Organic base fee growth
Q: Michael Cho of JPMorgan asked about the drivers and sustainability of the organic base fee growth.
A: Martin Small, Chief Financial Officer, noted the 11% growth marked the ninth consecutive quarter at or above 5%. He attributed this to a diversified platform including systematic strategies, active management, and private markets.
Interest rates and AI infrastructure
Q: Michael Cyprys of Morgan Stanley asked how higher interest rates are affecting client allocations and if AI infrastructure projects are sensitive to financing costs.
A: Robert Kapito, President, stated fixed income demand is in the early innings as investors seek yield. Laurence Fink, Chairman and Chief Executive Officer, added that financing AI infrastructure is a major priority and requires new, innovative financing vehicles to support broad economic growth.
Tax-aware strategies and Aperio
Q: Craig Siegenthaler of Bank of America asked about demand for tax-aware strategies, specifically Aperio, and how the firm is managing capacity constraints for long/short products.
A: Martin Small reported Aperio assets are near $200 billion and noted strong demand for tax-aware solutions. He explained that the firm is broadening its financing partners to support the growth of long/short strategies.
Margin expansion
Q: Michael Brown of UBS asked about the drivers of margin expansion and the outlook for 2027.
A: Martin Small highlighted that the operating margin reached 47.8% and credited structural growth categories like private markets and technology. He stated the firm aims to drive margins toward 50% over time.
AI ecosystem and capital markets
Q: Alex Blostein of Goldman Sachs asked how BlackRock is participating in the AI ecosystem and if the firm plans to build a syndication business.
A: Laurence Fink confirmed the firm is actively financing hyperscalers and data centers. Martin Small added that syndication revenue would be incremental, as the primary focus remains on placing assets into long-term client portfolios.
Flow outlook
Q: Dan Fannon of Jefferies asked about the outlook for flows and potential changes in the product mix.
A: Martin Small noted that the fourth quarter is seasonally strong for iShares and expects private markets fundraising to accelerate. He also anticipates a more constructive environment for private credit and retail BDCs.
