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 incorporated third quarter 2025 earnings teleconference our host for today's call will be the chairman and chief executive officer lawrence d think chief financial officer martin s small president robert s capito and general counsel christopher j mead all lines have been placed on mute to prevent any background noise After the speaker's remarks, there will be a question and answer period. If you'd like to ask a question during this time, simply press star, then the number 1 on your telephone keypad. If you'd like to withdraw your question, please press star 2. 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, 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 multi-faceted 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 four 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, product types, 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 1st, we've closed our acquisitions of HPS and Elmtree, announced an $80 billion SMA solution with CitiWealth, 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, Prequent, 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 non-operating 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. Non-operating results for the quarter included 84 million of net investment losses, primarily due to a mark-to-market non-cash loss linked to our minority investment in circles. 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 non-recurring 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 five-tenths of a basis point 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 Prequin. 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, Prequin, and HPS employees. G&A expense was up 18% year-over-year, primarily due to M&A transactions and higher technology investment spent. 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 percent, up 110 basis points year over year. We've 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, Prequin, 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 we're led by a new record flows quarters for iShares ETFs. iShares ETFs generated 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 EDPs raised another 17 billion in the third quarter. Our flagship offerings in IBIT and ETH were among the top five 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 markets 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 three 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 enter 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 a 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 percent organic base fee growth in the quarter that growth is even more notable in its diversification just looking across our top five 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 announcements 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 through an on-the-ground presence. That presence has strengthened our position as a trusted partner and advisor over many years, and it continues to further strengthen in 2025. Over the last 12 months, we generated 8% organic base fee growth, exceeding our target each quarter. Revenues grew 20 new AUM records. Clients have entrusted BlackRock with $1.4 trillion of net inflows over the last three years and $2.3 trillion over the last five years. When BlackRock acquired BGI and iShares, we gave investors the ability to blend active and index strategies 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 opportunities to do much more with BlackRock, and it's expanding the growth potential for GIP, HBS, and PreQuint. 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 acquisition 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 one platform, shared goals, and a common Aladdin technology. We're organized so the clients have access to all of BlackRock in a comprehensive, consistent way. We intentionally structure the GIP HBS transactions so that the consideration was largely in BlackRock equity with long-dated performance milestones. We all have the same interests as significant shareholders alongside our broader shareholder base. Our acquired firms are becoming a part of the fabric of BlackRock and are proud of the successes we've seen in just these early days. Our closing of HBS just three 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. Buying 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 non-traded senior bank, BDC, HLEN, to credit solutions across the capital stack. HLEN continues to generate around $1 billion in net inflows a quarter. And from a distribution perspective, HBS has had strong connectivity to private banks and high network practices. That is now augmented by BlackRock's extensive network across wire houses, 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 client 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-5 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 interests. Market-leading global technology, energy, and financial organizations are consolidating around AIP as a partner of choice. AIP includes MGX of Abu Dhabi, Microsoft, KIA of Kuwait, and Tomasik of Singapore, and technology and energy advisors in NVIDIA, XAI, Cisco, GE, Vernova, Nexera Energy. Our combined relationships and expertise are coming together to advance key discussions on fantastic investment opportunities for our clients. GIP's track market in one 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 five years in just the core and shell of data centers, and that's not including the chips. The growth of cloud computing and AI are 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 one 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's 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. Biddle 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 in 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 ETS 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 feed growth was once again led by digital assets, bond ETS, and active ETS. Our digital assets and active iShares franchise is an example 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 zero in 2023 to over $100 billion in digital assets and 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 learning 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 futures through our local investments as we facilitate the growth of capital markets and investing around the world. In India, our Geo BlackRock 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 GEO BlackRock, we're enabling individuals to more easily invest in their local economies, in 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 the BlackRock to scale and modernize their 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 401ks. Defined benefit 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 401ks, 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 Prequin. Plans would need better data, better analytics on private markets to substantiate and justify their inclusion in 401k offerings, representing a large potential unlock for Aladdin and Prequen. We're already helping clients better manage private markets investments with eFront alongside Prequen performance and investment data. We recently signed our first full portfolio technology mandate encompassing Aladdin, eFront, and Prequen 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 one 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 Prequin. 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.

Thank you. At this time, I'd like to remind everyone, in order to ask a question, please press star, then the number one on your telephone keypad. If you do ask a question, please take your phone off its speaker setting and use your handset to avoid any potential feedback. Please limit yourself to one question. If you have a follow-up, please re-enter the queue. We'll pause for just a moment to compile the Q&A roster. Your first question comes from Craig Siegenthaler with Bank of America. Good morning, Craig.

Hey, good morning, Larry. Hope everyone's 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 look pretty sizable when you look at it on a basic basis. Thank you, Larry.

Martin? Hi, 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-based fee growth contributors, you're right, they were in digital assets with IBIT and ETH 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 two 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 Reeder and the team. That's a $13 billion franchise. We had huge outsourcing wins that we noted. The Imperial 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 markets, systematic strategies and models, we think we should be able to power organic base fee growth, I think more consistently at 6%, 7% or higher. And when markets are supportive like this with risk on sentiment, we think that can tilt even higher. The last thing I'd flag is these strategies are contributing, I think, to field improvement. We continue to see fields on flows increasing with these high value add capabilities. We showed that in Investor Day and Gene. The fields on new assets to the firm are six to seven times 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 Seifres of Morgan Stanley.

Hey, good morning. Thanks so much for taking the question. 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 tokenized money fund with Bettle. So if 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, I'm curious your views on what's been the holdback from wider adoption as this technology has been around for some time. What do you see as the major unlock here?

So, first of all, this is probably one 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 that we already are a 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 can play a role in the role of digital wallets. The theory is, as I said in my prepared remarks, if you keep all your money in a digital platform, in a digital wallet, you could then seamlessly buy what we would traditionally say traditional assets like stocks and bonds. You know, we had a survey related to the percent of young people who 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. assets, and that we can introduce them to more and more traditional assets sooner in their life path, 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 relating 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 and 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 home ownership and 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 one of the great applications and the simplification. But if we could legitimately move towards the 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 but you got it that's it thank you we'll go next to alex bostin with goldman sachs hi alex hi larry good morning everybody um uh questioned uh for you guys around private credit um the market has grown increasingly anxious uh given some of the recent uh dynamics uh both related to perhaps gross um kind of amid lower rates and tata spreads as well as some of the kind of specific credit names out there. I'm 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.

Thanks, Alex. I hope you're doing well. So, 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 outside of banks and public debt markets is a two plus trillion dollar 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 and $300 billion, and the consumer receivables portion of that market's even smaller at maybe 10% of the total. It's smaller in scope, and the reported cases look more like idiosyncratic pockets of stress in 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 non-traded BDCs in HLend and BDET. You see the deployment numbers and 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, that tends to be some of the best opportunity 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 go next to Ken Worthington with J.P. Morgan.

Hi, good morning. Good morning. Thanks for taking the question. 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 Rafael Isabi and our systematic team. That's a $30 billion ETF today, $10 billion of flows this year. Bank, the flexible fixed income ETF managed by Rick Reeder 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 advisors 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 in the investment company institutes that's working to operationalize ETF share classes, especially with service providers and intermediaries. And so there's really good progress there, but it'll take some time for this to work its way, I think, through the product ecosystem. For BlackRock, an 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 in 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'll 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 Sannon with Jefferies.

Good morning, Dan. Thanks. Good morning. Good morning. I just wanted to follow up a bit more on private credit. You talked about momentum and insurance and wealth with HBS, 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 give the contribution of all of what HBS in terms of flows did in the quarter. Thank you.

Hey, 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 alts 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 and 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 solution 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 H-Lend 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 Kaepnick laid this out really well at Investor Day with a 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.

Good morning. Hi, Larry. Thanks for taking the question. You spoke to this a little bit in your prepared marks, but I was hoping to get maybe a bit more color on it. You guys have now done two rather substantial mergers with the private asset side, and Black Rock'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-block-rock 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 were absorbed in 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 Maryland's 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 they 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 that what we've witnessed, and now we, you know, in October 1st, we crossed the one-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 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 we'll be, you know, the HBS closing was three months ago, and we're not as far down the pathway as we were on HBS, but these take time. And in some cases, they take one and a half, two years to fully integrate. As I said, the GIP integration was probably less than six 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 could be built forward. So, you know, it's early with HBS. We're far down the road with HBS. We're actually far down the road with Prequin, 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 up front. The key is if we are going to win full portfolios, we cannot represent ourselves as a boutique. So I think across the board, more and more of our teams are realizing 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 one product, and that's what we're going to try to do, but then we then bring the 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, $900 billion on insurance assets. Now, bringing those relationships into HBS, 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, again, differentiating yourself versus all the other organizations that generally add on different businesses, but they keep them siloed, boutiqued. And we will not do that because we want to see each and every client worldwide as one firm. And through that, we are able to win more share a wallet by representing ourselves to the organization as one firm, one conversation.

Your next question comes from Brian Bedell with Deutsche Bank.

Oh, great. Thanks. Good morning. Good morning. Thanks for taking my question. A lot of good things to talk about. If I can tie two concepts together, the tokenization concept that you discussed and then tying that with maybe model portfolios. So as you think about exploring tokenization opportunities, do you envision having this be BlackRock-centric digital wallets or rather participate in the broader intermediary ecosystem, allowing your products to be tokenized, therefore sort of distributed on an open architecture basis? And then tying that into model portfolios, is there an opportunity to create, you know, BlackRock-centric digital wallet model portfolios?

Great. Great question, Martin. Thank you. So, listen, the first thing I'd do is I'd echo Larry's comments. You know, this is one of the most exciting areas in the financial markets. There's over $4.5 trillion of value sitting in digital wallets across crypto assets, stable coins, 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, cryptos, 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'd use 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 a model portfolio today, especially one that's public-private, it's having to deal with different settlement systems. It's having to deal with PDF sub-docs for private markets and then dealing with cash markets for T plus one 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. good morning ben hi hi good morning larry uh thanks for taking the question um i wanted to ask just a few housekeeping questions on hps and the private markets business i guess maybe maybe two i can wrap into one first just on the performance fees i think the the 270 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 you know 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 a fair run rate as we think out over the next several quarters or anything unusual about this quarter. Thank you.

Thanks very much for the question. 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, you know, 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 HLAND 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 InfraAUM. 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 T.D. Cowan.

Okay, thank you very much. Good morning, everybody. Thank you so much for taking the question today. Maybe we'll 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 things, just how your conversations with maybe the consultant community, the regulators, the legislators are going around sort of this change, and then how you sort of see pricing relative to maybe the legacy book of business that's sort of not retirement? it. Thank you.

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 has 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 401k today. I've seen more momentum in the last six 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's positive. For BlackRock, more than half the assets we manage are for retirement. We're the number one 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 fund. 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 in 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 401k 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 in 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 three decades. And we think that it allows us to build portfolios that take appropriate levels of risk across a working life and manage different levels of portfolio liquidity. I think some of what we've seen in the market are ideas that affix 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, good fiduciary practice and all of the advice-safe harbors, they're going to require some format for benchmarking and portfolio analysis. 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 Prequin. Just going to market and some of your questions about kind of pricing and product. Our initiative with Great Grey, 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 advisor 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 life path with private's 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 life path 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 one last point. The sooner we could get young people to be investing in their retirement funds, And that's why we're so encouraged about what's going on digital, 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, they'll enjoy a much longer duration of compounding returns over time. I think it's essential that we elevate this call to 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 abilities 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.