BlackRock, Inc. (BLK) Presents at 2019 Goldman Sachs US Financial Services Conference Transcript

Summary of BlackRock, Inc. Conference Call Company Overview - Company: BlackRock, Inc. (NYSE: BLK) - Event: 2019 Goldman Sachs US Financial Services Conference - Date: December 11, 2019 - Participants: Gary Shedlin (CFO), Alexander Blostein (Goldman Sachs) Key Points Industry and Company Performance - BlackRock reported approximately $300 billion of net flows for the first three quarters of 2019, with strong performance in iShares, fixed income, and cash management capabilities [2][3] - The company aims for a long-term organic fee growth target of 5%, with recent organic fee growth at around 3% [3][4] - Over the last 12 months, BlackRock achieved about $350 billion in flows, translating to 5% organic growth, but the yield from these flows was lower due to a preference for lower-fee fixed income and cash products [5][6] iShares and ETF Growth - iShares has been a significant growth driver, with $160 billion in flows year-to-date, indicating high single-digit to 10% organic growth [10][11] - BlackRock expects low double-digit growth in assets over the next five years, which could lead to over 5% organic fee growth [11][12] - The iShares business is segmented into core, strategic, and precision exposures, with the strategic segment (including fixed income and factors) showing strong growth rates [12][14] Market Dynamics and Competitive Position - The shift to zero-commission trading is seen as a long-term positive for BlackRock, enhancing access to ETFs and benefiting market leaders with scale and technology [18][19] - BlackRock's share on e-broker platforms has increased, with about $400 billion of ETFs on these platforms [21] - The merger of e-brokers is expected to narrow the product provider landscape, benefiting firms with strong brand recognition and efficient sales forces [23][24] Pricing Strategy - BlackRock maintains a disciplined pricing strategy for iShares, focusing on value propositions rather than chasing market share [26][27] - Pricing investments have been around 1.5% to 2.5% of iShares revenue, with a focus on maintaining profitability while investing in growth [27][28] Alternatives Business - BlackRock's alternatives business is significant, with a total of $225 billion in assets, including liquid and illiquid alternatives [31][32] - The company is focusing on both organic growth (hiring and operational infrastructure) and inorganic growth (targeted acquisitions) in the alternatives space [33][34] Technology and Innovation - BlackRock has invested heavily in technology, particularly in its Aladdin platform, which integrates portfolio management and risk analytics [38][39] - Aladdin Wealth is a newer initiative aimed at providing wealth management solutions, with 13 clients across 11 countries [42] Financial Outlook - BlackRock aims to keep core G&A expenses flat, focusing on optimizing the model for organic growth [44][46] - The company is committed to maintaining differentiated growth and managing margins effectively [47] Additional Insights - The preference for fixed income and cash products has impacted fee growth, as these products typically carry lower fees [5][6] - The strategic segment of iShares, particularly in fixed income, is expected to drive significant growth, with 40% annualized organic growth reported in this area [14][15] - BlackRock's approach to technology and client solutions is seen as a competitive advantage in a rapidly evolving market [39][40]