Investing Talk #42: BlackRock Business

What Is BlackRock’s Business

BlackRock, Inc. is one of the largest global asset managers. Wikipedia+2Latterly.org+2
Its clients include:

• Institutional investors (pension funds, sovereign wealth funds, insurance companies)

• Retail investors (through mutual funds, ETFs)

• Governments and large organizations

BlackRock’s Key Business Lines & Revenue Streams

Here are the major ways BlackRock generates revenue:

1. Investment Advisory & Management Fees

   • BlackRock charges fees based on the amount of Assets Under Management (AUM). Latterly.org+2Think Tank 2+2

   • These fees come from managing ETFs, mutual funds, separately managed accounts, and institutional mandates. Latterly.org+1

   • In Q2 2025, “base fees” (which includes advisory, admin, and securities lending) made up ~81% of its revenue. Investing.com Australia

2. Performance Fees

   • For some of its actively managed or alternative investment strategies, BlackRock earns performance-based fees when returns exceed certain benchmarks. Latterly.org+1

   • This is higher risk / higher reward business compared to plain advisory.

3. Securities Lending

   • BlackRock lends out securities (from portfolios it manages) to other financial institutions (e.g. for short selling) and earns fees. matrixbcg.com+1

   • This is a way to generate extra return on assets under management.

4. Technology Services (Aladdin Platform)

   • One of BlackRock’s most powerful and differentiated businesses is its Aladdin platform — a risk-management and portfolio analytics system. Wikipedia+1

   • It licenses Aladdin to other institutional investors, funds, and financial institutions. matrixbcg.com

   • This is a recurring, high-margin revenue stream (software-as-a-service style). Latterly.org

   • According to some sources, this tech business is growing rapidly. Klover

5. Advisory / Consulting Services

   • BlackRock advises large institutions (governments, pension funds) on asset allocation, risk, and strategic investments. ABITA LLC&MARKETING JAPAN

   • This is more bespoke, high-value work.

6. Private Markets & Alternatives

   • BlackRock is pushing into private markets: private credit, infrastructure, private equity. Alternatives Watch

   • These alternative assets tend to have higher fees than regular passive funds.

Key Strengths & Competitive Advantages

• Scale: It manages trillions of dollars. That gives massive fee income and bargaining power. revealdiligence.com

• iShares ETF Platform: Very strong ETF business, which is scalable and cost efficient. Think Tank 2+1

• Technology Advantage (Aladdin): The Aladdin platform gives BlackRock a moat — other asset managers pay to use it, and it deepens BlackRock’s data and risk infrastructure. revealdiligence.com

• Diversified Revenue: Not totally reliant on AUM — they have advisory, tech, lending, alternatives. Npifund

• Growing Private Markets Exposure: As it expands into private credit and infrastructure, it can capture higher-fee opportunities. Alternatives Watch

Risks & Challenges

• Fee Pressure: As ETFs and passive investing become more common, there’s pressure on management fees.

• Competition: From other asset managers (Vanguard, State Street), as well as fintech / quant firms.

• Risk in Private Markets: Alternatives (private credit, infrastructure) are less liquid and riskier.

• Technology Risk: Maintaining / scaling Aladdin is costly. Plus, clients could (in theory) switch to other platforms (though switching is hard).

• Regulatory Risk: As a huge asset manager, BlackRock is exposed to regulatory changes affecting asset management, ESG, capital markets, etc.

Recent & Strategic Trends

• BlackRock’s AUM is growing strongly. For example, in Q1 2024 they had $10.5 trillion in AUM. Reuters

• They’re aggressively expanding their private markets business, especially private credit. Alternatives Watch

• Their technology business (Aladdin) is increasingly central — not just for BlackRock’s own funds but as a platform for other firms. Klover

Why BlackRock Matters

• As the largest asset manager in the world, BlackRock has a huge influence on global capital flows.

• Through Aladdin and its risk-management tools, it helps other large institutions manage risk and portfolio construction.

• Its growth in private markets could reshape how big institutional capital is allocated (towards infrastructure, private credit, etc.).

• Because of its scale, it can provide very low-cost passive products (ETFs) while also offering high-value active and alternative strategies.