blk-10k_20191231.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File No. 001-33099

BlackRock, Inc.

(Exact name of registrant as specified in its charter)

Delaware

32-0174431

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

55 East 52nd Street, New York, NY 10055

(Address of Principal Executive Offices)

(212) 810-5300

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value	BLK	New York Stock Exchange
1.250% Notes due 2025	BLK25	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known, seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒	Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the voting common stock and nonvoting common stock equivalents held by nonaffiliates of the registrant as of June 30, 2019 was approximately $71.9 billion.

As of January 31, 2020, there were 154,827,534 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents are incorporated by reference herein:

Portions of the definitive Proxy Statement of BlackRock, Inc. to be filed pursuant to Regulation 14A of the general rules and regulations under the Securities Exchange Act of 1934, as amended, for the 2020 annual meeting of stockholders to be held on May 21, 2020 (“Proxy Statement”) are incorporated by reference into Part III of this Form 10-K.

BlackRock, Inc.

Table of Contents

PART I

Item 1	Business	1
Item 1A	Risk Factors	18
Item 1B	Unresolved Staff Comments	29
Item 2	Properties	30
Item 3	Legal Proceedings	30
Item 4	Mine Safety Disclosures	30

PART II

Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	31
Item 6	Selected Financial Data	32
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	58
Item 8	Financial Statements and Supplemental Data	59
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	59
Item 9A	Controls and Procedures	59
Item 9B	Other Information	62

PART III

Item 10	Directors, Executive Officers and Corporate Governance	62
Item 11	Executive Compensation	62
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	62
Item 13	Certain Relationships and Related Transactions, and Director Independence	62
Item 14	Principal Accountant Fees and Services	62

PART IV

Item 15	Exhibits and Financial Statement Schedules	62
	Signatures	66

Part I

Item 1. Business

Overview

BlackRock, Inc. (together, with its subsidiaries, unless the context otherwise indicates, “BlackRock” or the “Company”) is a leading publicly traded investment management firm with $7.43 trillion of assets under management (“AUM”) at December 31, 2019. With approximately 16,200 employees in more than 30 countries who serve clients in over 100 countries across the globe, BlackRock provides a broad range of investment and technology services to institutional and retail clients worldwide.

Our diverse platform of alpha-seeking active, index and cash management investment strategies across asset classes enables the Company to tailor investment outcomes and asset allocation solutions for clients. Product offerings include single- and multi-asset portfolios investing in equities, fixed income, alternatives and money market instruments. Products are offered directly and through intermediaries in a variety of vehicles, including open-end and closed-end mutual funds, iShares^® exchange-traded funds (“ETFs”), separate accounts, collective investment trusts and other pooled investment vehicles. BlackRock also offers technology services, including the investment and risk management technology platform, Aladdin^®, Aladdin Wealth, eFront, Cachematrix and FutureAdvisor, as well as advisory services and solutions to a broad base of institutional and wealth management clients. The Company is highly regulated and manages its clients’ assets as a fiduciary. We do not engage in proprietary trading activities that could conflict with the interests of our clients.

BlackRock serves a diverse mix of institutional and retail clients across the globe. Clients include tax-exempt institutions, such as defined benefit and defined contribution pension plans, charities, foundations and endowments; official institutions, such as central banks, sovereign wealth funds, supranationals and other government entities; taxable institutions, including insurance companies, financial institutions, corporations and third-party fund sponsors, and retail investors.

BlackRock maintains a significant global sales and marketing presence that is focused on establishing and maintaining retail and institutional investment management and technology service relationships by marketing its services to investors directly and through third-party distribution relationships, including financial professionals and pension consultants.

BlackRock is an independent, publicly traded company, with no single majority shareholder and over two-thirds of its Board of Directors consisting of independent directors. At December 31, 2019, The PNC Financial Services Group, Inc. (“PNC”) held 22.0% of BlackRock’s voting common stock and 22.4% of BlackRock’s capital stock, which includes outstanding common and nonvoting preferred stock.

Management seeks to deliver value for stockholders over time by, among other things, capitalizing on BlackRock’s differentiated competitive position, including:

•

the Company’s focus on strong performance providing alpha for active products and limited or no tracking error for index products;

•

the Company’s global reach and commitment to best practices around the world, with approximately 50% of employees outside the United States serving clients locally and supporting local investment capabilities. Approximately 40% of total AUM is managed for clients domiciled outside the United States;

•

the Company’s breadth of investment strategies, including market-cap weighted index, factors, systematic active, traditional fundamental active, high conviction alpha and illiquid alternative product offerings, which enhance its ability to tailor single- and multi-asset investment solutions to address specific client needs;

•

the Company’s differentiated client relationships and fiduciary focus, which enable effective positioning toward changing client needs and macro trends including the secular shift to index investing and ETFs, a focus on income and retirement, increasing demand for sustainable investment strategies and barbelling using index, active and illiquid alternatives products; and

•

the Company’s longstanding commitment to innovation, technology services and the continued development of, and increased interest in, BlackRock technology products and solutions, including Aladdin, Aladdin Wealth, eFront, Cachematrix, and FutureAdvisor. This commitment is further extended by minority investments in distribution technologies including Scalable Capital, iCapital, Acorns and Envestnet.

BlackRock operates in a global marketplace impacted by changing market dynamics and economic uncertainty, factors that can significantly affect earnings and stockholder returns in any given period.

The Company’s ability to increase revenue, earnings and stockholder value over time is predicated on its ability to generate new business, including business in Aladdin and other technology products and services. New business efforts depend on BlackRock’s ability to achieve clients’ investment objectives, in a manner consistent with their risk preferences, to deliver excellent client service and to innovate in technology to serve clients’ evolving needs. All of these efforts require the commitment and contributions of BlackRock employees. Accordingly, the ability to attract, develop and retain talented professionals is critical to the Company’s long-term success.

Financial Highlights

(in millions, except per share data)
GAAP:	2019			2018			2017⁽⁴⁾			2016⁽⁴⁾			2015⁽⁴⁾
Total revenue	$	14,539		$	14,198		$	13,600		$	12,261		$	11,401
Operating income	$	5,551		$	5,457		$	5,254		$	4,565		$	4,664
Operating margin		38.2	%		38.4	%		38.6	%		37.2	%		40.9	%
Nonoperating income (expense)⁽¹⁾	$	186		$	(76	)	$	(32	)	$	(108	)	$	(69	)
Net income attributable to BlackRock, Inc.	$	4,476		$	4,305		$	4,952		$	3,168		$	3,345
Diluted earnings per common share	$	28.43		$	26.58		$	30.12		$	19.02		$	19.79

(in millions, except per share data)
As adjusted⁽²⁾:	2019			2018			2017⁽⁴⁾			2016⁽⁴⁾			2015⁽⁴⁾
Operating income	$	5,551		$	5,531		$	5,269		$	4,669		$	4,695
Operating margin		43.7	%		44.3	%		44.1	%		43.8	%		42.9	%
Nonoperating income (expense)⁽¹⁾	$	186		$	(76	)	$	(32	)	$	(108	)	$	(70	)
Net income attributable to BlackRock, Inc.⁽³⁾	$	4,484		$	4,361		$	3,698		$	3,210		$	3,313
Diluted earnings per common share⁽³⁾	$	28.48		$	26.93		$	22.49		$	19.27		$	19.60

(1)	Net of net income (loss) attributable to noncontrolling interests (“NCI”) (redeemable and nonredeemable).

(2)	BlackRock reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”); however, management believes evaluating the Company’s ongoing operating results may be enhanced if investors have additional non-GAAP financial measures.

See “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures”, for further information on non-GAAP financial measures and for as adjusted items for 2019 and 2018.

In 2016, a restructuring charge, primarily comprised of severance and accelerated amortization expense of previously granted compensation awards, has been excluded to provide more meaningful analysis of BlackRock’s ongoing operations and to ensure comparability among periods presented. In 2015, compensation expense associated with appreciation (depreciation) on investments related to certain BlackRock deferred compensation plans has been excluded as returns on investments set aside for these plans, which substantially offset this expense, are reported in nonoperating income (expense). In 2017, 2016 and 2015, the portion of compensation expense associated with certain long-term incentive plans (“LTIP”) funded, or to be funded, through share distributions to participants of BlackRock stock held by PNC has been excluded because it ultimately did not impact BlackRock’s book value.

(3)

Net income attributable to BlackRock, Inc., as adjusted, and diluted earnings per common share, as adjusted exclude the after-tax impact of the items referred to above and exclude the effect on deferred income tax expense resulting from certain income tax matters. In 2017, $1.2 billion of net tax benefit related to The 2017 Tax Cuts and Jobs Act was excluded from net income attributable to BlackRock, Inc., as adjusted, and diluted earnings per common share, as adjusted.

(4)	Results for 2017 and 2016 were recast to reflect the adoption of the new revenue recognition standard. Results for 2015 reflect accounting guidance prior to the adoption of the new revenue recognition standard.

Assets Under Management

The Company’s AUM by product type for the years 2015 through 2019 is presented below.

	December 31,
(in millions)	2019		2018		2017		2016		2015		5-Year CAGR⁽¹⁾
Equity	$	3,820,329	$	3,035,825	$	3,371,641	$	2,657,176	$	2,423,772		9	%
Fixed income		2,315,392		1,884,417		1,855,465		1,572,365		1,422,368		11	%
Multi-asset		568,121		461,884		480,278		395,007		376,336		8	%
Alternatives		178,072		143,358		129,347		116,938		112,839		10	%
Long-term		6,881,914		5,525,484		5,836,731		4,741,486		4,335,315		10	%
Cash management		545,949		448,565		449,949		403,584		299,884		13	%
Advisory		1,770		1,769		1,515		2,782		10,213		(39	)%
Total	$	7,429,633	$	5,975,818	$	6,288,195	$	5,147,852	$	4,645,412		10	%

(1)	Percentage represents CAGR over a five-year period (2014-2019).

Component changes in AUM by product type for the five years ended December 31, 2019 are presented below.

(in millions)	December 31, 2014		Net inflows (outflows)			Adjustment/ acquisitions and dispositions⁽¹⁾		Market change		FX impact			December 31, 2019		5-Year CAGR⁽²⁾
Equity	$	2,451,111	$	277,866		$	2,590	$	1,134,325	$	(45,563	)	$	3,820,329		9	%
Fixed income		1,393,653		718,376			18,539		232,306		(47,482	)		2,315,392		11	%
Multi-asset		377,837		77,525			1,048		123,068		(11,357	)		568,121		8	%
Alternatives		111,240		48,035			10,121		11,255		(2,579	)		178,072		10	%
Long-term		4,333,841		1,121,802			32,298		1,500,954		(106,981	)		6,881,914		10	%
Cash management		296,353		168,051			81,321		6,583		(6,359	)		545,949		13	%
Advisory		21,701		(18,149	)		—		174		(1,956	)		1,770		(39	)%
Total	$	4,651,895	$	1,271,704		$	113,619	$	1,507,711	$	(115,296	)	$	7,429,633		10	%

(1)

Amounts include AUM acquired in the acquisition of certain assets of BlackRock Kelso Capital Advisors LLC (“BKCA”) in March 2015, AUM acquired from Infraestructura Institucional and FutureAdvisor in October 2015, AUM acquired in the BofA^® Global Capital Management transaction in April 2016, AUM acquired in the acquisition of the equity infrastructure franchise of First Reserve (“First Reserve Transaction”) in June 2017, net AUM from the acquisitions of Tennenbaum Capital Partners in August 2018 (“TCP Transaction”) and the asset management business of Citibanamex in September 2018 (“Citibanamex Transaction”), AUM reclassifications and net dispositions related to the transfer of BlackRock’s UK Defined Contribution Administration and Platform business to Aegon N.V. in July 2018 (“Aegon Transaction”), and net AUM dispositions related to the sale of BlackRock’s minority interest in DSP BlackRock Investment Managers Pvt. Ltd. to the DSP Group in August 2018 (“DSP Transaction”). In addition, amounts include other reclassifications to conform to current period combined AUM policy and presentation.

(2)	Percentage represents CAGR over a five-year period (2014-2019).

AUM represents the broad range of financial assets we manage for clients on a discretionary basis pursuant to investment management agreements that are expected to continue for at least 12 months. In general, reported AUM reflects the valuation methodology that corresponds to the basis used for determining revenue (for example, net asset value). Reported AUM does not include assets for which we provide risk management or other forms of nondiscretionary advice, or assets that we are retained to manage on a short-term, temporary basis.

Investment management fees are typically earned as a percentage of AUM. We also earn performance fees on certain portfolios relative to an agreed-upon benchmark or return hurdle. On some products, we also may earn securities lending revenue. In addition, BlackRock offers its proprietary Aladdin investment system as well as risk management, outsourcing, advisory and other technology services, to institutional investors and wealth management intermediaries. Revenue for these services may be based on several criteria including value of positions, number of users or accomplishment of specific deliverables.

At December 31, 2019, total AUM was $7.43 trillion, representing a CAGR of 10% over the last five years. AUM growth during the period was achieved through the combination of net market valuation gains, net inflows and acquisitions, including BKCA, Infraestructura Institucional and FutureAdvisor, which collectively added $2.2 billion of AUM in 2015, BofA Global Capital Management, which added $80.6 billion of AUM in 2016, the First Reserve Transaction, which added $3.3 billion of AUM in 2017 and the net AUM impact from the TCP Transaction, the Citibanamex Transaction, the Aegon Transaction and the DSP Transaction, which added $27.5 billion of AUM in 2018. Our AUM mix encompasses a broadly diversified product range, as described below.

The Company considers the categorization of its AUM by client type, product type, investment style, and client region useful to understanding its business. The following discussion of the Company’s AUM will be organized as follows:

Client Type	Product Type	Investment Style	Client Region
• Retail	• Equity	• Active	• Americas
• iShares ETFs	• Fixed Income	• Index and iShares ETFs	• Europe, the Middle East and Africa (“EMEA”)
• Institutional	• Multi-asset		• Asia-Pacific
	• Alternatives
	• Cash Management

Client Type

BlackRock serves a diverse mix of institutional and retail clients across the globe, with a regionally focused business model. BlackRock leverages the benefits of scale across global investment, risk and technology platforms while at the same time using local distribution presence to deliver solutions for clients. Furthermore, our structure facilitates strong teamwork globally across both functions and regions in order to enhance our ability to leverage best practices to serve our clients and continue to develop our talent.

Clients include tax-exempt institutions, such as defined benefit and defined contribution pension plans, charities, foundations and endowments; official institutions, such as central banks, sovereign wealth funds, supranationals and other government entities; taxable institutions, including insurance companies, financial institutions, corporations and third-party fund sponsors, and retail investors.

iShares ETFs are a growing component of both institutional and retail client portfolios. However, as iShares ETFs are traded on exchanges, complete transparency on the ultimate end-client is unavailable. Therefore, iShares ETFs are presented as a separate client type below, with investments in iShares ETFs by institutions and retail clients excluded from figures and discussions in their respective sections.

AUM by investment style and client type at December 31, 2019 is presented below.

(in millions)	Retail		iShares ETFs		Institutional		Total
Active	$	608,552	$	—	$	1,338,670	$	1,947,222
Non-ETF Index		94,745	—			2,599,882		2,694,627
iShares ETFs		—		2,240,065		—		2,240,065
Long-term		703,297		2,240,065		3,938,552		6,881,914
Cash management		10,842	—			535,107		545,949
Advisory		—	—			1,770		1,770
Total	$	714,139	$	2,240,065	$	4,475,429	$	7,429,633

Retail

BlackRock serves retail investors globally through a wide array of vehicles across the investment spectrum, including separate accounts, open-end and closed-end funds, unit trusts and private investment funds. Retail investors are served principally through intermediaries, including broker-dealers, banks, trust companies, insurance companies and independent financial advisors. Technology solutions, digital distribution tools and a shift toward portfolio construction are increasing the number of financial advisors and end-retail clients using BlackRock products. Retail represented 10% of long-term AUM at December 31, 2019 and 31% of long-term base fees for 2019.

iShares ETFs have a significant retail component but is shown separately below. With the exclusion of iShares ETFs, retail AUM is predominantly comprised of active mutual funds. Mutual funds totaled $565.1 billion, or 80%, of retail long-term AUM at year-end, with the remainder invested in private investment funds and separately managed accounts. 87% of retail long-term AUM is invested in active products.

Component changes in retail long-term AUM for 2019 are presented below.

(in millions)	December 31, 2018		Net inflows (outflows)			Market change		FX impact		December 31, 2019
Equity	$	205,714	$	(652	)	$	45,820	$	1,531	$	252,413
Fixed income		271,588		21,222			11,882		573		305,265
Multi-asset		113,417		(9,291	)		16,138		175		120,439
Alternatives		20,131		4,531			506		12		25,180
Total	$	610,850	$	15,810		$	74,346	$	2,291	$	703,297

The retail client base is diversified geographically, with 70% of long-term AUM managed for investors based in the Americas, 25% in EMEA and 5% in Asia-Pacific at year-end 2019.

•

US retail long-term net inflows of $23.4 billion were led by fixed income net inflows of $22.7 billion. Fixed income net inflows were diversified across exposures and products, with strong flows into municipal, total return, high yield and short duration bond offerings. Equity net inflows of $3.9 billion included the successful close of the $1.4 billion BlackRock Science & Technology Trust II, BlackRock’s largest closed-end fund launch in the last seven years. Alternatives net inflows of $2.7 billion were driven by flows into the BlackRock Global Event Driven fund. Multi-asset net outflows of $5.9 billion were primarily due to outflows from world allocation strategies.

•

International retail long-term net outflows of $7.6 billion resulted from net outflows from equity, multi-asset and fixed income, partially offset by alternatives net inflows. Alternatives net inflows of $1.8 billion were driven by flows into the BlackRock Global Event Driven fund. Equity net outflows of $4.5 billion were primarily due to outflows from European equities, as political and market uncertainty contributed to a risk-off environment in the region. Multi-asset net outflows of $3.4 billion were primarily due to outflows from world allocation strategies.

iShares ETFs

iShares is the leading ETF provider in the world with $2.2 trillion of AUM at December 31, 2019 and was the top asset gatherer globally in 2019¹ with net inflows of $183.5 billion driving an organic growth rate of 11%. iShares fixed income net inflows of $112.4 billion were diversified across exposures and product lines, led by flows into Core, treasuries and mortgage-backed securities funds. iShares equity net inflows of $64.7 billion were driven by flows into Core funds and factor-based ETFs. iShares ETF multi-asset and alternative funds contributed a combined $6.4 billion of net inflows, primarily into commodities funds. iShares ETFs represented 33% of long-term AUM at December 31, 2019 and 41% of long-term base fees for 2019.

Component changes in iShares ETFs AUM for 2019 are presented below.

(in millions)	December 31, 2018		Net inflows		Market change		FX impact			December 31, 2019
Equity	$	1,274,262	$	64,705	$	292,840	$	1,165		$	1,632,972
Fixed income		427,596		112,345		25,878		(29	)		565,790
Multi-asset		4,485		113		601		11			5,210
Alternatives⁽¹⁾		25,082		6,329		4,664		18			36,093
Total	$	1,731,425	$	183,492