 9 out of 10 of the largest insurers and asset managers use iShares fixed income ETFs. And we see regulatory unlocks, unlocking even more and expanding the market even more over time.

And then there is iShares to the world, bringing our two global platforms in the U.S. and Europe to clients everywhere, Asia, Latin America, the Middle East, exporting some of our best franchises around the world and expanding our local ETF ranges. So let's bring this strategy to life. And before I hand over to Jess and Jane to talk a bit more about the opportunities in U.S. and Europe, I thought I'd start with one of the most powerful global growth engines in our business today, fixed income.

IShares launched the first fixed income ETF back in 2002. What began as a bold experiment, is now a $2.7 trillion segment with iShares managing 40% of the market. Fixed income ETFs have gone from product that we had to defend from skeptics over and over again. So having proven their worth over and over again with clients through multiple periods of market loyalty over the last few years.

Just in April, record iShares trading volumes during that historic bond market moves once again proved the value of fixed income ETFs in helping investors manage risk and stay invested. But we haven't just built products. We've actually reshaped the underlying market itself. Through sustained investment in the ETF ecosystem, iShares has brought more price discovery, more transparency and greater connectivity to fixed income.

Today, fixed income ETFs are used by pretty much every type of investor, and adoption is accelerating. 20% organic growth last year, among the fastest of any asset class or any vehicle. And yet, they still represent just 2% of the underlying $140 trillion global bond market. That's the opportunity ahead of us. So we are ETF-ing more and more of that bond market, whether it's through indexing, whether it's through active strategies, from iBonds to CLOs, to cash management to outcome-oriented exposures, we're unlocking new use cases, we're reaching new investors.

And the industry is on track to reach the $6 trillion target that we set by 2030. And one of the biggest growth drivers towards that target will be the shift from individual bonds to ETFs, and that's where iBonds, whether it's an attractive alternative to cash, whether it's constructing bond ladders or gaining targeted yield curve, exposure for liability matching, clients of all types are rapidly adopting iBonds, and we believe that iBonds will become a core building block in the future of fixed income portfolios. There are $119 trillion held in individual bonds today. There are trillions of dollars of savings in cash. The potential is absolutely enormous, and iShares is leading away.

So let's now turn to the U.S. and Jessica.

Thanks, Steve. Hi, everyone. My name is Jessica Tan, and I oversee our U.S. iShares business. As Steve said, the ETF industry is evolving fast and U.S. iShares is positioned to lead in that change. Today, I'll focus on how we're building new categories and reaching new clients. As you've just heard, the ETF market has a lot of runway. Steve mentioned ETFs are 6% of the global capital markets. In the U.S., that number is 10%. If ETFs are to capital markets what e-commerce was to retail, then the U.S. ETF industry is just in the year 2019. So past the tipping point, but with plenty of growth ahead.

In 2024, the U.S. ETF industry saw a record year. In just the last 5 years, assets doubled to over $11 trillion, flows tripled to over $1 trillion and net new revenue quadrupled to nearly $2 billion. And we expect that acceleration to continue across both index and active strategies, with more of the revenue coming from newer, fast-growing segments.

IShares is at the forefront of the changing U.S. industry. We offer clients the most comprehensive suite across the board from core portfolio offerings to precise exposures like international or commodities to newer segments like active ETFs and digital assets. Our scale and brand allow us to be a leader across all of these segments, and our capital markets expertise allow us to innovate alongside clients to best meet their investment needs and deliver the quality that they have come to expect from iShares.

U.S. iShares assets surpassed $3 trillion in 2024. And just a quick reminder of how we got here. So our initial climb to $1 trillion took 17 years, and this is largely fueled by traditional index strategies, spanning core equities and fixed income. Just 4 years later, we doubled that driven by investors seeking core plus exposures. Last year, we surpassed $3 trillion powered by our expansion to new strategies, including more granular fixed income exposure, digital assets and active. But we don't measure ourselves solely by asset growth.

As you can see on the right-hand side, over the last 5 years, our NNBF nearly tripled to over $250 million in 2024. That is 40% more than the next competitor. And very notably, that growth has been powered by all major product segments. Our diversified platform now has over 190 U.S. iShares billionaire funds, spanning every major category. This gives our clients better solutions through all market cycles, and it makes iShares a true all-weather platform.

Now our ambition is to continue to build on this leadership and deliver 5% plus organic revenue growth through the cycle with upside in favorable markets. Now Steve talked about how we're unlocking growth by building new products and product categories and establishing new iShares clients. He spoke about two of our key areas, core fixed income -- I'm sorry, core equity and fixed income. Now all spotlight two of our newer categories, digital assets and active ETFs, which we expect to drive outsized growth through 2030.

Now when it comes to building new product categories, there's no better example than the launch of our spot Bitcoin ETP, IBIT. Despite several competitors entering the market at once, IBIT was the early winner due to the strength of the iShares brand and platform. As Rob mentioned earlier today, IBIT is the #1 spot Bitcoin ETP in the market with nearly $70 billion in AUM and 4x the flows at the next largest fund. It hit those levels in record time. But the bigger story of IBIT's nearly 1 million investors, 75% were new to iShares. And of those new investors, 27% or 185,000 investors now hold other iShares ETFs. That's not just category growth, that's platform expansion. We're not just attracting new investors to IBIT, we're also helping them discover the full iShares toolkit and opening the door to this emerging client segment.

IBIT is just one example where we're leading in the digital asset space. Whether it's Ethereum ETPs or tokenized treasury funds, we're innovating high-quality, trusted solutions. Now while the initial expansion of this category was driven by individual investors, we see continued demand as more institutional investors turn to digital assets to diversify risk over the long term and build resilient portfolios.

Now turning to another example of a new build, active ETFs. Active ETFs have seen tremendous growth and adoption in the last 5 years. In 2019, active ETFs made up 2% of the market. Today, they make up 9%, and we don't anticipate this trend to slow down. As Martin mentioned earlier, we have aspirations for iShares active suite to become a $500 million business by 2030. Over the last 3 years, we've launched 40 active ETFs, expanding core portfolio categories as well as innovative strategies, including our first liquid alternatives ETF, money markets ETFs and a suite of outcome ETFs.

And we're delivering top performance. In fact, over 70% of our active ETFs have Morningstar Bronze, Silver or Gold ratings. Our differentiator is combining BlackRock's best active management IP with iShares quality and convenience with our distribution reach across both wealth and institutional clients. And I'll walk through two examples. Our equity factor rotation ETF, DYNF; and our flexible income ETF, BINC.

Now these tickers were 2 of the top 5 active ETFs by flows in 2024. DYNF, which has grown to $18 billion in assets up from even the $15 billion at quarter end, as you see on the slide, was the top active ETF by flows across the industry last year. And why are clients choosing DYNF? The IP run by our systematic team leverages over 1,000 investment signals and enables investors to dynamically capture unique alpha opportunities, not to mention it has delivered top decile performance.

Now we're using that same IP that powers DYNF to expand our active ETF suite, for example, for our thematic rotation ETF, THRO. And you'll hear more about our systematic suite later on from Raffaele Savi.

As Steve mentioned, we're also increasingly able to ETF more parts of the bond market. BINC at $9 billion in assets debuted 2 years ago. Now BINC built on decades of strong results from flagship BlackRock strategies and has delivered attractive levels of yield with less volatility than the core fixed income market. And because of this trust, we've seen early success from mono portfolio builders and wealth platforms onboarding BINC even ahead of generating a 3-year track record, and you'll hear more on those capabilities later from Rick Rieder.

Now even with these strategies, we are still in early innings. We've already brought both products to Europe, and we'll continue to bring the best-in-class portfolio managers to the global ETF market. Establishing new iShares clients is a major growth driver for our business globally and in the U.S. The shift in wealth management is accelerating from individual stock and fund selection to a portfolio-based approach. Specifically, the demand for models is growing, and this presents a critical opportunity to further scale iShares.

As you'll hear from Rick Kushel, U.S. model portfolios comprise $4 trillion today. but have a total market opportunity of over $11 trillion as large fast-growing advisers are increasingly outsourcing portfolio construction to inject scale into their business. The rapid growth of models is fueled by four big trends: More custom models, more tax-aware investing, the evolution of the 60-40 portfolio to now include outcomes and alternatives and the increase of hybrid mutual fund and ETF models. In fact, ETFs now comprise over half of U.S. model assets.

IShares ETFs continue to serve as building blocks for model constructors. Strategic partnerships such as with Envestnet, Schwab, LPL and other third-party providers are helping to deliver iShares as investment solutions to advisers and their clients.

The models used to all be about core low-cost index building blocks. And while core is still a key driver, we're also seeing increased adoption of custom models. Our diverse range provides model portfolio managers, the broadest choice. As you can see in the chart on the right, nearly half of iShares model flows in 2024 came from these growth areas. It's because of that breadth that in 2024, model-driven assets for iShares exceeded $600 billion in assets.

So in summary, the scale of our platform in the U.S. enables consistent 5% plus organic revenue growth through the cycle. Our diversified platform offers our clients the tools to build modern portfolios from core to precise exposures to next-gen solutions like active ETFs and digital assets. And we're growing our client base across model builders, institutions and first-time investors, bringing millions of new clients into the iShares ecosystem.

Now many of these trends are also starting to take hold in Europe, so I'm going to pass the mic over to Jane to speak about the exciting opportunity we have for iShares in that region.

Good morning, everyone. I'm Jane Sloan, and I lead our European iShares business. And I'm thrilled to be here with you today to share three key messages: One, the European ETF industry, it's at a pivotal moment. Two, iShares is far and away the leader in this market. And three, the best days for European iShares are still ahead.

So the European ETF industry, it's really a coming of age tale, assets have more than doubled in the last 5 years to over $2 trillion. It's a $5 billion revenue pool growing 9% annually. And what's really interesting is how Europe's growth is tracking U.S. The chart to the right has got Europe in yellow, the U.S. in red. It tells two stories. One, first at $2 trillion, Europe is at an inflection point. If it continues to track the U.S. path, hockey stick growth lies ahead.

Second, there is significant rule to grow. Take index penetration in wealth portfolios. That sits at just 20% in Europe, 20%; in the U.S., 50%. Yes, Europe is a much more fragmented market, but the same growth forces are at play, rising indexation in wealth portfolios, the shift from underperforming funds and the expanding adoption of ETFs in new use cases across all client segments.

We believe the industry is poised to accelerate, nearly doubling to $4 trillion. The question isn't if this market will expand, it's how fast. And iShares, we've been a driving force in Europe's ETF expansion, shaping the market, benefiting from lessons in our U.S. business. And today, iShares is #1 by a distance, with over 40% market share, we lead in nearly every product category, and serve a diverse client base across Europe, Asia Pacific, Latin America, the Middle East and Africa.

In February, actually on Valentines Day, European iShares crossed $1 trillion in AUM. The velocity of growth has been remarkable. It took 20 years to gather the first $500 billion and only 4 years to gather the second. And at the same time, we've extended our lead versus the rest of the market. Five years ago, we were $255 billion ahead of the next issuer. Today, that lead has nearly tripled to over $730 billion. And this leadership hasn't just been about scale, it's also translated to financial strength.

Over the same period, we've delivered base fee growth of over 9% per annum, generating almost 4x the NNBF of the next issuer. And as we look ahead, European iShares is poised to enter a new phase of expansion. By 2030, we expect assets to hit over $1.6 trillion. Winning will come down to driving client adoption and unlocking new distribution channels. And the big ETF growth story in Europe is the continued revolution in wealth. Today, wealth drives over 2/3 of our assets and will drive 70% of our flows to 2030.

Two structural trends will accelerate ETF adoption in this segment, both areas where iShares is uniquely positioned to capitalize. The first is the shift towards centralized portfolio propositions, roughly $5 trillion sits in fee-based centralized propositions today, and we expect a further $3 trillion of assets to shift over the next 5 years. Portfolio building behaviors favor ETFs and European iShares differentiates by providing the breadth, scale and quality needed by portfolio managers. We have over 160 billionaire funds, 2.5x more than the next issuer.

The second trend, accelerating ETF reduction is the rise of the self-directed investors across digital channels. It's a key growth driver for our business. In fact, digital is the fastest-growing wealth channel in Europe, growing over 15% per annum with tens of millions of first-time investors all across Europe, choosing ETFs as the simple, affordable way to invest.

iShares has been a first mover in the space, pioneering ETF savings plans and affordable set it and forget it offering that enables monthly contributions for retail clients. And for us, its annuity-like flow adding resilience to the market-driven parts of our book. iShares MSCI World, that's the darling ETF of savings plans. It's been the #1 NNB and NNBF gatherer over the last 5 years and is now over $100 billion in assets.

But it's not just a wealth story. We're unlocking new use cases and users across asset managers and asset owners. Today, 15 European central banks use iShares to manage strategic and tactical asset allocations, a testament to the quality of iShares and the trust placed in us. Pension funds are using short-duration ETFs to manage near-term liabilities. Asset managers are using our ETFs to manage tactical allocation with agility. The list of use cases continues to grow.

As you heard from Jess, innovation is our growth engine, and European iShares has a long-standing legacy of building new categories of investing, developing entire suites at scale, think fixed income, sustainable thematic ETFs. And our track record really does set us apart. Over the last 3 years, iShares product launches have generated double the NNBF of the next closest issuer.

At the same time, innovation velocity remains high. Nearly 20% of our overall NNBF last year came from products launched since 2023. Still, we're upping the pace of innovation. We launched twice as many products last year versus prior and of that twice as many were in premium fee categories. We estimate that 15% of our iShares base fee growth will come from entirely new categories such as active ETFs, digital assets or option-based ETFs, but in Europe, the majority of innovation-led growth will come from extending existing building blocks.

Steve talked about fixed income. In Europe, we lead this category with over 50% market share, offering the broadest and most granular set of exposures. Our ambition is to double our fixed income ETF AUM by expanding access to more parts of the bond market. iBonds are a prime example. Launched in 2023, we were first to market. iBonds is our fastest-growing suite ever in Europe, gathering over $8 billion in under 18 months. And today, we have nearly 90% of the fixed maturity ETF market in Europe.

Across equities, we're broadening our offering, building suites tailored to meet the needs of different clients. So for sophisticated index investors such as portfolio builders, we're launching precise slices of beta, offering more choice than any other issuer. Take U.S. equities, investors can now dial up or down concentration to the largest U.S. companies with our S&P 500 top 20, or our Equal Weight or our 3% Capped.

For the self-directed clients on digital platforms, we're delivering simple, broad market ETFs and also themes that resonate from AI to Bitcoin, both recent launches. And then for institutional clients who want differentiated performance, we're extending our swap platform with a best-in-class operating model, raising the bar on quality and efficiency.

Also, we're finding even more ways to be local, building products tailored to local requirements that enable broader adoption of ETFs. Examples range from ETFs eligible for tax-advantaged investment accounts for French retail clients to European defense ETFs for European portfolio builders.

And to power future growth, we're also building entirely new categories of investing, including active ETFs. Jess talked a lot about them in the U.S. In Europe, it's still early innings, but the category will grow. We're delivering more strategies in the active ETF wrapper and commercializing areas of BlackRock's strength with a focus on: One, systematic active building blocks for the core of portfolios, taking our top-performing systematic franchise mainstream; two, bringing our best fundamental strategies to more clients including a European version of BINC that Jess mentioned.

On European iShares momentum, it's stronger than ever with a diversified investor base across markets, an unmatched product platform and a faster than ever pace of innovation, we are positioned to lead this next chapter of growth. The best days for European iShares are still ahead.

Thanks, Jane. So bringing all of this together is all about how we take iShares to the world. So we're exporting and scaling some of the franchises, we just talked about it. We're taking -- we're creating truly global franchises. And we're doing it in whatever way works for the local markets, so whether it's bitcoin, factor rotation, flexible fixed income, unconstrained equities.

Jane highlighted how we are thinking about taking the scale and the power of our UCITS platforms, developing custom solutions for local markets. She gave one example. Another example is peso hedge strategies for Mexican pension reform. And we're continuing to expand our local ETF ranges, which we have in Australia, Japan, Canada and Latin America, where we can give clients even greater access both to domestic and global markets. In fact, this year, we'll be launching a new iShares platform in Taiwan, which is one of the fastest-growing ETF markets in the world.

We look back over the last 25 years, iShares has powered the growth of the ETF industry. And as you heard, we're just getting started. So just as e-commerce redefine how people access goods and services, ETFs are redefining how the world will access markets, bringing transparency, speed and simplicity to investing. And we look out to 2030, we believe ETFs will be ubiquitous and indispensable across pretty much every asset class and every investment style.

And as we have before, iShares will lead this next era. With the unmatched scale we have with the BlackRock platform, the global reach and the power of innovation, we will empower tens of millions of new investors around the world to build better portfolios with iShares.

So thank you, and now we invite you to take a short break.

[Break]

Please welcome back to the stage, Caroline Rodda.

All right. Well, thanks, everyone. We'll have another break around 11:15. At this point, I'm going to turn it over to Rich.

Good morning. Great to be with you all this morning. I'm Rich Kushel, I'm the Head of the Portfolio Management Group. Today, I'll be speaking about our liquid active platform, the growing importance of active management in today's environment and how BlackRock is positioned to win in active.

We're meeting the changing needs of our clients by offering a spectrum of solutions across asset classes and geographies in both public and private markets. And since our founding as a fixed income shop, we have always been committed to bringing our active expertise to our clients. Over the years, market cycles have passed, client needs have evolved, and our offerings have diversified but we consistently have grown our active footprint. And today, BlackRock's liquid active assets total $3.6 trillion. This base is largely made up of our fixed income platform with AUM over $1.1 trillion and our multi-asset business at about $1 trillion.

Over the last 12 months, through the first quarter, we have achieved $215 billion in net new business, resulting in 7% organic growth over the period. That's in an industry that's seen flat or negative asset growth. We brought in $120 million of net new base fees continuing our track record of organic growth and year-over-year revenue growth against base and performance fees was 15%, reflecting our growth, investment performance and the trust that clients have placed in us.

Beneath these top line figures, I want to highlight a few of our thriving businesses. As my colleague, Raff Savi, will discuss in greater detail, our systematic strategies across equities and fixed income grew base fees organically at double-digit growth rates last year and have further accelerated this year driven by outstanding performance across the platform.

And then in fixed income, as Rick Rieder will talk about, we continue to see investor appetite for things such as our unconstrained solutions, such as our $40 billion flagship Strategic Income Opportunities fund or more recently launched iShares flexible income active ETF, known as BINC, which was referred to earlier, which has grown to $9 billion in AUM in just 2 years.

Our active muni suite has delivered strong long-term performance with multiple funds in the top decile for 5-year performance, while we've innovated our wrapper strategy there by packaging muni funds into active ETFs. And as we'll talk about, our insurance AUM has nearly doubled over the last 5 years, fueled by continued demand for outsourced solutions.

Let me put the growth in our active platform in perspective for a second. Over the last 5 years, BlackRock has averaged over 6% annual organic AUM growth in our liquid active businesses. The broader industry average is sub-2%. And while our active market share has increased each year since 2020, we have significant runway to grow beyond our current 4% level and what remains a highly fragmented industry.

Our clients continue to trust us to manage their active portfolios because we've delivered strong long-term performance. Through March, 78% of our active assets are above benchmark or peer medians for the last 5 years, and strong investment performance in addition to supporting growth contributes directly to the firm's earning power. 2024 was among our top years for performance fees at over $900 million, excluding our private markets business.

And importantly, our performance fee generation in liquid active is highly diversified with over 90 portfolios, each generating more than $1 million in performance fees in 2024. In total, we generated performance fees on over $150 billion of AUM in 2024, up more than 10% from 2020 and that base continues to climb this year with strategic additions to our product lineup.

Now before I dive deeper into our capabilities, I want to touch on why active is so crucial today. We believe that structural factors play to active management strengths and give us an opportunity to drive revenue growth. The 2010s, as you know, were defined by a regime of low rates and asset price inflation that enabled investors to enjoy the overall beta of the market to achieve their investment objectives.

Over the last few years, of course, we've seen a shift towards a high volatility, high dispersion regime that requires active management to protect capital and alpha generation to deliver target returns. Uncertainty has become the watchword of 2025. But we see this trend lasting longer. Geopolitical variability, technological change and the energy transition will continue to drive volatility uncertainty, but this creates opportunities for active management.

And against this backdrop, key trends like index concentration, structural inflation and the blurring of public and private markets are making markets more complex to navigate, causing investors to look for professional help. And the upshot of these trends is greater dispersion across managers. The best ones are rising to the challenges of today's market and outperforming their peers. And these are the strategies that are winning new flows.

And increasingly, alpha generation is a scale game. This is an important change, where a size used to be thought of as the enemy of alpha, it's clearly become an advantage in our ability to generate differentiated insights, attract and retain talent, deliver consistent risk management and produce implementation alpha through trading and liquidity advantages. Data and technology have been key accelerants across each of these dimensions and AI will only turbocharge these scale biased trends further.

Look, in this environment, both the demand for and the availability of diverse ways to access active investing are evolving. The existing scaled liquid active platforms with large revenue bases and asset bases persist. And we see this and enjoy this across our businesses with fundamental equity, with fixed income, multi-asset, systematic hedge funds and cash.

But clients are also increasingly turning to newer approaches, outsourcing, models, active ETFs and the blending of public and private markets. This evolution is spanning new, fast-growing market segments. The outsourced CIO opportunity is growing as asset owners and wealth managers are increasingly looking to focus on their core competencies and outsource more of their investment processes. We expect OCIO AUM to grow to $5.8 trillion by 2028.

The models portfolio business has also become a true standout for BlackRock. Financial advisers want to spend more time building their book and engaging with clients and less time constructing portfolios. This is where they turn to BlackRock. The client demand is strong. We estimate the total opportunity in models to be $11.5 trillion, driven by accelerating demand from wealth clients globally. And active ETFs are increasingly becoming an important part of investor toolkits with the industry growing over 40% organically in the last 3 years, as you heard.

Investors are choosing to access actively-managed strategies through ETFs due to the wrappers benefits, including tax efficiency, transparency and very importantly, their compatibility with model portfolios.

Now through the outsourcing platform and our multi-asset strategies and solutions business, we're well positioned to address the complex investment challenges for our OCIO clients and that's driving strong growth globally. In the past 2 years, for example, our OCIO business landed a $35 billion mandate from the Teamsters Central State pension funds here in the U.S., a $30 billion mandate from Shell pensions in the Netherlands and a $10 billion mandate from the Royal Mail pension plan in the U.K. Our insurance business also has very strong momentum.

And combined in the last 5 years, we have doubled the outsourcing assets we manage across both institutional and wealth clients to over $840 billion. These mandates prove very sticky. And once we begin managing them, we've consistently found ways to broaden our relationship and the services we provide, driving incremental revenue growth and value for clients.

Now through models, we've expanded the way clients access our platform and insights moving from products to portfolios. And that expansion means both broadening the range of models and the vehicle used, all the while differentiating ourselves through great performance and unmatched client experience and a flexible infrastructure platform powered by Aladdin. And while a decade ago, our model portfolio business was exclusively comprised of index iShares, today, the vehicle mix has evolved to include active ETFs, mutual funds and liquid alternatives. And this has boosted our average models fee from 12 basis points in 2020 to 19 basis points today. And we're now beginning to incorporate separately managed accounts and private markets, opening opportunities for growth and capturing more wallet and revenue share for BlackRock.

We're building an innovative custom models business to meet the needs of the largest and fastest-growing RIAs. We deliver mass customization at scale, so investors can leverage BlackRock's asset allocation and tech stack to facilitate their own investment processes. Since launching in 2020, our custom models business has grown to $55 billion in AUM and more than 150 different client partnerships. The business manages about 4,000 models for clients, and our platform can scale with minimal increase to overhead. This is industry-leading tech-enabled automation.

And we're transforming both the business that our clients are operating, driving real enterprise value for financial advisers while at the same time, increasing the value to the end investor through the use of a broader set of vehicles and investment IP that drives better returns. This kind of innovation is how we win in whole portfolio solutions. And I want to emphasize that our success and scale do not mean that there isn't a lot of room to run here. We see large growth opportunities in front of us in areas like integrating active products into -- and private assets into things like our target date fund regime.

Now as you already heard from my colleague, Jess, on active ETFs, and you'll hear more about them from both Raff and Rick. Active ETFs are going to be really important. So I just want to note very briefly that our active ETF platform has quadrupled in the last 5 years with 2024 driving most of that growth. And this is an area that we're really incredibly excited about.

So let me just say that innovation has been fundamental to BlackRock's success. We continually reinvent ourselves to capitalize on opportunities in markets and deliver for our clients, and we're positioned to win in active because of our long track record of performance with over $100 billion of alpha generated for our clients since 2012, and our ability to deliver traditional active strategies in new and innovative ways. And that's why I'm confident that active will always be at the heart of the BlackRock success story.

So I'm very pleased now to turn it over to Raff Savi, who will speak to our systematic platform. And this is a prime example of how we're innovating to drive performance for clients and revenue growth for our shareholders. Thank you very much.

Thank you. Thank you, Rich. I'm Raffaele Savi, I run systematic investing at BlackRock and actually, it's quite great to be here with all of you this morning and talk a little bit about the business. I think it's the first time we present the business in some details, and I'm excited to have the honor to do so. Before we talk about that and why we think this business can play an important role in achieving our collective 2030 ambition, I want to talk about a broader story. And the broader story I want to talk about this morning is how investing is changing.

And we live in a world -- many of us have been doing this for quite a while. I've been reading a lot of research notes of colleagues here for more than 20 years. And the way we've been talking about investing so far, for example, this morning, I heard Sudhir and Goldie talk about data, we didn't really use to talk about data 20 or 25 years ago. It was really more about information was the concept, investors were sort of trying to find information about assets.

And if you think about how things have changed there, we went in 20 years from a world of information scarcity, it was very hard to find high-quality insight into companies, markets, products, to a world of information abundance, some might say, overload. There's so much that we can know about everything, there's sort of millions of documents, trillions of search queries, millions and billions of videos and speech and posts and live data feeds in every geography, in every language available.

Now the way that the industry is talking about this is tokens, and there's tens of trillions of tokens about the world that keep streaming in every day. When we think about research, what do we do with this information as investors, we're trying to put it together, collect dots, connect dots sometimes in ways that are new and different and insightful.

Now, I was reading the founder of one of the preeminent AI labs in the world today that was talking about having a country of geniuses in a data center, I don't know if any of you ran across this quote, right? Now I'm not making this -- a claim this big, but it is true that today, you can do research deep and broad helped by AI agents, and Goldie was showing some of the work we've done at BlackRock with Asimov, but the reality of sort of research in the age of large language models is very different from the way research was even 5 years ago. Now you have the ability to have a team of virtual analysts that are working alongside your experts in trying to understand where there could be an edge that can be played in the market.

And then something that we don't talk about often, I think, in this new AI revolution, it's what's happening on the portfolio construction and risk management side. I think that this is as profound even if it's a little bit less visible than what is happening at the research and information side. And it is powered by speed. It's powered by this concept that sort of things that used to take hours, real-life simulation, changing parameters, trying to understand how you would crunch all these ideas you had in a portfolio that had the chance to deliver on a particular investment objective. Now this is a real-time millions of simulations a day happening in the background, developing situational awareness that is making sure that the portfolio reflects the intentions of the portfolio manager.

So the world has changed tremendously. And I think if you run a systematic investment team, you are at the tip of the spear, we really feel this change happening fast. But I think that there's something broader. I think that's something that is sort of happening across asset classes and invest in. And a lot of the forward-looking statement I will make in -- are based in this belief that the world of investing is really being significantly impacted by this technological innovation.

There are some numbers at the bottom of this slide on how the business has been doing, and I want to go into some further details here. But if you want to take something out of this first slide is that sort of what the concept that many of us have mentioned this morning of technology and scale not only as drivers of business success, but as drivers of alpha in active, that trend is really important and accelerating.

Now the business of systematic investing at BlackRock, it's about $320 billion in assets, 2/3 are in equities. And then we have about $20 billion in hedge funds and 1/3 of the assets are fixed income and multi-assets. Last year, in 2024, we came in a little shy of $1 billion in revenues. And as Rich was mentioning, the business has enjoyed substantial growth in recent times. So the last -- the 12-month trailing to the end of Q1 this year, $134 million of NNBF and about $25 billion in a net new business.

And I think that what this says is that in an industry that sometimes has sort of been questioning whether you can grow in liquid active. I think that what this is saying is that if you deliver consistent performance and if you're able to package it in a way that is interesting and exciting and helpful to the end investor, you can grow a lot in this industry.

One thing that I think is also interesting about the way that we've been driving the business forward is how diversified revenue growth has been. And this goes back to what I was just saying that maybe you have good performance, but the vehicle isn't the vehicle that investors are using today. For example, the way that you have to deliver performance and alpha to a model manager is very different from a traditional financial adviser. The way that you work with a sovereign wealth fund these days is very different from the way that you work with sort of a corporate pension fund. And the platform of BlackRock is incredible in sort of understanding how to connect investment ideas and portfolios to client objectives.

So the big driver of growth has not been in the last 5 years, products that we necessarily had 5 years ago. A lot of product innovation, the combination of product innovation, a strong performance powered by scale has been where a lot of the growth has happened. So a few of us already mentioned active ETFs. It's an incredibly exciting category, opened the door to a lot of new end use and investor bases and proud to have the DYNF, the factor rotation ETF has been sort of leading industry flows in 2024. And we are doing a lot of work with Jess and Jane and Steve and a lot of other colleagues in understanding how to deliver even more of our investment platform through this channel.

The second area that has been really interesting, and I think it does tie into Rich's comments on market environment, hedge funds in the 2010s has not been the fastest growth category. It is still where you display your purest ability to generate alpha, the strength of your investment process. But in terms of sort of investor allocation, hasn't been as strong as we've seen it in the 2000s. We've seen in the last 18 months a renewed interest, probably due to higher rates, probably due to increased volatility and dispersion, and this has been a very strong area of growth.

Another thing that I'd like to highlight is this concept of diversification of the platform. One of the challenges of growing active businesses is that sometimes you grow with one product. And if something happens to that product, then a lot of your growth objective sort of get put on the shelf. We have 25 products in BlackRock systematic that are at scale, they generate more than $10 million in revenues. And the growth has been nicely diversified across hedge fund, long-only; active ETFs; mutual funds; institutional wealth; and importantly, product that are pure alpha delivery; products that are exposure products; and products that are outcome products. I think that, that is key in having consistent growth going forward.

The last part I want to sort of quickly spend a minute on is, if you're thinking about all this movement of systematic investing, big data, machine learning and AI, it really started in equities. And it really started in short-term forecast in equities. That's where you have a lot of examples, that's where you have a lot of data. That's where sort of it's natural to become an AI-ML investor in those asset classes.

What I think is really interesting and when I'm looking at the horizon of our strategy to 2030, I think we're already seeing that this style of thinking is expanding to other asset classes. We have incredible success in systematic credit. We had very interesting early launches in alongside our private equity colleagues in growth equity space. I think this concept of sort of systematic investing going from institutional equities, mostly short term to institutional and wealth, to equities and fixed income, to public and private, it's a very powerful trend that we'll see play out over the next 5 years.

Finally, there's no better place to run the business I run than BlackRock. We've been -- you heard it from all of us, we can't go through a presentation without talking about our belief in the transformational power of technology and our obsession with delivering scale advantages to our end clients and systematic, it's a business of technology, and it's a business of scale. And here, there's some ideas on what we've been doing over the last few years. Some of them are obvious. Of course, we are pretty uniquely positioned in terms of leveraging the Aladdin platform and our data acquisition capabilities, I think we have an incredible ability to deliver advantages to client on our training platform. And Rich was mentioning some of them and Goldie was going through them as well.

I think one thing that this new generation of AI models is creating is creating proximity between different types of investors. The conversational nature of generative AI is making much easier to collaborate across different asset classes and investment styles.

If you think about it, we all want to collaborate with our colleagues, but we're somewhat limited. The bandwidth is human interaction. If you're collaborating through phone calls and through meetings, there's only so many people you can talk with while running your business, everybody is busy. But now generative AI and the conversational nature of these tools allow us to capture insights across the broad BlackRock investment platform and share and leverage each other's strength.

And the point of all this is sort of -- that's on the investor side, on how we make it side, right? As I was saying earlier, I think that magic happens when you innovate on how you generate alpha but also how you deliver alpha. And I think that in terms of what clients are looking for, it's an ever-evolving set of needs. And you can have a wonderful product, but if you cannot put it in that client portfolio at the moment, the way they want to consume it, you're not going to be able to grow. And this trend of sort of customization at scale, this trend of sort of targeted outcomes that we see in the end investor choice is something that, again, a systematic investment approach is very well positioned to deliver.

So systematic has been a growth engine for BlackRock in recent times. And we have confidence that this could be one of the -- this can be one of the growth engines for our strategy in liquid active and beyond to fire our collective ambitions in 2030.

Thank you all very much. Rick, up to you.

Thanks, Raff. Good morning, everybody. So I'm going to talk about leading the future of fixed income. So I did the math today, I'm actually approaching my fourth decade in fixed income. I had to do that math a couple of times, how hard to finding that was. But I have to say I've been doing almost 4 decades. This is the most exciting time. I want to talk about the evolution of fixed income and how much it's changing, and how different today is and where we're going.

First thing, let's start with the facts, and we'll talk about BlackRock, $3 trillion of BlackRock fixed income, $1.9 trillion in what is ETF and non-ETF index, $1.1 trillion in the active platform, as Rich was talking about, $930 billion in cash management, $206 million in private client assets, $4.1 trillion across fixed income, cash and private credit. $160 billion LTM net new business at a 6% growth rate, I'm going to talk about this in a second. $162 million LTM net new base fees, 5% organic growth rate. $3.7 billion 2024 base and performance fees, 7% revenue growth rate.

Let's talk about one thing I've learned in this business that it's all about performance. If you don't perform, the money doesn't come in. One thing I would say, I'm super proud of this slide. We've won a huge number of gold medals from Morningstar, others, one thing they tell me regularly, it's not a lifetime achievement award. So you got to come in, you got to do it year in and year out. Super proud of that.

And you see this chart on the right side, long-term performance, 87% above benchmark or peer median. We've got to keep doing that. You've got to keep performing. I'll talk about -- you got to keep using, similar to what Raff was talking about, the new tools at your disposal to try and get there, to keep that performance where it is.

Let's talk about flows, and I'm going to give you a couple of stats around this that I think, are pretty incredible. This is the industry growth 2020, '21 through '24, and one thing you've seen is BlackRock's organic growth rate has outpaced the industry. But I just want to put some of that growth rate in perspective. So think about what fixed income has been since 2020, the return of the aggregate index, the benchmark, since 2020, the total return is negative 6.5%. The total, if you take the long treasury index, the return since 2020 is negative 35%.

So you think about your growth -- by the way, let's -- you're talking about the paradox, the S&P is up 60%, Nasdaq is up 75%, Bitcoin is up 270%. So think about to try and generate that sort of growth rate. We've been in a negative performing fixed income market. Think about long treasury index down 35%. You hold that asset for the last 5 years to grow and to grow fixed income and think about to grow the back end of the curve, et cetera, pretty darn hard. One thing I'm going to talk about, I do think the starting point for fixed income today, is pretty attractive. And I'm going to go through some of that.

Let's talk about this idea of how fixed income is changing. When I came into the business, it was interest rates. What do you do in interest rates? Do you like the back end, do you like the front end? What does the curve do? Now dispersion is 145% higher compared to 2018. The number of tools you have to drive alpha, different parts of the cap stack, different regions, dispersion is significant. So your ability to create alpha becomes more profound. 6x the growth rate in private credit, Scott Kapnick is going to talk about this, private credit, bespoke financing doing things innovative around origination, a big driver of how create alpha. Index and ETFs improve flexibility and liquidity, by the way, 10 out of the 10 largest asset managers use iShares and ETFs, 8 of the 10 insurance companies use bond ETFs.

The change of this industry, when I came in, I used to trade cash bonds, now we use ETFs, now we use futures, we use options, we use derivatives, pretty incredible evolution. Liquidity management for near-term obligations, so many different tools you can use to try and think about what the Fed is doing and since that changes, so what the interpretation of what the Fed is doing changes roughly daily, your ability to actually transact on that, including today, is pretty extraordinary.

Let me throw one thing. I know a couple of people have talked about BINC today. I'd put this in terms of how do you optimize fixed income that's different than it used to be. We're super proud, in BINC today, we're throwing off 6.5% yield. By the way, in the last 2 decades, [ even though ] our rates were at 0 or at negative in Europe, now it's 6.5% with a volatility of 3.3%. So it's almost an organic sharp of 2%. You can clip 6.5%. What we're trying to do is build portfolios for clients that are optimized, consistent, give them a lot of yield and income but don't keep them up at night.

So you look at the drawdowns on the upper right, how do we create a better product than just traditional, whether it's high yield, the universal index, at a lower drawdown, and so the you can compound return more effectively by optimizing all the tools. Big thing for us, can you do this using the huge number of tools we have to create a better platform for clients.

Let's talk about dispersion in the world. This is, to me -- and I did this for a different presentation, but I just want to show you something, by the way, I did this to talk about the debt in the United States and to talk about how big it is and how you have to be concerned about it, because every asset, basically in the world, certainly every asset in the U.S., you start with the risk-free rate.

But if you look at where we are today, the U.S. high-yield market is bigger than the entire Canadian market. And by the way, that's -- sorry, that's BB. It is bigger than the entire Canadian market. U.S. IG A, bigger -- 50% bigger than the whole U.K. U.S. IG BBB, double the size of the whole German debt market. Point being, there are so many different opportunities, but the big thing for us today is like where do you take IG risk, where do you take high yield, and we're taking rate risk in the rest of the world, dispersion, different regional opportunities, pretty powerful today. The build-out of the fixed income market globally has given you so many ways to take advantage of this pretty different point in time.

Let's talk about for -- like I said, when I started in this business, rates came persistently down, much more fun. The dynamic where I think about inflation was on a persistent deceleration. Now we're going the other way, new global, new regime, deglobalization, higher levels of inflation, the correlation of returns is different. The way it used to run 60-40 is people you think about, gosh, I got to get long duration, it protects my equity return, it offsets my beta. Look at the data -- so by the way, that's the correlation today. If inflation is higher, bonds and equities correlate. Correlate positively.

Look what happened in April, same time the stock market went down, the back end of the curve went down. Very different framework from when we used to run fixed income, and I'll talk about it. So what do you do with that? I think fixed income used to be an interest rate tool. Now it's about how much income can you create and how can you do it efficiently? Scott is going to talk about the private markets. How do you do that efficiently? I think it's all about fixed income, is income.

And you talk about today, so when you run -- this is BINC or our strategic income, which Rich mentioned optimizing fixed income, you can run a model portfolio where you can create way more yield than cash. And look at this chart on the top right, so and I've said on -- in the media bunch, this is the golden age of fixed income, not because I think rates are coming down. You can buy 1 to 3-year European investment grade, swap it back to dollars, your breakeven in 1 year is 10%. We are in a global depression if that stuff is trading at 10%, meaning the yields you get today and the breakevens are so attractive, you don't have to go out the yield curve and you can stay in good quality.

So we could build these portfolios even with inflation -- I show this on the bottom left, even with inflation moving higher, even if you sit in a front end. You think about the 2-year, but if you can add securitized, if you can add high yield, you can add privates, you can eclipse the rate of inflation, you actually double the rate of inflation, even if inflation picks up moderately, pretty incredible.

By the way, I always have to remind myself, 9 years in Europe of negative interest rates, 9 years, the craziest strategy of all time. 9 years of negative interest rates, today, we're building portfolios using Europe, where we're the biggest -- I think Europe is the best opportunity, where you're getting, you look at those numbers, if you swap back to dollars, you're getting 6%, 7%, pretty amazing point in time. What generally drives return is your forward starting point. Your forward starting point today is pretty attractive.

So let me finish on one last thing on this. So this is -- this chart on the upper left gives you a pretty good perspective of where we are today. That star is where we are today using the 2-year note and again, put securitize on it, put yield on top of it. The red part of that bar is 50% -- almost 50% of the last 20 years, the 2-year was under 1%, 2-year was under 1%. 20% of the time, the 2-year was 1% to 2%. So 2/3 of the last 2 decades, you had to sit, you had to buy high yield to get 4. Now you could sit in the front end. By the way, same thing in the 5-year, 10-year, exciting, but I would argue the curve's going to steepen, very different paradigm in terms of where valuations are in equities. It's not like equities are fine. But boy, that is super attractive.

So the net conclusion if you take a portfolio, this looks a bit like some of the optimized BINC SIO, you could build a portfolio of 6.6% with the duration under 3 years and a vol of 2.6%. Rich talked about models. If you're buying equities, you're buying beta, you're buying real estate, you're buying venture, if you can create almost 7% pension fund endowment with a vol of 2.6%, it fits incredibly well into -- in the portfolio.

So to summarize, more tools, more things to do, more ways to create alpha, different fixed income environment than we've seen in the past. You need global expertise. We've got over 500 people within our franchise looking at should we own rates in Indonesia, should we own them in Europe, where on the cap stack do you want to do it? Differentiated sourcing. I'm sure Scott is going to talk about this, the ability to originate real estate, bilateral credit to put it together in a portfolio and then like Raff was saying, can you put these tools together efficiently, so it's not a mess, correlation dispersion, beta. And then flexibility, how do you use -- which of these tools you want to use? When do you want to use ETF, when do you want to use mutual fund, et cetera.

So in my 4 decades, I'm still pretty excited. I think fixed income is going to a very different place. I'm going to pass it to my friend, Scott.

You guys have built an incredible business, and we look forward to working together. And lots of activity here to talk about, but good morning, everybody. It's really -- it's great to see you all here today.

Before I start, I just want to take a minute to thank Larry and Martin and the whole -- really the whole BlackRock team for believing in our business and giving us the opportunity to join them in shaping the capital markets and the alternatives industry. Rick touched on what's going on. But I truly believe we're in the midst of a once-in-generation reconfiguration of western capital markets. And now we're right in the middle of it together with BlackRock.

BlackRock has also entrusted us really to run a large business. You see here, $280 billion, a large combined business, and we're going to work hard every day to earn that trust. BlackRock and HPS each have entrepreneurial cultures. You've heard it this morning, really the -- one of the things that really drew us to BlackRock was the caliber of the team and BlackRock's track record of innovation. And we're very excited to form that partnership.

The firms both have founder-led cultures, and we both like to get stuff done. Our -- and really, I've been amazed that we've worked tirelessly together with Martin and his team over the last 6 months since we announced this deal to ensure a smooth integration. We're ready to hit the ground running on July 1. And the combination of BlackRock and HPS creates an asset manager with breadth and scale to compete with anyone in the industry, banks or nonbanks.

Today, I want to talk a little bit about how the market forces are driving this. Rick highlighted a bunch of them going on, but really preview the platform we've created and also give you a window on how we plan to grow this business in the future.

This slide, some of you may have seen this if you've been -- had discussions with us in the past about how we see the private credit industry. Post-close, this platform, we'll manage approximately $280 billion in assets, bringing together our combined businesses will create a really fully integrated private credit and fund sponsor business. And combined, we'll also be a top-tier public and private CLO business.

As one, we'll be able to provide investors with a holistic credit solution that they demand. And from a non -- really from noninvestment grade, high-grade liquid and private, including, starting from the left, $122 billion of direct lending; $39 billion across junior capital, that's together really our private direct lending business; $30 billion in asset-based finance; $49 billion in liquid credit and CLOs; and $6 billion across multi-strategy debt solutions.

And really, that last column then on the chart shows $34 billion in GP-LP assets which are a wide range of capabilities, we'll also be very well positioned to be a full life cycle partner for the fund sponsors that we deal with, which sort of takes us to the next slide.

When I talk about private credit, I think it's important to put it -- Rick put it -- the sort of fixed income market in context. I want to put the industry's growth in size into context. In -- this chart starts in 2014, but in '07, we started HPS, really private debt was sub-$300 billion asset class. Today, it's over $1.6 trillion and on track to grow to $4.5 trillion. So just tremendous secular tailwinds really pushed from the financial crisis when the regulators by design wanted to push risk assets off of banks and into private enterprises like ours.

It's interesting to note that the data shows that the bulk of flows that I think Martin or someone highlighted this, this morning, the bulk of the flows are going to the largest managers. And nearly half of those flows go to those large managers. With BlackRock, we're as well positioned as anyone to capture this opportunity.

I'm going to come back to these orange boxes here and go into a little more detail, but really wanted to highlight a few of the growth drivers. First, capturing the growth in private high grade. That's a massive total addressable market and an area where we have really actionable strategy and very exciting opportunity. Asset-backed, which is the second box is also related to #1 and together, a very large opportunity. The opportunity across private wealth, I'll go into detail. We have very exciting opportunities there when we bring the combined capabilities of HPS and BlackRock together, it's very exciting what we're going to do there.

And then fourth, it's really the larger deals and not everybody knows it is really -- it's the larger deals that are driving growth, and HPS is already a leader in the larger deals. So big picture, we're very well positioned to capture those secular tailwinds here on growth, and really, the opportunity is as big as I've seen in my 40-year career, and it's why we're very excited to be doing it together.

The next 4 slides, I thought I'd just touch a little bit on who HPS is to the extent you don't know that. And these numbers go back to sort of just the HPS numbers. From the beginning, again, we've been at it 17 years, purpose built to capture the opportunity in private credit and in -- and really in a purpose -- unique and purposeful way. We're credit specialists, just like Rick talked about, 40 years, we've been at it, trying to provide solutions to our borrowers and to our LPs.

When we started the firm, it was our mission to deliver quality, both absolute and relative terms, returns to the world's most sophisticated investors. And while we're really focused on being a reliable and trusted capital partner to our borrowers, and we have been that. And we continue to be that. I think together with BlackRock, that's even more powerful.

To do this, when we started, we knew we needed to be a global business, and we really wanted to create differentiated sourcing channels and the scale to execute those deals with any size and shape. Today, we're a leader in that alternative credit ecosystem. We manage over $150 billion of AUM, $130 billion of that is in private credit. We operate at scale across the capital structure really from the most senior to junior and around the world.

The importance of Europe, I agree with Rick, Europe seems very attractive right now. We have 800 people around the world, about 100 in Europe, more than 250 investment professionals. And at our size, we really provide a certainty of capital and flexibility that you can't find in the public markets or often can't find. We're also can often execute on a transaction faster and with more discretion, which is why borrowers come to us.

For investors, we offer products spanning the capital structure, and we pride ourselves on creating bespoke solutions for our clients, really customized portfolios, very similar to what you've heard this morning. And for our portfolio companies, we aim to be a true partner. So we want to be somebody that can facilitate today's transaction, the next transaction and the transaction after that. So no matter what the complexity or size, we want to be their partner for the future to grow their business.

I mentioned the capital markets are changing. There's not enough bank capital in the world to keep the world growing. So private pools of capital coming together is critical to help fund the company's growth.

In credit origination is and will continue to be the dominant capacity constraint. That's -- let me say it again, it's about origination and figuring out how to create that origination. From the beginning, we prioritize -- really prioritize differentiated sourcing with a relentless global focus on both sponsor and nonsponsor transactions. Historically, over 60% of what we've done has been sourced outside of the sponsor channel. So -- and that's actually a very important point, not very often known. The nonsponsor market is huge and can often generate more attractive returns. You see it's really that premium in the orange shown in this chart. But it's sometimes very hard to find and generate these returns.

Oftentimes, the deal requires more diligence and more time to negotiate. So you have to build a kind of credit team that will do it well. And that's what we're bringing here together with BlackRock. You have to have the relationships across the industries. We've been at it 17 years now. So the depth of the industry relationships across geographies, and you have to be really a reliable partner for borrowers. It's paramount to our future success that we continue widening the top of the funnel.

And the combination with BlackRock does just that. The wider the funnel, the more selective we can be, the faster we can scale and the better we can deliver risk-adjusted returns that our investors expect. At the same time, origination isn't worth much if you don't have that scaled flexible capital needed to execute. Historically, most of the large deals were done in the broadly syndicated market, and more traded fixed income. But over the last 4 years, you can see in this chart on the left, private credit has proven it can be a viable alternative at scale, so north of $1 billion deals.

And we've seen borrower adoption continue to grow, and we're seeing that we're certainly seeing a pipeline of opportunities be very large for us with several more than billion-dollar deals coming to the market. And it's really our pipeline that is continuing to show this growth. But the majority of the growth in the noninvestment-grade market is also being driven by these mega deals. There are only a handful of players, ourselves included, that really have the scale to lead these transactions and our ability to do so across the capital structure, both senior, junior investment grade, noninvestment grade is particularly differentiating.

Leadership in this transaction is really particularly important because it allows you to control the documents, puts us in the driver seat in the event that things do go wrong. And importantly, over the last 6 years, HPS has led or co-led more than 25% of these billion large-cap transactions, and we are very excited to work with the team at BlackRock to continue to look at those opportunities, a big, big driver.

The true north in investing, Rick said, it is performance. We're completely aligned on that. I'd like to say that performance, it's performance that creates scale, not the other way around. We're very proud of our track record. You can see it here, but just a few highlights. Since inception, relative to the public market benchmarks, our direct lending strategy has generated 3.2% compared to a public benchmark. Premium, that's on the left and then 7.9% premium in the junior capital. And capturing that for our investors has really led to the success in fundraising and sustained success, really allowing us to raise over $10 billion in each of our latest flagship vehicles.

You can see the direct lending we break into core and then HLEND is our nontraded BDC, which is $10 billion, $20 billion of assets. And then on the right, the junior capital strategy, which we're now out with our sixth fund and again, very exciting feedback from investors and I've been humbled by the investor support and understanding of the industrial logic of this transaction. So we very much appreciate that support in the fundraising.

Rob Kapito said, really wanted us to make sure we left you with 1 message on growth. So I have 1 message, but it has 3 parts. Part 1 really is growth in private investment grade. And again, one of the largest and most immediate areas for growth. It's a multitrillion dollar opportunity that's going to span everything from asset-backed lending, real estate, NAV financing and secondaries. A recent research report that suggested private credit markets could reach $40 trillion. So way bigger than the TAM I showed going to $4.5 trillion in 10 years.

And we're only going to do that if we get there through the proliferation of private IG. And again, that's when I said we're remaking capital markets, a 40-year, 50-year generational shift here. That's what's going on. The shift is starting with insurance companies, but quickly going to pensions and sovereign wealth funds as well. And if you look at the balance sheet of the world's largest insurance companies, they still are overwhelmingly invested in public fixed income and these firms are under competitive pressure to enhance their returns.

So it's really the place where insurance companies are looking for more yield and higher returns. Insurance companies have always been a huge part of the history of HBS and you heard earlier the history of BlackRock. We're in early -- we -- HBS is an early mover in establishing dedicated insurance solutions team to work with clients on product design, rated note structures and regulatory reporting. Unlike many of our peers, we're not a vertically integrated insurance company, meaning we don't control the insurance assets. We don't compete with our clients in any way. Today, we manage $60 billion of assets for over 125 insurance companies. BlackRock, you heard earlier is the world's largest OCIO for insurers, managing over $700 billion across more than 450 insurance relationships.

If we can convert just 10% of that $700 billion and provide 100 to 200 basis points premium over publics that is a hugely impactful for our investors and a very big tailwind for our business. Pretty straightforward. Post closing, our platform will be better positioned than ever to be a high-grade solutions provider of choice. And really, the other 2 boxes on this chart, which I won't go into detail, but are almost equally important. The opportunity is to be a partner and a sidecar provider for insurance companies.

We have a number of dialogues ongoing there. And also the recent regulatory changes in Japan have provided a significant opportunity for that market as well. So we're very excited about that. One message, second part, growth in the wealth channel. Our transaction brings together, you can see here the existing HPS capabilities as well as the existing BlackRock and planned activities in the wealth channel. These highly complementary capabilities really position us to be a leading player in wealth.

On the investment side, together, we have a broad-based suite of scale and proven strategies. And from an investor perspective, our strong connectivity to the private banks, high net worth and high net worth segments really supplement BlackRock's extensive distribution network and strength across wirehouses, independents and RIAs. With our capabilities under one roof, we believe we're going to grow fee-paying AUM in this segment from approximately $14 billion to more than $60 billion. These are already ready to launch or in existence, and I think we're going to exceed what we've got here, but that's what's in, I believe, Martin's model. As you can see across this page, growth is going to come through scaling existing vehicles, as I said, and then launching new vehicles, which are in the pipeline.

Okay. One message, Part 3, GLP solution. So this is very exciting and really I'm excited to grow this business as anything we're doing. We want to be a solutions provider of choice for the world's leading private market firms. And the evolution of those private markets driven by private equity has led managers to consider alternative ways to raise capital and grow their firms and their portfolios. So as well as manage liquidity and importantly, returning capital to their LPs, which is a lot of a big need now in the world.

HPS has already been doing this. We have fund financing, NAV financing, prep facilities, GP financing and continuation vehicles. And BlackRock is bringing its private equity and secondaries business together. So combined, we'll have almost $200 billion of capital in this space and really just getting going to pull that together as a solutions provider, private credit and private equity capabilities, both primary and secondary into a single business, which is very exciting.

As I mentioned upfront, all of this origination is predicated on -- all of this is predicated on origination. Origination is the key to growth. You've got to find the deals. There's simply too much capital in the world chasing too few assets. Together, we need a comprehensive and proactive coverage of the banks, sponsors, corporates, asset origination platform. It's, to me, remarkable that we've built HPS with almost no wallet to the street.

Now with BlackRock, we're part of one of Wall Street's biggest counterparties and one of the world's largest equity owners. That is going to supercharge the origination engine and lead to better outcomes and is going to allow this leadership team here to have a lot of fun both providing service to our clients and our investors.

This slide is a great way just to reiterate our key message of the day growth, market backdrop and alternatives is rapidly growing and evolving. And when it comes to delivering holistic solutions, scale, origination, breadth together with the technology platform you heard today, Aladdin and the amount of technology focus here, that is really going to be more important than ever to help us deliver.

Together with BlackRock and GIP, I believe we have a differentiated sourcing, really differentiated level of understanding of what's growing businesses around the world and what those businesses need. I've long admired Bayo and Raj, and it's very exciting to me personally and to our whole team to be working with the best in the industry and the GIP team.

As one team, we're going to be well positioned to serve the world's most sophisticated investors, borrowers and sponsors. With that, let me turn it over to Raj. He was going to tell you more about the opportunities ahead in infrastructure. Thank you.

Thank you, Scott. From private credits to our private infrastructure. Hello, everyone. It's a privilege to be here today, my first BlackRock Investor Day. For those of you who don't know me, I'm Raj Rao, I'm a founding partner of GIP, and currently served as its President and Chief Operating Officer. I'm based here in New York, but for the first 17 of the 19 years of GIP's history, I was based in London. GIP is now a part of BlackRock, a combination that we are incredibly excited about as we are entering the golden age of private infrastructure.

Now when we started GIP 19 years ago, infrastructure as an asset class did not exist. So we're trying to raise capital for our first fund and we'll go to an institution, and they sometimes send us to the private equity team, sometimes to the real estate team, sometimes to the fixed income team. And you know what sometimes even to the agri and timber team that go and talk to these guys.

Infrastructure has come a very, very long way. It's an asset class that is here to stay and it is an asset class that is going to continue to grow. So we are pioneers of the space. And as of today, we absolutely define the asset class. So our AUM has grown from pretty much nothing in 2006 when we started to $183 billion today.

So I'm going to cover 3 things today. One, the scale and the breadth of our platform; second, a multi-decade opportunity of infrastructure ahead of us; and third, the power of the BlackRock GIP combination. So Scott, you mentioned this, Rob, you said I had to deliver 1 message, and I'm going to give only 1 message, no parts to that, just 1 message. And the message is very simple. Our aim and our goal is to be the premier infrastructure investing platform globally and we at BlackRock, have the opportunity, and we are extremely well positioned to capture that.

So let me give -- begin by giving you a quick overview of the GIP infra platform. So $183 billion under management, 19-year track record started in 2006, actually July 1. So in a couple of weeks, we will be exactly 19 years. The founders started the business, and then we were backed by Credit Suisse and GE as our founding investors back in 2006. 683 professionals today in more than 20 countries, we have more than 900 LP relationships.

As a part of the transaction, BlackRock transferred around $50 billion of AUM and 200 professionals into the platform to the combined platform and the combined platform is now called GIP, a part of BlackRock. So we have a wide range of products. As you can see on the slide here, they're all differentiated. They're differentiated by scale, by geography, by risk and return, and they're all catering to the needs of our clients. So the biggest piece of our AUM is our global equity business. That's about $111 billion. That's where the flagship fund sits and we've got 3 strategies there. The GIP flagship strategy, the mid-market strategy and the core strategy.

So GIP's flagship strategy is now in its fifth vintage. We had a target of $25 billion to achieve. And I'm pleased to say that we have managed to get to $25 billion for our fifth vintage. Mid-market fund is already fourth vintage and will soon be into its fifth vintage.

We also have a few specialized and thematic by sector and by geography funds. The AI partnership, which I will touch upon later on, energy transition, renewables, a decarbonization joint venture with Temasek that invested in early-stage energy transition companies. And we have a few single asset continuation funds. These are for some of our best assets. So 50% of Gatwick that we own, 50% of Edinburgh are in separate continuation funds. We also have 2 other funds. One is TiL, which is our partnership with MSC, a port platform that we have and also Italo, a high-speed rail business in Italy.

Geographic focus, we have a few subs -- we have a few geographic sector funds, Australia, emerging markets and the Middle East. Our credit business is around $28 billion, both investment-grade credit and noninvestment-grade credit. A substantial portion of this credit business came from BlackRock. And then we have a solutions business that does multi-manager portfolios, secondaries and primaries. That's about $9 billion.

Now the secondaries business -- sorry, the solutions business with investors in GIP's first fund, way back in 2006 and they have been investors in GIP subsequent vintages all along the way. So I'm sure a part of the performance of GIP has helped the solution business to raise the $9 billion they have. So what's the beauty of the combination? Very limited overlap between what BlackRock had in infrastructure and what we had in GIP.

We did not have a mid-market franchise. We did not have a solutions business. We did not have an investment-grade credit business, and we did not have an energy transition business from a decarbonization early-stage growth vehicle point of view. All of those enhance our platform tremendously. When you look at the overlap of the LPs between what GIP had and BlackRock Infra had, that was less than 5%, less than 5% overlap between our LP base. So today, we are fully integrated. We operate as 1 platform. We're all sitting together in 1 location in this building in Hudson Yards in New York. We are sharing resources. We are sharing origination ideas. We're sharing our business improvement team and we're sharing our risk processes.

So let me start by explaining what our definition. And there are many different definitions in the market of infrastructure is. Our definition is very, very simple, large real, difficult to replicate critical infrastructure with extremely high barriers to entry. So think about big airports, big ports, big LNG facilities, big offshore wind farms. These are long-lived assets, 50-plus years with fair regulation and fully contracted revenues.

Now over the last 19 years, as the asset class has grown, people have stretched the definition of infrastructure, added risk on to it. We have not done that. Since the beginning, our sector focus has remained the same. Our target returns have remained the same. Our investment approach has remained the same. We have not had a sector drift. We only focus on 4 sectors, which is energy, transportation, digital and water and waste. And even in those 4 sectors, we target few subsectors, not every subsector of those.

So let me touch upon each of those. Energy is our biggest business. It's our biggest sector. So what do we do? We invest in midstream companies, LNG, power generation, renewables. We do not take direct commodity risk. We are a global top 10 player in the renewable business today. Our portfolio of renewables, where we've invested more than $20 billion of equity is about 18 gigawatts in operation, operates all over the world, and we have a platform and a development pipeline of more than 180 gigawatts.

So you'll see some logos here. Atlas is a leading Latin American platform. Clearway is a leading U.S. renewable platform. [ Wien Energie ] is a leading pan-Asian renewable platform. RG LNG, very exciting. It's an 18 million-tonne facility that we are currently building in Brownsville in Texas and soon to be 30 million tonnes of capacity.

Now transportation is our second sector. We are only focused on 3 subsectors: airports, ports and rail. Those are the 3 subsectors we focus on. There is no other manager out there who has got better track record in airport space. We have to date invested in 6 different airports. London City Airport, we met 4.5x money multiples. Gatwick, we made 8x money multiple. Edinburgh, we made 6x money multiple. Now we still own Edinburgh and Gatwick with the continuation fund that I talked about. We are the largest shareholder in Sydney Airport. And very recently, we took the entire Malaysian airport system private working with 2 sovereign wealth funds. So that's not only KL, which is a capital city, but there are 38 other airports in the Malaysian airport system.

Ports, a big area that we've invested in. We've been owners of Port of Brisbane, large shareholder in Port of Melbourne, Peel Ports. And we have a joint venture with the largest container shipping business in the world called MSC, the ports business called TiL. That's the platform through which we have recently announced the Hutchinson transaction.

Digital, one of our newer sectors over the last 7 or 8 years focused again on 3 subsectors, telecom towers, fiber and data centers. In the tower space, we have a joint venture with Vodafone with more than 30,000 towers in Europe. Data center, we have a business called CyrusOne. That is the America's third-largest data center company. And CyrusOne was pretty instrumental when I come on to the AI partnership. I refer to it back again.

In fiber, we have a joint venture with AT&T called Gigapower. And the fourth sector is water and waste. Smallest of our sectors, but we have a few more marquee assets. Suez, a global #2 in water and waste. And then we have the Lanes Group and E360. So the message you have on this slide for me is that we focus on very few sectors. We have deep industry knowledge. We have phenomenal corporate relationships. We get proprietary origination, and we will add operational value add. I'll come on to that in a minute.

So let me set the scene on private infrastructure landscape. We're entering the golden age. Capital needs over the next 2 decades are going to be double of what was spent over the last 2 decades. That's the scale of the opportunities, and that's driven by 4 key things: energy transition, what's happening in the digital space, rewiring of supply chains and quite often neglected but true, the [ creaking ] and the upgradation of old infrastructure that is absolutely essential.

So energy transition. It is here to say. It is irreversible. Now we can debate whether the world is going to get to its 2050 net zero targets. Are they going to beat it or are we going to get close to it? The fact is money is being spent in the space, and that is going to continue to be the case. The numbers for around here are big. $100 trillion of capital will be spent in energy transition. We think roughly about $40 trillion of that will be an infrastructure associated with energy transition.

Some of it will be repurposed infrastructure. Quite a lot of it will be new build infrastructure. Now digital, you all go through different places and you want mobile phones. Even if you're hiking in the mountains, you want your cell phone to work, right? When you're outside somewhere, you want to stream football, you want to get it very fast. We talk about cloud computing. That is creating a tremendous amount of opportunity for new build infrastructure.

Just on the data center alone, the existing installed capacity of data centers globally is about 60 gigawatts. By 2030, that's going to be 220 gigawatts. A large part of that is going to be driven by cloud computing. People think it's AI, AI is yet to come, a big piece of that. A large piece of that is cloud computing. And if you think about that, that's in the next 5 years, that's $1.5 trillion of capital that is needed just in the data center space. That does not include the chips and everything else that goes in. This is core and shell.

Supply chain rewiring. Now that started with COVID. It's sort of a sort of accelerated by Russia's invasion into Ukraine, and that concerns that created with security of supply -- geopolitical tensions, U.S.-China and now with the tariff. Factories are moving. You call it friend shoring, you call it near shoring. Factories are moving from one place to another. That requires a lot of capital to go in.

And then upgradation of infrastructure. I'm sure many of you have been through airports and road systems in the U.S., they need a lot of work. They need a lot of upgradation. I just pulled up a chart here, and this is a chart at the bottom right from the American Society of Civil Engineers. They grade once every 4 years, the state of American infrastructure and look at the grades they've given the U.S. infrastructure. C+, D+, D+, C.

Now if you have children and they brought these grades at home, I'm sure what the conversation is going to be. So the idea is the opportunity is huge. That's the point I want to make. So who's going to fund this, right? What's the traditional source of funding infrastructure? It's governments. It's multilateral agencies.

Now if you're not a government in the Middle East, then you have very great difficulty in funding infrastructure today or big capital projects. And the reason for that is simple. Pretty much every government around the world, OECD, talk about the U.S., talk about the U.K., Eurozone, Japan, is either close to 100% or more than 100% debt-to-GDP ratio. So they are not in a position to fund this.

So what's the second source? Corporates. Corporates will play a big part, definitely. But corporate balance sheets are stretched. And as you heard, if you think interest rates are going to rise, that's going to create that funding constraint is going to grow more and more from a corporate perspective. Capital markets are definitely going to be part of the solution, but they're not going to fill the gap. The gap is about $15 trillion. That could be $20 trillion. The only way place that gets filled is private capital. That's where we come in. That's where we fit.

So this is long-dated infrastructure needs to be funded in the long-dated market, long-dated private credit, long-dated private infrastructure. That's the gap that we're going to fill. So let me just talk a little bit about GIP and what differentiates us.

What's our secret sauce? I think there are 5 things that differentiate us massively. The first is proprietary origination. We are control-oriented investors. So we take control positions in the equity. So I'm just going to use numbers which are flagship fund oriented. Obviously, we have equity funds, specialized funds that I talked about. So these numbers don't include that just by flagship fund. To date, we've done 53 equity transactions. Out of the 53 transactions, 30 of them are corporate joint ventures.

So this is what's the corporate joint venture. We go to a company and say, "Look, you have this embedded piece of infrastructure that's sitting inside your company. That's a cost center to that. All you need is access to that. We're going to come in. We're going to buy half of it. So you retain 50% of the business. We will work with you. We'll get our business improvement team in. We'll improve the operations of the asset. By the way, we will get incremental growth by getting third party in. And as we create value in the asset, you will get your pro rata share of the value, and we have released a significant piece of capital to you. That mantra has worked very, very well for us.

And as the beauty of the BlackRock combination, our access now at the senior most level to all corporates have stepped up massively. So just to give you a sense that this is working, we've done 4 different transactions with Total. We've done 4 different transactions with Ørsted. We've done 3 different transactions with MSC. We've done 2 different transactions with [ Vonceia ] and that list goes on and on and on.

The second is business improvement. Now we are a pioneer in operating assets in the infrastructure space. And I want to take you back to Fund I.

And the reason I want to take you back to Fund I is simple. When we were raising capital for Fund I, we were saying to investors, infrastructure assets are under managed. They have historically been owned by utilities or corporates or governments. They have not been put to the rigor of an industrial company. If we can operate assets better, we will generate incremental return.

Now most others were saying infrastructure is boring. You buy it, it's a bond, you will get a yield, forget it. Now life has not turned out to be that way. So with that mantra, we started a business improvement team. That's about 50 people today. We have a proven playbook, use tools like Six Sigma, Kaizen, Lean and the business improvement team of GIP works with the deal team while we're doing due diligence, as soon as we acquire the asset, prepare the 100-day plan, continue to work with the asset as we grow the asset and help us in thinking through the business plan when we sell the asset from as to how we're going to position the asset in the future.

So let me give you a couple of examples. What is -- what is an airport? An airport is a place where you move people, you move bags and you turn around planes. Now if I can move people faster and if I can move planes, turn around planes quicker, and if I can get you through your bags in time, my customers are happy. Who's a customer of an airport? People like you and the airlines. If you are happy, you're going to spend money. If airlines are happy, they're going to put routes. As soon as you do that, we get more revenue as an airport owner. So that is the nature of what we've done with the business improvement team.

The third is risk. We have an independent risk function completely dissociated with the deal, looked at every deal objectively. We focus on core and core plus. We hedge everything. We think about downsides. We think a little bit like credit. What is the downside? How do we make sure we never lose equity? And the proof of this is simple.

When COVID happened, we had airports that had 0 traffic. We had high-speed rail, which is 0 traffic. We had oil and gas pipelines all went down to 0. We did not put a single penny of equity in any of our deals. That's the risk approach that we have. Sustainability, we think about every asset from a sustainability point of view. We have an idea of giving every asset a net zero target. And sometimes 2030, sometimes 2040, sometimes 2050. And the reason we do that is we track, we work with the management team, we report it to our LPs. But most importantly, when we exit an asset, we want that asset to be very well positioned so that the new buyer can take that forward.

The last is a proven track record and exit. This is a huge differentiator for us. Across the flagship deals out of the 53 deals I talked about, we have exited 28 deals. We've invested $48 billion. We have returned $56 billion. We have returned $56 billion. There aren't that many investors in infrastructure who have invested $56 billion. We have returned $56 billion. As I go on the road, we consistently hear that private equity hasn't returned capital.

Now we had GIP, I don't think we got that memo. And the reason we didn't get that memo is since COVID, we have returned $28 billion back to our LP. So that's the big differentiator.

Now let me just talk about the BlackRock-GIP combination. We got many approaches to sort of partner up with GIP along the way. We turned all of them down. So when BlackRock approaches, Larry and Martin came to talk to us, we took it seriously. We took it seriously for many reasons. One, the power of the BlackRock franchise. Second, the complementary fit of the organizations. The third, the potential and the tremendous growth opportunity for the platform under the BlackRock ownership. But most importantly, and Scott, you touched on this, the culture, the founder-led culture. That is exactly how we think about. So from an ability to get things done, we thought about it the same way.

So we actually had a dinner. We had a dinner after we agreed commercial terms before we made the announcement, it was somewhere in the floor or a fourth floor of Hudson Yards, and we meant to be there for 2 hours. We ended up spending 3.5 hours at dinner, and we have a WhatsApp group among the founder. And as we all left back and there were messages flying around, and we all said this was amazing. The cultural fit is phenomenal, and we have not looked back since that day.

So let me just give you 3 examples of areas where the combination adds tremendous and enhances our capabilities. Origination. This is what I talked about, proprietary origination with corporates. Now BlackRock being the largest shareholder or the largest bondholder of many of the biggest corporations in the world, we now have access to the [ city ] most decision-makers in big companies. That enables proprietary origination.

Institutional relationship, wealth channel, again, very limited overlap. So there's a whole set of institutional relationship. We hardly had a wealth channel at GIP. So our ability to tap into new investors from a capital raising perspective, very, very powerful. Technology, Aladdin, eFront, Preqin, they will all be value added to us. The insights we will get from BlackRock institution -- investment institute will make us better investors. That's the power of the combination.

Now I want to give you a case study of how this combination is coming in practice. It's actually one of the most exciting things happening at BlackRock, that's the AI partnership. Now I think it's fair to say that this would not have happened if it was only BlackRock. And I'm pretty much sure that GIP probably may not have been in the room -- may not have been in the room when these conversations were going on.

What are we trying to achieve? We are trying to capture a generational investment opportunity in artificial intelligence and digital infrastructure linked with AI. Our goal is simple. We are trying to create a funding mechanism to tackle the significant needs that exist. I talked about the $1.5 trillion over the next 5 years. Think about what that number is going forward. The industry needs a solution. So in that context, as we went around with BlackRock's connections and speaking to the biggest hyperscalers at the highest level of each organization, it became very, very clear that a combination of what GIP could bring to the table, what BlackRock could bring to the table, what the hyperscalers could bring to the table will create an industry-wide solution. So you've seen the announcement we made in September.

And since then, we have expanded the partnership. We now have 8 partners in the partnership. BlackRock, GIP, MGX from Abu Dhabi, a long-term patient capital from the UAE, a big investor in the technology space. We know about Microsoft, NVIDIA and xAI. Very recently, last week, the KIA, Kuwait Investment Authority announced that they'll be a part of the partnership. And I'm pleased to say, as of today, that Temasek has agreed to be a part of the partnership as well. So KIA and Temasek were not part of the original group. They are going to be big investors in the fund going forward.

So in addition to the members of the partnership, we have a few technical collaborators on the power and the technology side. So GE Vernova, NextEra and Cisco will provide a lot of information to us and be collaborative partners on us. So what are we trying to do? We're trying to raise a $30 billion pool of capital, equity capital, in an open-ended format. We'll unlock about $100 billion pool of capital because with the debt, that is the power of what we will have. Now we are currently working on the structure and the terms of this. So stay tuned, more to come on this.

Let's talk about the future. We are in a strong position to capitalize on all the demands that I talked about. Look at the chart on the bottom left, that is the fundraising track record of the flagship fund of GIP. We started at $5.6 billion for Fund I. Our target for GIP V was $25 billion. We've reached that target of $25 billion.

Now over the next 24 months, we have more opportunities, the AI partnership that I talked about, middle market, energy transition, emerging market, Decarb Partners, credit, both on the investment-grade side and noninvestment grade side in infrastructure and solution. Our strategies are working. Our strategies are performing. We have a phenomenal track record and the combination with BlackRock positions us really, really well for the future.

So let me conclude. You've heard this several times today. Everything that we do at BlackRock is about clients. And what we are trying to do is connect our clients with the best investment product that we have. I think Larry said it, infrastructure is one of the most exciting investment opportunities ahead. So 3 key final messages or 4 key final messages for me. We have the absolute ambition to be the world's premier infrastructure investing platform today, tomorrow, day after tomorrow and way beyond that as well.

We will continue to play a significant role in funding -- playing the funding gap that exists. We'll continue to focus on performance, deliver operational value add, and we will solidify BlackRock's leadership position in the private markets. Now as we embark on the golden age of infrastructure, we will capitalize on these tailwinds, both for our asset class and for private markets overall.

So I just want to end by saying a big thank you to all of you. It's been a great pleasure to be here. I believe it's now time for a break. So go ahead, stretch your legs, get a cup of coffee and see you back in 15 minutes.

[Break]

Thank you. Please welcome back to the stage, Caroline Rodda.

All right. Thanks, everyone. After this next session or our next few presentations, I should say, we're going to go straight into the Q&A. So with that, I'd like to introduce Rachel Lord, our Head of International.

Thank you. Thank you for being here. Thank you for staying here. I know we're running through a lot of material today. So in this session, I'm going to discuss our international businesses outside of the States, and then I'll walk through some examples of strategic initiatives that we're taking to drive outsized growth over the long term.

Our business outside America has grown rapidly since our last Investor Day in 2023. Today, we manage roughly $4.4 trillion of assets for our clients based outside America, which makes us the largest international asset manager by quite some margin. It also marks significant growth since 2023 when we reported $3.3 trillion of international AUM.

In revenues, this part of our business delivered $9.5 billion of revenues in 2024, recording 15% year-over-year growth. For the 12 months to end Q1 2025, the average organic growth rate is 8%, and our average organic growth -- base fee growth rate is 5%.

Now given I'm going to talk you through how we build some of these businesses internationally over the long term, I actually went back and had a look at our 2014 Investor Day presentation, which was the first time we actually disclosed our non-U.S. revenues and AUM. And for those of you who were covering us back then, you would, of course, remember that in 2014, we managed $1.7 trillion of non-U.S. client assets and generated $3.5 billion of revenues. So you can probably all do the math. That means in the last 11 years, we've added $2.7 trillion of AUM and $6 billion of revenues, which gives the non-U.S. businesses a 10% compound annual growth rate over the last 11 years. And we've done that by starting with our global strategy.

What Martin took you through earlier today and previous iterations of this. And we figure out how and where to deliver that global strategy hyper locally right the way to the end client in the countries in which we operate in a way that responds to client needs in those countries while always leveraging our global platform and scale.

Today, we have offices in 50 countries around the world, and these are led by a huge group of seasoned country managers with deep expertise in their local markets, backed by a series of product platforms, investors, sales teams, corporate relationships, policy experts and thought leaders. And this strength delivered locally puts us in a prime position in times like this to capture outsized flows in periods where capital reallocations occur across countries or investment segments.

One of the key drivers of growth in building this unparalleled global business has involved developing long-term strategic initiatives to play into what we see as emerging and persistent trends in our industry, in markets, in client segments and in the people and places that we as a team believe will deliver those outsized returns that we're looking for. I joined the firm just over 11 years ago to do just that with a mission to catalyze growth in the somewhat dormant ETF market in Europe at the time. And you heard from Jane and the team earlier today how that ETF market in Europe has now grown by over 600% in that period with much more room for growth in the future. You'll also have heard that she's been much more successful at me at growing this because it took me ages to get to $0.5 billion and hardly any time to get to $1 trillion.

We consistently look to increase our presence in markets that are buoyed by positive long-term trends such as changing demographics, emerging middle classes, evolving regulatory environments changes in customer preferences and new business model developments in wealth or pensions markets. We train and hire the most brilliant minds in the industry to help us develop products and solutions to meet those emerging client needs.

We also use our technological prowess and strategic partnerships to improve the experience of investors, distributors and other participants across the capital markets. So to try and bring this to life, I'm going to share with you 3 of the most interesting strategic initiatives we're pursuing today around the world. Firstly, I'm going to talk about India, where our business that we're growing will tap into the rapidly growing middle classes. Secondly, the Middle East, where we're investing into long-term structural changes within the GCC. And then finally, across the developed markets in retirement, driven by aging populations and some really interesting regulatory changes that are creating whole new pension markets. We believe that each of these will deliver outsized growth for the firm over the next decade.

So I'll start with India, where actually Goldie and I are leading this together, which has been an amazing fun for us both. We're partnering with Jio Financial Services to launch a 3-part joint venture called Jio BlackRock. And this joint venture is going to include an asset manager, a wealth manager and a brokerage. With 1.4 billion people, a median age of 30 years, an economy that is growing at 6.5% annually and a national digital infrastructure that is ahead of nearly everywhere else in the world, India is a remarkable country, which presents an incredible opportunity. But today, India remains a nation of savers and not investors.

The asset management market is currently very small. There's only around $1.3 trillion AUM managed onshore. And of that, only about $800 billion is in mutual funds, which are invested in by only 54 million investors out of that population of 1.4 billion people. 90% of existing wealth today sits in unmanaged or physical assets. And we believe both the asset management and the wealth management markets will grow materially over the next 5 years. So Jio BlackRock was created to accelerate and participate in the growth of the domestic investment industry.

We agreed on JV in 2023. We received our mutual fund license a few weeks ago, and we received our investment advisory license a few days ago. Together with JFS, we have designed a proposition which we believe will capture market share, will grow the asset management and the wealth management markets and will expand the capital markets.

Through Jio BlackRock, Indian investors will be able to use portfolios with personalized asset allocations. They will be able to invest in systematic strategies for the first time, and they'll be able to understand the portfolio -- their portfolios through analytics that are calculated by Aladdin, which marks the first time we've deployed Aladdin into India. Our partner, JFS and the broader Reliance Jio ecosystem bring unparalleled customer reach to this joint venture. Their existing businesses reach hundreds and hundreds of millions of Indians today. By leveraging their deep expertise in understanding the consumer and in digital marketing, their embedded brand and their understanding of local best practices, they're able to reduce our customer acquisition cost to less than half that of our competition.

Our primary tool for acquiring and engaging with customers will be the Jio BlackRock app. This will live directly within the broader MyJio super app, meaning that our clients will be able to review their investments in the same place where they manage every aspect of their personal lives. And our ambition is to reach tens of millions of customers in the wealth space by 2030.

Our direct-to-consumer digital-first approach will significantly reduce the overall cost of investing for Indian savers by removing many layers of friction costs that people are dealing with today. In parallel to what we're doing onshore, outside India, we have focused on becoming the market leaders around the world in investing into the country. And over the last 2 years, we have more than doubled the AUM of Indian assets that we manage for global clients from $56 billion in 2023 to $115 billion today. By 2030, we expect that India will be a significant revenue driver for BlackRock across our Jio BlackRock businesses and for that to continue significantly in the years to come.

If we turn to the Middle East, we've been serving institutional clients here for decades. Some of our oldest relationships with very large investors sit in the Middle East. And we've done that by helping them to deploy capital into global markets. But over the last 2 years, we have taken more ambitious steps to increase our local presence and to partner with local companies and regulators to support their own growth objectives for the region. The Middle East is benefiting from significant macro and geopolitical tailwinds today as well as governments who have ambitious and long-term development plans for their nations. They are focused on driving long-term economic growth, building the businesses of the future and creating dynamic and competitive economies with a highly productive human capital strategy. The attractiveness of the region for global talent is also changing rapidly, creating new opportunities in wealth segments as well as in investing.

In Saudi Arabia, we signed an agreement with the PIF in 2024 to establish a Riyadh-based investment platform. This is anchored by an initial investment from the PIF, but it aims to support global investment into the Kingdom and to enhance the local asset management industry. In addition, we're helping the local government develop a mortgage-backed securities market, aiming to improve interest rates offered to borrowers and boost homeownership across the 34 million people who live there.

Up the road in the UAE, as you've heard, we partnered with MGX to launch the AI infrastructure partnership. This supports the UAE's ambitions to become one of the world's top AI leaders and will mobilize up to $100 billion in total investment for AI data centers and energy solutions to be deployed globally and also in the UAE. And across the Middle East, we're driving growth by launching bespoke products, which meet local client needs and support the real economy.

Our BlackRock Middle East infrastructure fund surpassed its initial fundraising target with $1.2 billion for its final close in April of this year. And this fund met both local and global demand for infrastructure investments in the region. In the wealth space, we formed a partnership with the NBD, which we signed in March of this year, which will offer wealth clients in the UAE opportunities to access alternative asset classes focused on private credit and multi-alternatives. And all of this is supported by our deep and growing local presence. We have offices in Dubai, Abu Dhabi, Riyadh and Doha, and we have plans to launch in Kuwait City later this year.

We also benefit from outstanding Saudi, Emirati and Kuwaiti client leadership talent, and we've built out our Aladdin expertise, our investment teams and our operations and corporate functions locally in the region.

Away from local clients, we're also now locating senior personnel in Abu Dhabi who have international responsibilities, taking advantage of the attractiveness of the destination for our people and its time zone sitting between East and West. Our ambition is that our continued investment into the region will drive upwards of 15% CAGR for BlackRock over the next 5 years and position us as the leading global asset manager operating locally across public and private markets there.

Then the third and final strategic initiative I'll go through is retirement, which doesn't sound very new. However, retirement outside of America is undergoing some profound transformation, especially in Europe and especially in the DC, the defined contribution space. And this is going to be increasingly important to everything you've heard about today because the changes underway are going to drive significant allocations into private markets.

Now retirement is our core business with more than half of the money that we manage today being retirement money. But as demographic shifts and financial pressures drive governments and corporates to rethink their retirement plans and their retirement systems, those reforms and evolving client needs are putting significant money in motion. Europe is the second largest pension market outside of the States with around $12 trillion in assets forecast to reach $20 trillion by 2030. Most of this growth is going to come in DC pension pots. DB is over in most places. This is going to represent $6 trillion of assets, but will grow to $14 trillion by 2030. So the ratio of DC to DB is finally accelerating.

Traditionally, DC assets were very heavily skewed to index assets with a focus on low cost and immediate daily liquidity in almost every single DC scheme that existed. But the future of DC investing looks different, and private market allocations are going to grow significantly in this space. So the U.K. is the largest DC market. It's growing rapidly since it adopted auto enrollment in 2012, and we expect this to continue to grow over the next 5 years. And of course, at the moment, having gone through the pensions review in the U.K., current reforms are now targeting consolidation, scale and allocations to private markets. The U.K. government explicitly aims to increase private market allocations from an average around 3.5% today to 10% by 2030. We manage around 30% of all U.K. DC pension assets today, and we're working now alongside our clients to help improve retirement outcomes as these reforms start to kick in over the next year.

Another big shift happening in the Netherlands, where the Future of Pensions Act from 2023, which mandated the transition of almost $2 trillion of pension assets from defined benefit to a hybrid form of defined contribution needs that to be completed by January of 2028. The transition requires rapid business model transformation as a result of which captive assets previously managed in-house are increasingly being tendered as OCIO mandates where larger external managers can leverage their scale to improve the outcomes for members.

You heard earlier that we were appointed to manage the Dutch -- Shell Dutch pension scheme last year. That is in this nature. And again, these new types of DC schemes are going to have to maintain and build a high allocation to private markets assets. So they're not just going to be low-cost liquid equities and bonds.

In addition to government reforms, transformation in pensions is driven by companies themselves who are creating innovative solutions to meet the pensions conundrum. One example, we mentioned it briefly earlier today is Royal Mail, who launched the first collective defined contribution pension plan in the U.K. and selected us to act as their OCIO provider. And this new type of pension plan allows for DC contributions, but it introduces investment and longevity risk sharing across members. This also enables investing in higher-risk assets to drive long-term growth. And we expect these types of pension schemes, these DC -- collective DC pension schemes to end up with between 20% and 30% allocation to private markets.

Final example of changes in Australia, which has had, for the longest time, one of the most advanced superannuation schemes. But over the years, all of that money has been building up to save for retirement. And now we have a generation beginning to enter retirement. And what hasn't been built yet is a set of decumulation products and income products in retirement. And we've seen this problem before in the States where we launched LifePath Paycheck last year. So we're working on a bunch of strategies right now to tap into the decumulation income products in Australia. That includes a strategic alliance with Generation Life, a life insurance -- life insurer specializing in retirement who are bringing us local expertise to help co-develop decumulation solutions.

Retirement is a complex heterogeneous market with dozens of regulatory regimes at different stages of evolution. But the need for transformation is everywhere, and BlackRock's abilities to bring learnings from one country and port them to another, to bring solutions from one market and take them to another market is unique. And it puts us in an incredible position to capture what we see as significant money in motion while also improving the outcomes for savers and retirees.

So to close, our approach to identifying trends and taking comprehensive action that will create new ways for us to grow markets and help clients is consistent, whatever those changes might be. The significant growth we've seen across our international business is intentional and repeatable, which is why we moved from $3.5 billion of revenues 11 years ago to $9.5 billion revenues today. There are many initiatives underway that I couldn't touch on today. I could have talked for the whole time, but Larry told me I was boring, so he gave me 15 minutes. But there is a lot going on in this space where we take everything that you've heard about from all of our partners earlier this morning around technology, investment strategies, private markets, ETFs, everything else you've heard of. We blend them together and we deliver them for clients in all of the countries we operate in around the world.

Okay. I'm going to pass over to Martin now, who's going to bring us...

Thanks, Rachel. The picture that my colleagues paint of BlackRock in 2030, it's a remarkable one. I think you can see from today's sessions that we're just in execution mode, just taking lots of decisive action to progress our 2030 plan. But I'm here to close you out with why invest in BlackRock and why invest now?

We've built a premier investments and technology platform across public and private markets. We're an earnings compounder with a portfolio of structural growth businesses, steady and recurring cash flows, a capital-light balance sheet and low leverage. We're evolving our revenue mix to reach an over 30% contribution from private markets and technology platforms, commanding higher valuation multiples.

Our 2030 strategy aims to double the operating income of the firm. Even at today's multiple, that implies more than a doubling of BlackRock's market cap. So let's examine how our strategy drives value for BlackRock shareholders. Why BlackRock and why now?

Our shareholder value framework has been consistent. First launched in 2013, we've used it to guide thousands of institutions and individual owners of BlackRock stock as to how their investment builds in value. We focus on generating organic growth, driving operating leverage and returning capital to our shareholders. Although our framework hasn't changed, I'll put our 2030 strategy in context. We've built a platform that we believe enables us to achieve or exceed 5% organic base fee growth and 45% operating margin goals over a market cycle. And together with our consistent and predictable capital management policy, we believe we'll continue to deliver attractive returns to BlackRock shareholders.

In the last 5 years, we've executed on each element of our shareholder framework. On average, we've generated 5% organic asset and 5% organic base fee growth, meeting our target across market cycles. In some markets, we'll exceed this target. But even during significant dislocation in 2022, we generated positive organic base fee growth. We reached our 5% growth target without significant M&A. We see our recent combinations with GIP, Preqin and soon HPS as catalysts to outperform our historical organic growth trends.

We continue to drive operating leverage enabled by our financial rubric and our scale. Our scale enablement levers are vast and they're growing. They benefit from our size, both in terms of AUM and the large number of client accounts. Some examples of our scale levers include technology and automation, the footprint-ing of our business, strategic partnerships across distribution and data and order aggregation to reduce costs or secure better pricing.

That said, the markets or beta, beta is our highest margin item, both in rising markets and in falling markets. Our results in 2023 reflect the impact of historic market declines from 2022. As markets rebounded from their lows, we expanded our as-adjusted margin by 280 basis points in 2024.

Finally, we've delivered on a predictable capital management policy. We see dividends and share repurchases as twin engines of shareholder outperformance. Over the last 5 years, our dividend has grown at a compounded annual growth rate of 9%. We also returned $7.7 billion to shareholders through open market repurchases of BlackRock stock at an average price of $661 per share.

BlackRock is an earnings compounder. In a constructive beta environment, execution on our framework should result in consistent increases in operating cash flow and double-digit EPS growth. We know markets will fluctuate, but our focus is on delivering the BlackRock platform to clients. Delivering for clients has fueled consistent organic asset growth even in tough markets.

Over the last 10 years, we've generated nearly $7 trillion of AUM growth. Every year, BlackRock won client share of mind and share of wallet. Over the last 5 years, we've seen historic highs. We've seen historic declines in markets and changes in client preferences all along the way. The diversification of our investment and technology platform is a distinct competitive advantage. We're not reliant on any one strategy or asset class. And as you can see, all of our businesses have delivered organic base fee growth over the last 5 years.

That said, the BlackRock of the next 5 years to 2030 is different than the past. With the HPS close, BlackRock's private markets and alternatives platform is approximately $600 billion. We have even better and broader opportunities to serve clients. We've seen early proof points post the GIP close with 5% or higher organic base fee growth in each of the last 3 quarters. And with a larger private markets franchise, we see the BlackRock of 2030 powering higher organic growth with positive leverage to base fee revenue and average fee rates.

We've always said the average fee rate is an output driven by factors that we can and can't control. We understand fee rates are important factors in modeling BlackRock's future performance. We can influence organic growth by having the right capabilities and products, generating strong investment performance and executing on our distribution. We can't control movements in the markets or broad changes in client preferences like stocks over bonds or U.S. relative to non-U.S. markets.

Our AUM base is global. It's not concentrated, for example, in U.S. stocks. In a period led by relative outperformance of U.S. stocks, beta has been a headwind to the fee rate. Non-U.S. equity markets, which carry relatively higher fee rates have underperformed U.S. equity markets. But looking ahead, this dynamic can also be a tailwind to our fee rate if non-U.S. equity markets were to consistently outperform. But more recently, we've seen client demand for newer and higher value-add capabilities such as private markets, systematic active strategies, active ETFs as well as cryptocurrency ETPs. This growth has resulted in higher fee rates on new flows. These fee rates have been on a steady upward trajectory in recent years and are 7x higher than they were in 2023.

As we grow our private markets platform and these higher value-add capabilities to 2030, assuming neutral impact from beta, execution of our organic growth strategy should support higher effective fee rates. From 2015 until the end of 2022, we saw over $2.5 trillion of net inflows. Our 2022 margin reflects primarily historic market declines in both equities and bonds and foreign exchange headwinds. 2022's margin also reflected ongoing strategic investments in technology to generate long-term operating leverage. The learned experiences of 2022 helped evolve our business investments and our approach to managing operating expenses. In 2023, we systematized our budgeting approach into a simple 3-part rubric: aligning controllable expenses with organic growth, variabilizing more expenses and driving fixed cost scale.

So far, this approach has been successful. In the last 2 years, we generated over $900 billion in net inflows with 14% revenue growth and 170 basis points in margin expansion. The last 2 years of margin expansion was powered by execution on each component of this rubric.

We've continued to invest in growth and scale. We've paced our investments to match organic revenue growth. We endeavor to power more fixed cost scale through technology and by footprint-ing scale generation activities in our innovation hubs. In the last 2 years, our AUM grew by $3 trillion, and our head count growth, excluding M&A, was under 5% entirely in our iHubs. We'll look to find more opportunities to variabilize expenses. Variable expenses make up approximately 1/3 of our revenues. The growth of these expenses reflects an increase in revenues or sales. Variabilization embeds more natural resilience in our expense base, buffering margins in volatile downward markets.

Our rubric allows us to keep investing against organic growth and efficiency objectives. Organic growth rates are the throttle, greater variabilization is the shock absorber in tough markets, and driving fixed cost scale through technology serves as a long-term value creation lever. We believe this approach should yield a better upside capture for growth of operating income and margin in good markets and a better downside defense of both through periodic market declines. Ultimately, with the long-term growth of markets as our structural tailwind, our approach should deliver more beta to the bottom line for operating income growth and the benefits of scale to our clients and shareholders.

Our capital management strategy remains consistent. First, we invest in our business, either to scale important growth initiatives or to drive operational efficiency, and then return cash to our shareholders. Our priority remains to invest organically, but we also use inorganic investments to expand our capabilities and growth opportunities. BlackRock's history is rooted in successful M&A and the ability to realize synergies through sound integrations of acquired firms. Many of the platforms you've heard about today, ETFs, systematic investments, private markets trace back to our M&A history. Our main focus is to integrate and realize the synergies of our combinations with GIP, Preqin and HPS and deliver a great integration experience for clients and employees. The GIP, Preqin and HPS transactions, they round out our near- to intermediate-term priorities for larger scale M&A.

Historically, we've also executed smaller acquisitions in order to bolt on capabilities. For a period, these types of transactions will be our main inorganic activity. Our inorganic growth interests are to broaden our technology capabilities, expand our global distribution reach, and continue scaling our private markets franchise. In certain circumstances, we will also pursue strategic minority investments. The primary purpose of these minority investments is to drive incremental revenue for BlackRock products, to incubate future capabilities, or to otherwise create value or convenience for our clients. Our minority investments have added AUM and revenues from new ecosystems like stablecoins and tokenized funds. They've enabled distribution or creation of wealth portfolio products, including models. Through our recently announced investment in Viridium, we'll enhance our reach into insurance allocations to private markets.

Over the last 5 years, after investing for future growth, we returned an average of nearly 80% of our earnings to shareholders, including $4.7 billion last year. We recognize dividend income is an important part of many of your portfolios. We continue to target a dividend payout ratio in the 40% to 50% range. We've steadily increased our dividend since its start in 2003. Over this time, our dividend per share has grown at a compound annual growth rate of 15%. Over the last 5 years, we've paid on average 50% of our GAAP net income and dividends. Our dividend payout ratio target is intended to ensure that the growth in operating and net income under our 2030 strategy will translate into commensurate dividend growth at high single to low double-digit rates. To avoid payout ratio impact from the noncash amortization of acquisition-related intangibles, we'll adjust this amortization when calibrating our dividend to the payout target.

Share repurchases are another key element of our capital management strategy. After investing our cash to grow the business and satisfying our commitment to the dividend, we'll return capital to shareholders through share repurchases. Share repurchases, therefore, are an output of, rather than an input to, our capital management policy. Since 2013, we've repurchased over 16 billion of shares at an average price of $467 per share. This has reduced our share count by 10%. Repurchases more than offset share issuances associated with acquisitions and deferred compensation plans. Importantly, we also generated an over 15% compounded annual return for our shareholders.

So I'll conclude where I started the whole day, with our 2030 ambitions that I think answer why BlackRock and why now. We aim to grow our revenue to over $35 billion and to double both our operating income and market cap. We're building a platform that can achieve a combination of premium organic growth and premium operating margin. We're creating a platform that's powered by structural growth businesses linked to the long-term growth of the capital markets and fast-growing client and product segments. We're shifting our business mix to meet client trends across whole portfolios, resulting in longer-duration recurring revenues at higher fee rates with less sensitivity to the ups and downs of the markets. We're building more resilient growth and financial outcomes for clients and for BlackRock, especially in market downturns and lower industry growth environments. We believe this strategy should result in multiple expansion on sustained higher growth and increase in longer duration asset and revenues and more predictable and resilient financial outcomes.

BlackRock has a history of making bold moves. We decided to sell our proprietary Aladdin technology to third parties, even competitors. Now it earns over $1.6 billion as a revenue center. As a fixed income manager, we added equities, multi-asset and alternatives with MLIM. We birthed the industry's first whole portfolio firm when we combined active management and ETFs with BGI and iShares. These moves all led to clients doing more with BlackRock.

Today, we're continuing the bold moves of our history. We're first. We're ushering in a new business model that integrates asset management and financial technology across public and private markets. There isn't another firm with the same breadth of ambition and combined capabilities within its 4 walls. We have the expertise. We have the client units of trust, and we have strong investment and technology track records of success. We have nearly 23,000 colleagues that represent the best of our capabilities and the valuable institutional memory of all our combined history, all our shared experiences. We're all One BlackRock and all working together towards delivering excellence for our clients and growth for our shareholders.

So I want to thank you for joining our Investor Day, and it's really my pleasure to pass it to Larry to close this out.

I'll pick that up later. It's a real pleasure to be here today. Thank you for taking your time. I know everybody has so many commitments. And so it's a real honor that you're spending the day with us today. Martin, thank you. Everybody, team, thank you.

I see in the audience, some of the investors and analysts here have been with us since the IPO 25 years ago. I'm not going to call out those who have been with us for 25 years, and I know a lot of you are new to the BlackRock story and are deciding whether and when to step into buying the stock.

Hopefully, you see today and heard today what makes BlackRock a special place and is this the right time to select BlackRock as a stock to own but also making sure that you're selecting an organization that has the right partners and the right people and the right culture and the right for the time that we are going to be presented in each and every market.

I know we have the right people today. And when we started the company 37 years ago, I invited only a few colleagues who reported to me to my house. And those key people did the right thing every day, and their whole motivation was to grow the firm, to build the firm. It was about we. It wasn't about I. And when you do that each day and each quarter and each year, it becomes a habit. And as more and more people believe in that model, that One BlackRock culture, it continues on and grows and builds and continues to grow and build. And it's integrated throughout the organization. And I can tell you today, working with all the teams throughout the organization, all the different businesses, the GIP, it feels already as a One BlackRock firm. And I'm very excited in a few weeks to having the incredible talent of HPS joining us and being part of that.

I can stand here today and tell you that strategic acquisitions have strengthened our firm, have built a better culture for that, bringing top talent, many new skills, different experiences, different heritages into our organization and make our organization more fluid, more adaptive and more prepared to handle the needs of the world, the markets, and our clients. Our culture has evolved to welcome new teams, to embrace the new teams, and build colleagues and friends throughout BlackRock under a One BlackRock culture. Today, it represents a blending of the best parts of the cultures that have come together over the years.

With GIP, HPS and Preqin, we were again looking for the right partners. Ultimately, they were the only organizations in their respective industries that we were even interested in. It's not that they're just all premier firms, but hopefully, you heard, especially from Scott and Raj, it was a strong cultural fit, a culture built around putting clients first, second and third. For weeks, we had conversations with each and every organization, and we've talked about culture and what drives us and what motivates us about what our combined organizations would look like. We talked about that a lot before we even talked about valuation. The price is the price. It's the integration to fit that builds an organization.

Our acquisition philosophy has always been about growth. It has never been about cost takeouts, never been about reducing footprints, but then rebuilding. It was about reaching new heights, taking on new opportunities. But importantly, and as you heard it from Raj earlier, neither BlackRock nor the merging partners could have reached those levels on their own. And that's what makes me very proud of watching it come together and reaching new opportunities, new conversations, and importantly, building deeper and broader friendships.

What makes our acquisition so successful was a steadfast commitment to integrate the organizations into one organization, One BlackRock. And we do that to totally connect our clients, so our clients understand that there's one platform, there's one culture using only one technology. As a result of that, no firm has the breadth or the scale of what we can provide to each and every client, whether it's a small client, an individual who's putting money each month in the defined contribution plan, or a very large sovereign wealth fund. It is our job to bring one firm together. Importantly, we do not represent as a collection or a cooperative of different enterprises.

We know you're looking to see if we could execute. I told my team that if it feels a bit like it did after we acquired BGI, I wasn't happy with the stock price after we did that transaction, the team knows I have high tolerance for disruption but I have pretty low tolerance, probably a 0 tolerance, for mediocrity. But once we prove that our whole was exponentially stronger than the parts, the stock broke out. And I believe this is going to be the case here today. We're singularly focused on executing these integrations to bring the breadth of BlackRock to each and every client. And with the execution doubling of operating income and stock price, I believe it is very achievable.

Looking back, being self-critical of my leadership at times, we probably did not use M&A enough in the years since BGI. Maybe we became a little too wedded to our history. Yet through strategic, thoughtful acquisitions, we have proven that we could spark outsized growth. But it's just as importantly about refining the organization, reorienting the organization, using the change as a stimulus, as an opportunity to build the organization, to refit the organization, and importantly, to get each and every employee to accept change. That change is powerful. That ethos of change, that integration of firms and the best parts of each and every culture, that's what allows us to be more adaptive, to be more responsive, and to be a better listener to each and every client. And it's one of our biggest differentiators in working with our clients. Our model is very different, and it sets us apart from any other public or private market firm in the industry.

You look around the markets and you see traditional and alternative managers forming various tie-ups. You hear optimism around the potential for using private markets to build better retirement solutions, how insurers are increasing allocations of private credit. That's a place where BlackRock can succeed in a balance sheet-light way. You hear about growing investments in data, in technology, active ETFs, digital assets. BlackRock is at the cutting edge of everything I just told you that each -- different firms are talking about what they could do differently. We're doing them all. We're transforming like no other firm. We're building this together and realizing the potential of these transformations, and it's all within the walls of BlackRock.

Two years ago, at our last Investor Day, I spoke of our willingness to take large bets, to disrupt ourselves and the industry to better serve our clients. Our moves since then and the emerging early success of our combinations are proof points that our strategy is truly working. We have built a firm that is integrated across public and private markets, in asset management and in technology. With GIP and HPS, we'll be a top 5 alternative provider. BlackRock houses the #1 ETF franchise. We house $3 trillion of fixed income, $700 billion in insurance asset management, and a leading retirement services. We have over $0.5 trillion in target date AUM alone.

And as private markets make their way into retirement solutions and portfolios, we have glide path technology, the private markets content, the 30-plus years of relationships with plan managers, managers who are small or large. And our proven Aladdin technology is powering whole portfolios across public and private markets. And now with the addition of eFront and Preqin, no firm can blend that in a whole portfolio setting, bringing together the best of public and private markets together. For clients, we believe that this all means better performance through alpha, through indexation, through origination, better advice, better services. For you, our shareholders, we believe that results in premium organic growth and operating margins.

Across our entire business, we are executing against this ambitious 2030 targets. As you've heard from Martin, we're aiming to drive more than $35 billion in revenues, $15 billion in operating income and doubling our market cap to $280 billion. It is achievable and realistic. We raised the bar in aiming for above 5% organic base fee growth. We plan to raise a cumulative of $400 billion in private markets by 2030. We focused on our margins and driving profitable growth. This should translate to share price appreciation through higher earnings, multiple expansion, but importantly, with more resilience through different and diverse market cycles. Our shareholders, our employees will be the biggest beneficiaries of that next chapter of the BlackRock growth story.

I spend much of my time on the road meeting clients. I flew back last night from the Middle East. And I believe that connection with our clients is becoming deeper and deeper and deeper. When I think back now, when we started the organization and Rich Kushel and I were traveling together, we raised our first closed-end fund together, I learned early on that Rich is not going to be responsible for picking hotels. Days Inn?

Holiday.

Holiday, excuse me. Okay. Great place, though. And now I'm traveling around the world with Raj and Bayo among the BlackRock team. Rick Rieder was with me in the Middle East yesterday. We're bringing everybody together. We're connecting together with our clients. And we feel more ambitious, more optimistic about the things we could do in infrastructure more than ever before as we are traveling.

Traveling around the world becomes very clear that BlackRock is a unique global firm. But importantly, especially in these times when nationalism is rising, populism is rising, we have to become hyper local. And the role of capital markets is going to be more important in each and every country. And that's our wheelhouse, that's our opportunity. That's our differentiation, that we have that opportunity to build capital markets in each and every market where we operate. As we have since our foundings, we have a central role to play in the transformation of markets in each and every market we operate around the world. BlackRock is a growth business. We grow markets, we grow companies, we grow data and technology. It's a virtuous cycle that delivers growth for both our clients and our shareholders.

Rob and I are deeply proud of the leadership team at BlackRock. It reflects a breadth of experience and sustained excellence. When we got started, we were all about raising BlackRock citizens for life. As we've taken on more important roles in our industry, we've taken on a role of growing its future leaders at BlackRock. Importantly, a number of our alumni have gone to take on more senior roles across financial services, and we are very proud to see their success. While some of our senior leaders have moved on, I can stand here today and tell you, I've never been prouder and feeling more confident that our senior leadership team is stronger and more connected to our clients and to each other as a community of leaders driving BlackRock to higher and higher opportunities and success.

I have no doubt that the colleagues we're welcoming from GIP, Preqin and soon HPS will also be great leaders at BlackRock. Just look at today, nearly half the leaders you saw onstage today at BlackRock through 5 different acquisitions, including Tarek, Rick, Raff and, of course, Raj and Scott, came through acquisitions. Our clients, shareholders, employees have all benefited from that cross-pollination of people from other successful organizations with our homegrown talent. I'm not planning to leave BlackRock anytime soon, so you don't have to have those questions later on. But a top priority for Rob and I, working with the Board, is making sure we're developing the next generation of leaders for BlackRock.

And I could stand here to tell you, this is the best leadership team we've ever had. Way beyond the group of men and women who presented today, the depth of the organization in each and every sleeve and business that you heard from today, the scale of the leadership and the opportunities for young leaders to grow and build has never been more powerful today. And I'm very confident we are going to have the leadership of the future way beyond any imagination that everybody could have today. So I'm confident we're moving forward on that. And I said in many ways, this is just the beginning for BlackRock.

I remember the 5 years between 2005 and 2009, where we integrated several multi-jurisdictional, multicultural organizations in a short period of time. That was State Street Research, MLIM, R3, Helix, and of course, BGI, which brought iShares. The work during this time resulted in immense growth for BlackRock and laid the groundwork for what we are today. As we build towards our 2030 ambitions, we're embarking on another intense 5-year period of accelerated growth. We're already operating from record strength. The opportunity to deliver the organization to more individuals, to more companies, to governments, to regions, is greater now than it's ever been. I'd argue it's greater than any company across the traditional or private market asset management industry by far.

We're delivering BlackRock to our clients in a comprehensive, consistent, determined way. And we continue to remain steadfast in our One BlackRock culture. That culture now integrates GIP, Preqin and soon HPS. We have one platform, shared goals and a common Aladdin technology. As a result, BlackRock is greater than the sum of the parts. And I hope that this information and ambition from today that this model tells you the same thing. But the concept goes beyond what you get in a valuation model. Valuation models really don't tell you the essence of what a culture can drive and what an organization can consistently build. And I can stand here and say our leaders are all talented individuals, but they have and will accomplish more because of the culture and the organization and how they work each and every day as a team.

I've never been more excited about the breadth of the organization, the opportunities I have that we see as a firm, the opportunities for us to capture more share of wallet, to capture synergies and to build more revenue growth through this integration. I see greater opportunities ahead for BlackRock. Importantly, more opportunities for our clients, which will lead to more opportunities for our shareholders than ever before. Yes, it is a new BlackRock. We're just getting started even at 37 years old, and we hope you'll join us for the ride.

I want to thank you again for being part of us today and being part of the BlackRock past, the present and the future. I'm going to ask the team to come up here and sit in these orange chairs, and we are going to be opening up for questions. And I think we have 35 minutes because we've said we're going to end at 1:00. So 35 minutes of questions.

So raise your hand, we'll get a mic over to you. If you don't mind, just your name, the firm that you're with. And then we also had a couple of questions on the webcast that I'll read out, but I thought we'll maybe start in the room. All right. I see Craig. Why don't we start with Craig in the front?

Larry, Rob, team, thank you for a great event. Craig Siegenthaler, Bank of America. My question is on the EPS algo. You gave us a few pieces, base fee organic growth rate above 5%, op margin above 45%. My question is, we are missing a few inputs, so if you could give us any high-level color on tech solutions revenue, also performance fees because you've just done big acquisitions in those spaces, so what could that contribute? And on the operating margin, if you exceed 45%, get in the 45%, 46% zone, is there a natural ceiling somewhere above that? Or can you keep moving up towards 50% and above?

You want me to do that, right?

Right.

Yes, okay. So thanks, Craig. Good job. I appreciate it. Good. So that's right, Craig. So the BlackRock and 2030 strategy aims to take revenues to $35 billion, to double operating income, to hit 30-plus percent in private markets and tech revenues. So the first thing I'd tell you is I understand why you look at the math and say 5% organic growth, 10% revenue CAGR, how do you get to those numbers. So the answer is the substantial majority of that revenue growth is organic, right, 5-plus percent organic base fee growth, basically a doubling of the enterprise tech business in Aladdin, plus product extensions, Preqin product extensions, to continue to grow that business. And then we would have the balance in performance revenues from what's a much bigger private markets business as you get out to 2030.

What I would say is we're very bullish on the plus part of the 5-plus percent. And I think if you just run some of the math, if that's 6%, 7%, 8%, you can see how you get to a substantial majority or more towards that $35 billion number. And at $35 billion and double operating income growth, at 45% or better margins, we'd expect double-digit EPS growth in that scenario. That's all ex beta. So obviously, there's significant room to run with modest assumptions about beta growth. And on the margin, we're targeting 45% or better. I think some of the sensitivities about margin expansion apply to what your market assumptions are in terms of growth. But the financial rubric means if you put bigger beta assumptions in, you'll basically get more of that beta dropping to the bottom line and higher and faster expanding margins.

Let me just add one thing that I think is really important. We believe the global capital markets are going to grow substantially over the next 10 years. We are hearing from more and more governments the need to be more in control of their economies through the development of their own capital markets, both debt and equity. They want to see their local companies expand, build. And more importantly, the retirement system changes that we're going to be -- we're seeing in every country is about the development of their own capital markets. Rachel talked about what we're doing in Saudi, the opportunities we have in India. The conversations we're having with more and more countries, more and more governments is, in our opinion, going to be one of the key characteristics.

And when you talk about and think about what one of the foundational reasons of the great success of the U.S. economy post the great financial recession, it was the power of the capital markets. And then if you overlay what Scott was talking about related to private credit and the expansion there, too, we see the pie just growing dramatically and the opportunity for a scaled operator who is hyper locally connected, we have a really unique opportunity to be expanding these revenues in multiple sources that are not present today. And we talked about some of the potentials earlier.

Great. Thank you. And then I want to just turn to a few that were submitted online. So the first one is from Barclays, asking who are Aladdin's competitors and how do clients consider their independence versus Aladdin being part of BlackRock, another asset manager.

I'm happy to take that one. So thanks for the question. I guess, first and foremost, it's important to note that the competitive environment for technology, it's a highly competitive environment, and the field is actually expanding, not shrinking. We compete against people, firms, continuing to do it themselves, right, upgrading legacy technology platforms that they've built over time. We see less of that, but it's still a big part of what we're facing in the market. We compete against other enterprise technology platforms who are similarly pursuing an end-to-end solution strategy. And we compete against point solutions, so smaller firms who provide a piece of the workflow, oftentimes in an industry-leading way, where in that field, we're seeing a whole host of new competitors enter the marketplace, particularly in the space of data and AI.

I would say to the second part of the question, as I mentioned in my presentation, I think this user provider concept has been our special sauce and continues to be a key competitive advantage. It's probably the reason why some of our largest client relationships are other global sophisticated asset managers who I'm sure very much view BlackRock through a competitive lens. But the reason why they ultimately go with Aladdin and make that decision is when you move to a new technology, these are long-term decisions, these are decisions that you're going to live with for a really long period of time. And I think they take great comfort in the fact that in BlackRock, they view a long-term strategic partner who will be there through thick and thin, the ups and downs. I think they view a high degree of alignment in terms of the road map and requirements.

Each of us has a seemingly endless to-do list, but at least 50% of that to-do list we have in common. So if we can do it together, if we can invest together and focus on the core, that will allow each and every one of these firms to differentiate themselves and focus on their points of competition and how they set themselves apart from BlackRock and everyone else. And then finally, they take comfort and a level of commitment and ongoing investment, right? Technology is only as good as the amount you invest in it. You need to invest in it more every year, not less. And because we are the biggest user of Aladdin, because we rely on it as our operating backbone, they take comfort that our level of commitment will continue for years and decades and for the future to come.

That's great. Thanks, Sudhir. And then one more submitted by our friend, Bill Katz at Cowen. How do you think about the opportunity for private markets in U.S. retirement? What needs to happen? How do you see BlackRock in that opportunity?

Sure, I'll take that. So a couple of things. I think you heard throughout the day that the role of private markets and retirement is critical. I think you heard from Rich about target date funds, model portfolios. I think you heard from Rachel about real transitions in the retirement ecosystem in the Netherlands, across Europe, the global move from DB to DC. So this isn't just a U.S. phenomenon. This is very much a global phenomenon and a huge opportunity for BlackRock as a large retirement manager in the world.

With respect to U.S.-defined contribution plans, in particular, there's a real sea change happening. I was in Washington 3 weeks ago and had 30 meetings on The Hill. And I was asked about this in every single meeting, in every single meeting. And one meeting that was particularly poignant was with an elected representative from California who was saying, "What is this all about? Isn't this going to be a big problem for 401(k) plans?" And I just asked, "Do the California pension plans that serve employees and teachers invest in the private markets and alternatives? Are they considered big investors?" They said, "Yes, absolutely. That's a big part of what they do." And I said, "So why is it that a corporate plan can't access those same markets? And why wouldn't that be true all over the United States for the millions of American workers that ultimately are trying to build better portfolios and outcomes for retirement? And what if I told you that putting private markets into retirement accounts could add 50 basis points of additional returns a year and 15% more retirement assets at the end of life. Is that something you think we should pursue?" And obviously, the answer was a resounding yes.

I do think the interesting thing is that there's starting to be a fair amount of press and questioning whether ultimately "retail investors" or retirees could get hurt. I think a really important thing here to consider is we're talking about private markets exposures in professionally managed multi-asset accounts. That's what a target date fund is. And I see a real pathway for private markets making their way into target date funds. Larry mentioned it. Target date funds are the predominant way as qualified default investment alternatives that U.S. retirees access investments in their 401(k) for growth, there should be private markets. It will take some advice reform. It will take some regulatory support. But I think there's a real sea change starting to happen on that and a path forward. It will start with smaller plans, adviser sold plans. It will make its way into the middle market and ultimately into mega DC plans with the support, I think, of providers, consultants and regulators.

All right. We'll take it back in the room. I think Mike Brown on the side here, please. Thank you.

Mike Brown from Wells Fargo. So given BlackRock's strength in the insurance channel and the new capabilities from HPS, it certainly makes sense to lean in even more there. Regarding the private IG opportunity, how do you plan to approach that? Is that going to be driven by partnerships? Or will that require some bolt-on acquisitions to kind of add and diversify origination?

Scott, do you want to give a go?

Yes. Sure. Thank you. Well, thanks for the question. Good to see you. I mentioned it in the talk, the OCIO opportunity with sort of $700 billion and the ability to convert that again, over 400 accounts, but the bulk of -- a lot of that capital concentrated with accounts that are sort of 30 to 50 accounts. We have 125 insurance accounts already where we've done noninvestment-grade credit. So pretty clear opportunity to just have those already set up, and we already have dialogues going with sort of 40 or 50 of those. And then I think the combined assets right now, combined with BlackRock and HPS in already an investment grade, is $25 billion. So we're well underway. I'm not sure that includes real estate. We can give you that. We can come back and give you the exact combination number, if that's important.

But then there's really systematically, across sort of 5 categories, I would say, corporate, traditional 144A type financing, small and medium-sized enterprise, that piece of it is pretty straightforward. And we mentioned with the network that BlackRock has, really unparalleled network to access that, together with the bank relationships that I mentioned. And then GPLP solutions, I mentioned increasingly GP financing, so a lot of these GPs need financing. That's traditionally been provided by banks. That's a big opportunity to allow whether that's NAV financing or fund financing, our own fund financing as well as a big opportunity there. And then infrastructure, again, together with GIP, but it's really traditional infrastructure, solar, data centers, Raj mentioned telecom transport and then real estate lending, private mortgages and then non-QM growth in non-QM mortgages is very significant as well. And then lastly would be sort of structured solutions.

We actually have what we believe is the largest nonbank lease platform, which we're bringing here. And we think we can access some of that private capital for those accounts as well, together with aircraft leasing, other forms of traditional lease finance that will come to the private market. So that's sort of what we're going to do. And I think we can rapidly move from 25 to 100 and then just execute on that. And you're really only capturing a hot count, anywhere from sort of 50 to 200 basis point premium over public comparably rated credit. That's what we're doing.

Mike, on the second part of your question, just I think a real strategic rationale for the combinations with GIP and HPS was being able to deliver origination from these platforms into insurance accounts, especially in investment grade. But we'll look at minority investments that expand those capabilities that would be geared all around origination. So I think from what you heard today, those capabilities are here to originate. It's not just insurance, it's going to power the whole platform, whether it's our fixed income mutual fund accounts and building public, private credit in retail portfolios, but also insurance is a real opportunity. And so origination platforms would be a place where we're looking at minority investments.

Viridian transaction is a good example.

Minority investment in Viridian and the closed-book German insurer is also a way to continue to grow those franchises.

Okay. Great. I'm going to move up and down. Could we go all the way to the back. Is it Ben?

Ben Budish from Barclays. Wondering if you could drill in a little bit more on the private markets fundraising outlook. You've given some of the pieces, $70 billion in insurance, $60 billion in wealth. Curious, what are the other building blocks? What does the flagship cycle look like over the next several years? How much is going to come from sort of open-ended fundraising? And maybe along the same lines, how are you thinking about public and private together? You talked a lot about portfolio management, which makes a lot of sense. But we've seen a lot of your competitors sort of partner up traditional and private, but it seems like you can do a lot of that in-house. So how are you thinking about sort of new product creation along the same lines?

Great. I think that one is going to be with me, too. So look, clients are doing more with BlackRock in private markets. We're really excited about a growing pipeline with HPS and with GIP and really moving into a higher gear. Raj went through with you the successful last close of GIP flagship Fund V at target $25 billion, took you through the ambitions to build $30 billion in the AI infrastructure fund. And from 2025 to 2030, as Larry mentioned and I mentioned, we're targeting $400 billion of gross private markets fundraising led by infrastructure and the alternative credit platforms. We spent a lot of time thinking through the past and fundraising and capital formation to get to this $400 billion number.

And I can tell you, I think there's a lot of slightly different shapes, I'll share just different 3. I think some of those will be dictated by clients in the markets, but we feel very good about that number. So first would be just building successor and extension strategies on the normal time line for building successor funds. So once funds get through their normal investment period, 70-plus percent invested, you'd see them back in market for successor funds. So under that construct, we'd see the shape of future fundraising to be fairly proportionate to the shape of the assets in our business pro forma today. So let's call it roughly 1/3, 1/3, 1/3 coming from infra, alternative credit, other solutions. And with more success, I think, in extension strategies, higher level of insurance client shifts to IG private debt. There's no question to me that each of infra and private credit could be 40-plus percent of fundraising.

A second shape, I think, is really that we'd expect faster growth with our wealth clients. So if the growth clients go faster, you're going to see a higher fundraising contribution, I think, from some of the private credit retail vehicles. Scott took you through a plan with over $45 billion of new fee-paying AUM in retail and wealth. I think a stronger breakout in things like GPLP solutions, secondaries fund, the semi-liquid through wealth platforms, that could lift this even higher.

And then the last thing I'll say is when we sat down to build the fundraising pipeline and what the future looked like with Raj and Bayo on the GIP and BlackRock combination, we never modeled this AI infrastructure partnership. That wasn't even part of the plan. And I think Raj set out really nicely the enormity of the digital infrastructure opportunity. I think it has the opportunity to grow both GIP flagship infrastructure funds. It has adjacent financing opportunities, no question, for alternative credit and HPS funds as well as just a bigger AIP program. So we'll look forward to tracking that progress on fundraising with you.

Is it Peter in the middle?

So famous business maxim is that there's only 2 ways to make money: to bundle or to unbundle. And investment management is famously an open architecture unbundled industry. After 25 years of incredible work and then the recent M&A, your investment product set and technology set allows you to deliver 50-30-20 bundles at 50 basis points rather than 10% wallet share at 15 basis points. Do you agree with this framing and opportunity? And how do you intend to pursue bundles? Will you pursue, for example, disruptive bundle pricing, which comes with bundles? And if that's the case, why aren't the financial targets higher, every single basis point of fee growth is 7% organic growth?

Sometimes, I think the example of kind of Coca-Cola is a great example. So I think about Coca-Cola started selling cans in order to meet consumer band, skinnier cans, 6 packs, bottles, fountain soda. And this concept of kind of bundling and unbundling, I think, is one that you see from the outside and not so much from the inside. From the inside, we're always dealing with the client's whole portfolio. Even if you're just dealing with one particular wedge of the portfolio, you're always dealing with the whole portfolio and, in that sense, the more we can grow with those clients. You heard that from Rob Goldstein. You heard it from Rich. But Rich, I think a good example of this would be to talk about what's happened with fee rates and product constructions in the models business. And the models business is both an open architecture and an all BlackRock business. But maybe you could give some of that as an example of what happens in terms of pricing on fee rates.

Sure. Well, I mean, I think the models business is a particularly interesting one. We talked about the total size of it. And let's be clear, we participate in that in multiple ways. One, as a building block provider for our own models, of course, and as well as other people's models. But what I think is most interesting is how that industry is evolving and what people are looking for. So what we've been able to do is to incorporate a broader suite of strategies, notably active ETFs, notably liquid alternatives, into these strategies. And that's what you've seen. I referenced the average fee rate on that business going from 12% to 19%.

Additionally, we have different branded suites of models. We have our target allocation models, which are the most well-known and largest across the entire market. But then we have some more specialized models. Rick and his team run a series of models that are based off the flagship global allocation franchise. In that franchise, by itself, where people are accessing the specific skills of certain teams, the average fee on those models is over 34 basis points, and we're seeing a lot of growth there.

And then I think the last element is as we begin incorporating the separately managed accounts like the Aperio concept, with the tax efficiency that goes along with it and, in fact, true privates, not just liquid alternatives, like Raj and Scott referenced, we have a lot of upside in terms of increasing the average fee rate and participating in the biggest part of that whole portfolio.

And Rich, if I could just add because I think the question assumes a very binary world. And I think one of the really strong competitive advantages of BlackRock is that we don't view it at all as binary, we view it as one continuous spectrum. And in many regards, we view it through the lens of everything being technology. So whether we're the bundler or someone else's, they could use our technology. The ETF is a technology.

And importantly, one of the things that I had mentioned that we think maybe less so in the next Investor Day, but in the 2 or 3 from now, is going to be really important. is if you think about what's happening in the world right now, particularly with regard to digital assets and particularly thinking of it as a technology and tokenization as a core element of that, that's just going to make the friction costs associated with bundling go down, and it's going to make the technology requirements for people to be able to put the LEGOs together go up, which is something that not only we're very excited about, but we believe as a company, we could be quite catalytic towards.

Brian, over here.

Brian Bedell, Deutsche Bank. Maybe just building on that theme, Rob, on tokenization, if you can maybe, and Larry, Martin and whoever else, add some more perspective on what you see in the next 4 years or 6 years through 2030 in terms of what part of -- how much of the ecosystem do you think will be tokenized? And then your role in that process, is that accretive to the model if you're able to do that? Or are there offsets on pricing? Do you think you gain market share, more organic growth?

I'm eager to take it. So thank you. So I think that at least through our lens, I think it's not an if at this point, it's a when. So it's harder to tell if it's going to be exactly in 4 years versus in 6 years versus in 3 years versus in 9 years. But I think there are certain things that are pretty clear at this point. And as a starting point, I've easily gotten pitched 100 times on people who have come to talk to us about how every stock in the world should be tokenized. And the reality is the marginal cost of trading a stock at BlackRock rounds to 0 at this point. So that is on our top 1,000 to-do list in terms of -- at least through the lens of the COO.

But if you look at things that should be reasonably simple within our ecosystem and the friction costs associated with them, someone buying and selling a fund, cash moving around, cash is collateral. The friction costs for these activities is still very, very high. And I think it's quite clear it's going to go down. I think there's 2 primary dimensions that are exciting to us as we see the world going forward. One is that we see a world where the token as a fund technology will enable it to be easier for people to bundle the building blocks in traditional capital markets. So there is a technology element to this that will innovate just how funds are bought today. And I think if we had a day where we looked into the fund process, I think that the ecosystem is shockingly behind the current state of technology.

The second element is there's a very large emerging alternate universe that I like to think of in the digital asset space. And that emerging universe has a significant amount of capital that's being allocated to it. And ultimately, I believe, we believe, that traditional investment products will make their way into that space. And one of the most interesting things, I think IBID is an incredible example of this, a really remarkable industry example of this. People wanted access to Bitcoin, but they wanted it through the boring old capital markets. I think there's a great untapped opportunity where people are going to want access to traditional capital markets things, but through the technologies of digital assets. And that is yet to even begin.

Let me just add to that. If you look at the success of Brazil and India and the digitization of its currency and how it transform those economies, you are going to see other economies go directly towards tokenization faster. And so you're going to see this convergence in some parts of the world faster than maybe countries that have more traditional capital markets. But as one thing clear, I think it's really important to what Rob said, what we are noticing, the age differential between a typical capital market investor and stock and bonds and a typical investor globally in crypto, you're talking about half the age. And so the marriage, as Rob was talking about, these 2 avenues.

And if we could be that nexus, and that's what we're trying to do in our position in crypto, if we could be at that nexus of helping those younger investors who are big believers in crypto, at one time in their life, they're going to have to start focusing on things like retirement, boring things like retirement. And so we look at this as an incredible opportunity to be connective and helping them on that long journey. And I believe this is going to be one of the real big opportunities. And again, once again, this is a scale thing. And having our position in technology and our position in ETFs and iShares allows us to have that deeper, faster and more resounding connectivity on marrying those 2 avenues.

Great. I see Glenn in the back here, please.

Glenn Schorr, Evercore. Maybe a crossover question on private credit that I might get a little from Scott and a lot from Rick, I think. So a lot of data providers and consultants talk about the big growth in private credit. I agree. They talk about it more in like low double digits and a doubling by 2030, including one that is named Preqin. You guys have $4.5 trillion going by 2030, which is a lot more. I like triple, better than double. So my question is, is the private investment grade opportunity the big difference in that type of exponential growth?

And for Rick, your part is what I'm curious is, if we take a big, huge installed base of fixed income, your clients that you've grown up with, can you convince them, hey, investment grade is investment grade, whether it's public or private, can we get -- can we port over a big block of fixed income all at once? Like, I'd love your opinion on that.

So I think there's a couple of things happening that are pretty extraordinary. There's a demographic in the world and there's a wealth creation in the world. There are, depending how you measure it, I think, 3 to 6x the size of wealth relative to financial assets that could be purchased today. It's part of why you see the technicals in the credit market are extraordinary, part of why the equity market, even though multiples may be stretched, just continue to elevate. There's an extraordinary need for assets, as Larry says, into retirement and just straight assets.

Simultaneously, so you think about how entities have financed like governments. Governments have financed through you spend, you borrow, you tax. And you've got assets on balance sheet and, quite frankly, they're stretched today. I think what's happened, what's going to happen, is you're going to unlock amazing amounts of assets and I think the securitization market. Think about how we finance real estate, how we finance student loans, how we finance so much of modern finance today, I think what's going to happen, what is I think is incredibly exciting is you've got incredible amounts of wealth globally, a need for assets and you've got assets locked on balance sheets or they're not financed effectively. And I think where you're going to see amazing growth is the ability to do that.

And I think the benefit to clients is you're going to get to buy new assets, investment grade, below investment grade, where you can look at what is your attachment point, what is your collateral. And I think you're going to see advancements in finance that are going to be pretty extraordinary that I think are great, phenomenal, for investors.

Yes. The only thing -- there are 2 things. One, I think in Martin's slide, he had private credit growing at 17% for the last 5 or so years. The $4.5 trillion, I think, was an estimate for like 5 years out. And then the research, again, the expanding definition of private credit, some research, if you talk -- everything on a bank balance sheet could be private, and you're seeing those trends, partly based on what Rick is saying is anything that you can see. Whether you structure it, securitize it and try to lower the cost of capital, that's going to just proliferate in both private markets and public markets. Yes, go ahead.

No, I was going to say one more, I mean think about how corporations -- governments, corporations, the efficiencies of their balance sheet, how they think about -- and Raj talked about this, how they think about subsidiaries, how they think about hard assets, how do you finance those effectively? I think you're going to see explosion of that in terms of how does real modern finance work over the next number of years.

Yes. And then you overlay the growth -- what Raj talked about, the incredible biggest CapEx cycle in our generation by a lot, not including really the power and a lot of the other things that are ancillary to all that, that's all going to come through and some of that's going to be private and public. So I'd sort of do 10% to 20% growth by sector, and you'll be somewhere around that.

I would just add, too, if you think about the most recent reallocation into Europe, for Europe to succeed with its big promise, the private markets of Europe, especially where the banking system is smaller than here in the United States, the need for private credit, private capital is even greater than ever.

That's great. I spent 15 years of my career in Europe. There is no integrated European capital market without private pools of capital, whether they're traded or private. And so that is a huge opportunity for us as an organization as Europe gets into a much more spending mode.

And if you take that and think about the needs of Asia, the GCC region, and these are just incredible opportunities that were not part of the possibility just 5 years ago, and that's the opportunity for BlackRock.

Great. Maybe we'll do one more. Mike Cyprys, please.

Mike Cyprys, Morgan Stanley. So you guys have done a number of acquisitions over the past 2 years. So question is, as you look at the firm today, are there any areas that you'd like to bolster, enhance other geographic, asset class presence, technological capabilities, expertise there in order to best capture the opportunity set? So how are you thinking about inorganic growth, M&A, but also partnerships as you look out over the next 5 years?

So as I said -- thanks for the question, Mike. As I said, I think HPS, Preqin, GIP round out the larger scale M&A, I think, on our sort of near to intermediate-term agenda. And as we look out, I think the bolt-ons are about things that can help us expand capabilities across the private markets franchise. So I think about logical extensions into things like real estate credit. I think about logical extensions into other financing and receivables platforms. In technology, we think there are some really interesting bolt-on things that could help with Preqin, that could help accelerate the Aladdin platform.

We see also sort of strategic partnerships with distribution venues, particularly Europe, Asia; and even right here in the United States, some other opportunities there for strategic partnerships. We did -- and minority investments there, we did some of those in turnkey asset management platforms to help build public private models businesses like we've done with places like Envestnet, GOL, iCapital, et cetera. So we think there's more of that to do as well.

Great. Should we get the people some lunch?

Let's get the people some lunch.

Thank you, everyone.

Thanks, everyone. Thank you for joining.