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BlackRock Reports Third Quarter 2016 Diluted EPS of $5.26, or $5.14 as adjusted

Company Release - 10/18/2016 6:30 AM ET
  • $70 billion of total net inflows, including $55 billion in long-term net inflows, reflects positive flows across all product types, investment styles and regions
  • 4% increase in base fees year-over-year driven by organic growth and market performance, offset by mix change favoring fixed income and cash
  • 13% growth in Aladdin® revenue year-over-year reflects ongoing demand for risk management technology
  • Expansion in operating margin from prior year driven by continued expense discipline in the current quarter
  • 5% increase in diluted EPS (3% as adjusted) year-over-year
  • Consistent capital management with $275 million of quarterly share repurchases

NEW YORK--(BUSINESS WIRE)-- BlackRock, Inc. (NYSE:BLK):

FINANCIAL RESULTS

                               
(in millions, except per share data)   Q3

2016

  Q3

2015

  Change   Q2

2016

  Change   Nine Months Ended September 30,  
            2016     2015     Change
AUM $ 5,117,421 $ 4,505,721 14 % $ 4,890,121 5 % $ 5,117,421   $ 4,505,721 14 %

GAAP basis:

Revenue $ 2,837 $ 2,910 (3 )% $ 2,804 1 % $ 8,265 $ 8,538 (3 )%
Operating income $ 1,209 $ 1,222 (1 )% $ 1,173 3 % $ 3,345 $ 3,527 (5 )%
Operating margin 42.6 % 42.0 % 60 bps 41.8 % 80 bps 40.5 % 41.3 % (80) bps
Net income(1) $ 875 $ 843 4 % $ 789 11 % $ 2,321 $ 2,484 (7 )%
Diluted EPS $ 5.26 $ 5.00 5 % $ 4.73 11 % $ 13.92 $ 14.68 (5 )%
Weighted average diluted shares 166.3 168.7 (1 )% 166.6 - % 166.8 169.2 (1 )%

As Adjusted:

Operating income(2) $ 1,216 $ 1,227 (1 )% $ 1,179 3 % $ 3,442 $ 3,552 (3 )%
Operating margin(2) 44.8 % 43.9 % 90 bps 43.9 % 90 bps 43.5 % 43.4 % 10 bps
Net income(1) (2) $ 854 $ 844 1 % $ 797 7 % $ 2,362 $ 2,512 (6 )%
Diluted EPS(2)   $ 5.14     $ 5.00     3 %   $ 4.78     8 %   $ 14.16     $ 14.85     (5 )%
(1)   Net income represents net income attributable to BlackRock, Inc.
(2)

See notes (1) through (4) to the Condensed Consolidated Statements of Income and Supplemental Information for more information on as adjusted items and the reconciliation to GAAP.

BlackRock, Inc. (NYSE:BLK) today reported financial results for the three and nine months ended September 30, 2016.

“BlackRock’s business model was built to thrive in all market environments,” commented Laurence D. Fink, Chairman and CEO of BlackRock. “In the third quarter, even as investor preferences continued to migrate from equity to fixed income and cash, and away from active strategies, the diversity of our platform drove nearly $70 billion of total net inflows. Our $55 billion of long-term net inflows were positive across both active and index strategies, and positive across every asset class and region.

“Retail and institutional investors continued turning to iShares as an effective way to express market views and generate alpha. iShares once again captured the #1 market share of net new business in the United States, in Europe and globally, across both equity and fixed income. Our European fixed income ETFs reached $100 billion of AUM and fixed income remains an important growth area for iShares.

“With pensions and insurers facing continued challenges to fund future liabilities in a ‘lower-for-longer’ environment, we saw $8 billion of long-term active net inflows from institutional clients in the quarter, reflecting demand for BlackRock’s customized fixed income solutions and multi-asset strategies. Institutional demand for investment and risk management technology remains strong and drove 13% growth in our Aladdin revenue year-over-year.

“Regulatory change continues to have a material impact on our industry. In retail, the DoL fiduciary rule will increasingly influence the choices that financial intermediaries make for their clients. Anticipating that change, BlackRock is using our scale to provide distribution partners with the highest quality investment strategies at the best value, as well as portfolio construction and risk tools, to help them build better portfolios. In cash management, where more than $1 trillion dollars has shifted from prime to government funds as a result of money market reform, the breadth of our platform and our ability to both embrace and adapt ahead of change have enabled us to meet our clients’ evolving needs and increase market share, and we saw $15 billion of net inflows into cash management in the third quarter.

“I want to thank our employees for their ongoing commitment to improving our clients’ financial futures. We continue to evolve our business model and invest in our future to help clients achieve their investment goals and deliver long-term value for shareholders.”

LONG-TERM RESULTS BY CLIENT TYPE

(in millions), (unaudited)   Q3 2016

Net flows

  September 30, 2016

AUM

  Q3 2016

Base Fees(1)

  September 30, 2016

AUM

% of Total

  Q3 2016

Base Fees(1)

% of Total

Retail

 

$(2,228

)  

$554,778

 

$821

 

12

%  

34

%
iShares 51,257 1,246,166 901 26 % 37 %
Institutional:
Active 7,531 1,039,653 465 22 % 19 %
Index (1,376 )   1,877,501   241   40 %   10 %
Total institutional 6,155     2,917,154   706   62 %   29 %
Total long-term   $55,184     $4,718,098   $2,428   100 %   100 %
 

LONG-TERM RESULTS BY PRODUCT TYPE

(in millions), (unaudited)   Q3 2016

Net flows

  September 30, 2016

AUM

  Q3 2016

Base Fees(1)

  September 30, 2016

AUM

% of Total

  Q3 2016

Base Fees(1)

% of Total

Equity   $13,350  

$2,566,039

  $1,270   54 %   52 %
Fixed income 36,981 1,628,268 693 34 % 29 %
Multi-asset 3,038 402,261 285 9 % 12 %
Alternatives 1,815   121,530   180   3 %   7 %
Total long-term   $55,184   $4,718,098   $2,428   100 %   100 %
 

LONG-TERM RESULTS BY INVESTMENT STYLE

(in millions), (unaudited)   Q3 2016

Net flows

  September 30, 2016

AUM

  Q3 2016

Base Fees(1)

  September 30, 2016

AUM

% of Total

  Q3 2016

Base Fees(1)

% of Total

Active   $4,039  

$1,547,473

  $1,274   33 %   52 %
Index and iShares 51,145   3,170,625   1,154   67 %   48 %
Total long-term   $55,184   $4,718,098   $2,428   100 %   100 %
 
(1)   Base fees include investment advisory, administration fees and securities lending revenue.

Long-Term Business Highlights

Long-term net inflows were positive across all major regions, with net inflows of $38.7 billion, $13.4 billion and $3.1 billion from clients in the Americas, EMEA and Asia-Pacific, respectively. At September 30, 2016, BlackRock managed 63% of its long-term AUM for investors in the Americas and 37% for clients in EMEA and Asia-Pacific.

A discussion of the Company’s net flows by client type for the third quarter of 2016 is presented below.

  • Retail long-term net outflows of $2.2 billion reflected net outflows of $1.9 billion and $0.3 billion from the United States and internationally, respectively. Fixed income saw net inflows of $5.8 billion, paced by flows into emerging market debt and high yield bond funds. Equity net outflows of $3.9 billion were primarily related to outflows from European and U.S. equities. Multi-asset net outflows of $3.5 billion were largely due to outflows from world allocation strategies.
  • iShares® long-term net inflows of $51.3 billion were led by equity net inflows of $25.5 billion, with strength in emerging market precision exposures and iShares Core ETFs. Fixed income net inflows of $22.7 billion were diversified across corporate, emerging markets and core bond funds. Commodities iShares generated $2.9 billion of net inflows.
  • Institutional active long-term net inflows of $7.5 billion were led by multi-asset net inflows of $6.5 billion, driven by ongoing demand for solutions offerings and the LifePath® target-date series. Fixed income net inflows of $5.1 billion reflected strong flows from insurance clients in the quarter. Equity net outflows of $3.4 billion were primarily due to outflows from Scientific Active equities and European equities.
  • Institutional index long-term net outflows of $1.4 billion reflected equity net outflows of $4.9 billion, partially offset by fixed income inflows of $3.4 billion, driven by inflows into liability-driven investment solutions.

Cash management AUM increased 4% to $389.0 billion, driven by $14.7 billion of net inflows, primarily into government funds ahead of money market reform.

Advisory AUM ended the third quarter at $10.3 billion.

INVESTMENT PERFORMANCE AT SEPTEMBER 30, 2016 (1)

       

 

  One-year period   Three-year period   Five-year period
Fixed Income:
Actively managed AUM above benchmark or peer
median

Taxable

59

%

79

%

88

%

Tax-exempt 60 % 60 % 65 %
Index AUM within or above applicable tolerance   89 %   98 %   98 %
Equity:
Actively managed AUM above benchmark or peer
median
Fundamental 50 % 66 % 53 %
Scientific 31 % 83 % 93 %
Index AUM within or above applicable tolerance   96 %   99 %   97 %
 
(1)  

Past performance is not indicative of future results. The performance information shown is based on preliminary available data. Please refer to performance disclosure detail.

Teleconference, Webcast and Presentation Information

Chairman and Chief Executive Officer, Laurence D. Fink, and Chief Financial Officer, Gary S. Shedlin, will host a teleconference call for investors and analysts on Tuesday, October 18, 2016 at 8:30 a.m. (Eastern Time). Members of the public who are interested in participating in the teleconference should dial, from the United States, (800) 374-0176, or from outside the United States, (706) 679-8281, shortly before 8:30 a.m. and reference the BlackRock Conference Call (ID Number 92557521). A live, listen-only webcast will also be available via the investor relations section of www.blackrock.com.

Both the teleconference and webcast will be available for replay by 12:30 p.m. (Eastern Time) on Tuesday, October 18, 2016 and ending at midnight on Tuesday, November 1, 2016. To access the replay of the teleconference, callers from the United States should dial (855) 859-2056 and callers from outside the United States should dial (404) 537-3406 and enter the Conference ID Number 92557521. To access the webcast, please visit the investor relations section of www.blackrock.com.

About BlackRock

BlackRock is a global leader in investment management, risk management and advisory services for institutional and retail clients. At September 30, 2016, BlackRock’s AUM was $5.1 trillion. BlackRock helps clients around the world meet their goals and overcome challenges with a range of products that include separate accounts, mutual funds, iShares® (exchange-traded funds), and other pooled investment vehicles. BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions®. As of September 30, 2016, the firm had approximately 13,000 employees in 30 countries and a major presence in global markets, including North and South America, Europe, Asia, Australia and the Middle East and Africa. For additional information, please visit the Company’s website at www.blackrock.com | Twitter: @blackrock_news | Blog: www.blackrockblog.com | LinkedIn: www.linkedin.com/company/blackrock

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL INFORMATION

(in millions, except shares and per share data), (unaudited)

         
Three Months
Three Months Ended Ended
September 30, June 30,
2016 2015 Change 2016 Change
Revenue
Investment advisory, administration fees and securities lending revenue $2,546 $2,456 $90 $2,489 $57
Investment advisory performance fees 58 208 (150 ) 74 (16 )
BlackRock Solutions and advisory 174 167 7 172 2
Distribution fees 10 14 (4 ) 11 (1 )
Other revenue 49   65   (16 ) 58   (9 )
Total revenue 2,837   2,910   (73 ) 2,804   33  
 
Expense
Employee compensation and benefits 969 1,023 (54 ) 977 (8 )
Distribution and servicing costs 114 102 12 109 5
Amortization of deferred sales commissions 8 12 (4 ) 9 (1 )
Direct fund expense 200 198 2 195 5
General and administration 312 319 (7 ) 316 (4 )
Amortization of intangible assets 25   34   (9 ) 25   -  
Total expense 1,628   1,688   (60 ) 1,631   (3 )
Operating income 1,209 1,222 (13 ) 1,173 36
 
Nonoperating income (expense)
Net gain (loss) on investments 31 (10 ) 41 20 11
Interest and dividend income 22 12 10 6 16
Interest expense (52 ) (50 ) (2 ) (51 ) (1 )
Total nonoperating income (expense) 1   (48 ) 49   (25 ) 26  
 
Income before income taxes 1,210 1,174 36 1,148 62
Income tax expense 333   342   (9 ) 353   (20 )
Net income 877 832 45 795 82
Less:

Net income (loss) attributable to noncontrolling
interests

2   (11 ) 13   6   (4 )
Net income attributable to BlackRock, Inc. $875   $843   $32   $789   $86  
Weighted-average common shares outstanding
Basic 164,129,214 166,045,291 (1,916,077 ) 164,758,612 (629,398 )
Diluted 166,256,598 168,665,303 (2,408,705 ) 166,639,290 (382,692 )

Earnings per share attributable to BlackRock, Inc.
common stockholders (4)

Basic $5.33 $5.08 $0.25 $4.79 $0.54
Diluted $5.26 $5.00 $0.26 $4.73 $0.53
Cash dividends declared and paid per share $2.29 $2.18 $0.11 $2.29 $ -
 

Supplemental information:

 
AUM (end of period) $5,117,421 $4,505,721 $611,700 $4,890,121 $227,300
Shares outstanding (end of period) 163,858,070 166,057,085 (2,199,015 ) 164,463,297 (605,227 )
GAAP:
Operating margin 42.6 % 42.0 % 60 bps 41.8 % 80 bps
Effective tax rate 27.6 % 28.8 % (120) bps 30.9 % (330) bps
As adjusted:
Operating income (1) $1,216 $1,227 $(11 ) $1,179 $37
Operating margin (1) 44.8 % 43.9 % 90 bps 43.9 % 90 bps

Nonoperating income (expense), less net income
(loss) attributable to noncontrolling interests (2)

$(1 ) $(32 ) $31 $(31 ) $30
Net income attributable to BlackRock, Inc. (3) $854 $844 $10 $797 $57

Diluted earnings attributable to BlackRock, Inc.
common stockholders per share (3) (4)

$5.14 $5.00 $0.14 $4.78 $0.36
Effective tax rate 29.7 % 29.3 % 40 bps 30.6 % (90) bps
 

See the reconciliation to GAAP and notes (1) through (4) for more information on as adjusted items.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL INFORMATION

(in millions, except shares and per share data), (unaudited)

     
Nine Months Ended
September 30,
2016 2015 Change
Revenue
Investment advisory, administration fees and securities lending revenue $7,394 $7,380 $14
Investment advisory performance fees 166 452 (286 )
BlackRock Solutions and advisory 517 475 42
Distribution fees 32 44 (12 )
Other revenue 156   187   (31 )
 
Total revenue 8,265   8,538   (273 )
 
Expense
Employee compensation and benefits 2,893 3,016 (123 )
Distribution and servicing costs 320 306 14
Amortization of deferred sales commissions 27 37 (10 )
Direct fund expense 583 578 5
General and administration 946 970 (24 )
Restructuring charge 76 - 76
Amortization of intangible assets 75   104   (29 )
Total expense 4,920   5,011   (91 )
 
Operating income 3,345 3,527 (182 )
 
Nonoperating income (expense)
Net gain (loss) on investments 49 59 (10 )
Interest and dividend income 33 21 12
Interest expense (154 ) (153 ) (1 )
Total nonoperating income (expense) (72 ) (73 ) 1  
Income before income taxes 3,273 3,454 (181 )
Income tax expense 954   971   (17 )
Net income 2,319 2,483 (164 )
Less:
Net income (loss) attributable to noncontrolling interests (2 ) (1 ) (1 )
Net income attributable to BlackRock, Inc. $2,321   $2,484   $(163 )
Weighted-average common shares outstanding
Basic 164,756,355 166,579,805 (1,823,450 )
Diluted 166,760,912 169,157,188 (2,396,276 )
Earnings per share attributable to BlackRock, Inc. common stockholders (4)
Basic $14.09 $14.91 $(0.82 )
Diluted $13.92 $14.68 $(0.76 )
Cash dividends declared and paid per share $6.87 $6.54 $0.33
 

Supplemental information:

 
AUM (end of period) $5,117,421 $4,505,721 $611,700
Shares outstanding (end of period) 163,858,070 166,057,085 (2,199,015 )
GAAP:
Operating margin 40.5 % 41.3 % (80) bps
Effective tax rate 29.1 % 28.1 % 100 bps
As adjusted:
Operating income (1) $3,442 $3,552 $(110 )
Operating margin (1) 43.5 % 43.4 % 10 bps

Nonoperating income (expense), less net income (loss) attributable to
noncontrolling interests (2)

$(70 ) $(71 ) $1
Net income attributable to BlackRock, Inc. (3) $2,362 $2,512 $(150 )

Diluted earnings attributable to BlackRock, Inc. common stockholders per
share(3) (4)

$14.16 $14.85 $(0.69 )
Effective tax rate 30.0 % 27.8 % 220 bps
 

See the reconciliation to GAAP and notes (1) through (4) for more information on as adjusted items.

ASSETS UNDER MANAGEMENT

(in millions), (unaudited)

Current Quarter Component Changes by Client Type and Product
 
    Net        
June 30, inflows September 30,
2016 (outflows) Market Change FX impact (1) 2016 Average AUM (2)
 
Retail:
Equity $191,980 $(3,889 ) $8,550 $(510 ) $196,131 $195,266
Fixed income 223,710 5,801 1,228 103 230,842 228,099
Multi-asset 111,456 (3,452 ) 3,435 (70 ) 111,369 112,263
Alternatives 17,281 (688 ) (190 ) 33   16,436 16,753
Retail subtotal 544,427 (2,228 ) 13,023 (444 ) 554,778 552,381
iShares:
Equity 826,768 25,519 38,628 95 891,010 868,747
Fixed income 304,896 22,730 1,607 229 329,462 320,249
Multi-asset 2,328 124 56 (2 ) 2,506 2,430
Alternatives 20,130 2,884   160   14   23,188 22,162
iShares subtotal 1,154,122 51,257 40,451 336 1,246,166 1,213,588
Institutional:
Active:
Equity 120,127 (3,357 ) 7,455 (455 ) 123,770 122,790
Fixed income 549,686 5,060 6,538 (485 ) 560,799 557,357
Multi-asset 264,937 6,533 8,909 27 280,406 274,516
Alternatives 74,971 (705 ) 565   (153 ) 74,678 74,741
Active subtotal 1,009,721 7,531 23,467 (1,066 ) 1,039,653 1,029,404
Index:
Equity 1,293,683 (4,923 ) 68,226 (1,858 ) 1,355,128 1,335,780
Fixed income 488,364 3,390 21,566 (6,155 ) 507,165 499,187
Multi-asset 7,799 (167 ) 322 26 7,980 7,982
Alternatives 6,808 324   169   (73 ) 7,228 7,081
Index subtotal 1,796,654 (1,376 ) 90,283   (8,060 ) 1,877,501 1,850,030
Institutional subtotal 2,806,375 6,155   113,750   (9,126 ) 2,917,154 2,879,434
Long-term 4,504,924 55,184 167,224 (9,234 ) 4,718,098 4,645,403
Cash management 374,684 14,696 219 (617 ) 388,982 383,424
Advisory (3) 10,513 (71 ) (14 ) (87 ) 10,341 10,419
Total $4,890,121 $69,809   $167,429   $(9,938 ) $5,117,421 $5,039,246
 
Current Quarter Component Changes by Product Type (Long-term)
Net
June 30, inflows September 30,
2016 (outflows) Market Change FX impact (1) 2016 Average AUM (2)
 
Equity:
Active $276,348 $(7,831 ) $13,725 $(516 ) $281,726 $281,136
iShares 826,768 25,519 38,628 95 891,010 868,747
Non-ETF index 1,329,442 (4,338 ) 70,506   (2,307 ) 1,393,303 1,372,700
Equity subtotal 2,432,558 13,350 122,859 (2,728 ) 2,566,039 2,522,583
Fixed income:
Active 765,431 10,182 7,455 (210 ) 782,858 777,109
iShares 304,896 22,730 1,607 229 329,462 320,249
Non-ETF index 496,329 4,069   21,877   (6,327 ) 515,948 507,534
Fixed income subtotal 1,566,656 36,981 30,939 (6,308 ) 1,628,268 1,604,892
Multi-asset 386,520 3,038 12,722 (19 ) 402,261 397,191
Alternatives:
Core 89,912 (1,408 ) 372 (145 ) 88,731 89,149
Currency and

commodities (4)

29,278 3,223   332   (34 ) 32,799 31,588
Alternatives subtotal 119,190 1,815   704   (179 ) 121,530 120,737
Long-term $4,504,924 $55,184   $167,224   $(9,234 ) $4,718,098 $4,645,403
 
Current Quarter Component Changes by Investment Style (Long-term)
Net
June 30, inflows September 30,
2016 (outflows) Market Change FX impact (1) 2016 Average AUM (2)
Active $1,510,424 $4,039 $33,900 $(890 ) $1,547,473 $1,536,517
Index and iShares 2,994,500 51,145   133,324   (8,344 ) 3,170,625 3,108,886
Long-term $4,504,924 $55,184   $167,224   $(9,234 ) $4,718,098 $4,645,403
(1)   Foreign exchange reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.
(2) Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing four months.
(3) Advisory AUM represents long-term portfolio liquidation assignments.
(4)

Amounts include commodity iShares.

ASSETS UNDER MANAGEMENT

(in millions), (unaudited)

Year-to-Date Changes by Client Type and Product
    Net          
December 31, inflows September 30,
2015 (outflows) Acquisition (1) Market Change FX impact (2) 2016 Average AUM (3)
 
Retail:
Equity $193,755 $(9,171 ) $ - $13,929 $(2,382 ) $196,131 $192,072
Fixed income 212,653 10,239 - 7,929 21 230,842 220,956
Multi-asset 115,307 (7,668 ) - 4,216 (486 ) 111,369 112,464
Alternatives 19,410 (2,279 ) - (803 ) 108   16,436 17,904
Retail subtotal 541,125 (8,879 ) - 25,271 (2,739 ) 554,778 543,396
iShares:
Equity 823,156 24,264 - 40,747 2,843 891,010 828,932
Fixed income 254,190 60,238 - 14,126 908 329,462 296,192
Multi-asset 2,730 (340 ) - 110 6 2,506 2,341
Alternatives 12,485 7,016   - 3,642   45   23,188 18,100
iShares subtotal 1,092,561 91,178 - 58,625 3,802 1,246,166 1,145,565
Institutional:
Active:
Equity 121,442 (4,644 ) - 8,459 (1,487 ) 123,770 119,626
Fixed income 514,428 8,967 - 34,779 2,625 560,799 542,375
Multi-asset 252,041 7,664 - 20,920 (219 ) 280,406 263,307
Alternatives 74,941 (375 ) - 549   (437 ) 74,678 74,835
Active subtotal 962,852 11,612 - 64,707 482 1,039,653 1,000,143
Index:
Equity 1,285,419 (16,990 ) - 83,247 3,452 1,355,128 1,291,634
Fixed income 441,097 15,204 - 71,566 (20,702 ) 507,165 475,562
Multi-asset 6,258 (285 ) - 1,569 438 7,980 7,443
Alternatives 6,003 960   - 576   (311 ) 7,228 6,518
Index subtotal 1,738,777 (1,111 ) - 156,958   (17,123 ) 1,877,501 1,781,157
Institutional subtotal 2,701,629 10,501   - 221,665   (16,641 ) 2,917,154 2,781,300
Long-term 4,335,315 92,800 - 305,561 (15,578 ) 4,718,098 4,470,261
Cash management 299,884 11,556 80,635 206 (3,299 ) 388,982 345,881
Advisory (4) 10,213 (216 ) - (120 ) 464   10,341 10,419
Total $4,645,412 $104,140   $80,635 $305,647   $(18,413 ) $5,117,421 $4,826,561
 
Year-to-Date Component Changes by Product Type (Long-term)
Net
December 31, inflows September 30,
2015 (outflows) Acquisition Market Change FX impact (2) 2016 Average AUM (3)
 
Equity:
Active $281,319 $(15,680 ) $ - $17,980 $(1,893 ) $281,726 $276,494
iShares 823,156 24,264 - 40,747 2,843 891,010 828,932
Non-ETF index 1,319,297 (15,125 ) - 87,655   1,476   1,393,303 1,326,838
Equity subtotal 2,423,772 (6,541 ) - 146,382 2,426 2,566,039 2,432,264
Fixed income:
Active 719,653 18,110 - 41,727 3,368 782,858 755,462
iShares 254,190 60,238 - 14,126 908 329,462 296,192
Non-ETF index 448,525 16,300   - 72,547   (21,424 ) 515,948 483,431
Fixed income subtotal 1,422,368 94,648 - 128,400 (17,148 ) 1,628,268 1,535,085
Multi-asset 376,336 (629 ) - 26,815 (261 ) 402,261 385,555
Alternatives:
Core 92,085 (2,382 ) - (309 ) (663 ) 88,731 90,424
Currency and

commodities (5)

20,754 7,704   - 4,273   68   32,799 26,933
Alternatives subtotal 112,839 5,322   - 3,964   (595 ) 121,530 117,357
Long-term $4,335,315 $92,800   $ - $305,561   $(15,578 ) $4,718,098 $4,470,261
 
Year-to-Date Component Changes by Investment Style (Long-term)
Net
December 31, inflows September 30,
2015 (outflows) Acquisition Market Change FX impact (2) 2016 Average AUM (3)
Active $1,462,672 $(228 ) $ - $84,589 $440 $1,547,473 $1,500,466
Index and iShares 2,872,643 93,028   - 220,972   (16,018 ) 3,170,625 2,969,795
Long-term $4,335,315 $92,800   $ - $305,561   $(15,578 ) $4,718,098 $4,470,261
(1)   Amount represents AUM acquired in the BofA® Global Capital Management transaction in April 2016.
(2) Foreign exchange reflects the impact of converting non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.
(3) Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing ten months.
(4) Advisory AUM represents long-term portfolio liquidation assignments.
(5)

Amounts include commodity iShares.

ASSETS UNDER MANAGEMENT

(in millions), (unaudited)

Year-over-Year Component Changes by Client Type and Product
    Net        
September 30, inflows September 30,
2015 (outflows) Acquisitions(1) Market Change FX impact (2) 2016 Average AUM (3)
 
Retail:
Equity $184,265 $(2,443 ) $ - $18,203 $(3,894 ) $196,131 $192,360
Fixed income 210,605 14,175 - 6,755 (693 ) 230,842 218,901
Multi-asset 120,486 (11,233 ) 366 2,444 (694 ) 111,369 114,089
Alternatives 19,852 (2,358 ) - (1,025 ) (33 ) 16,436 18,374
Retail subtotal 535,208 (1,859 ) 366 26,377 (5,314 ) 554,778 543,724
iShares:
Equity 748,458 71,824 - 71,109 (381 ) 891,010 821,038
Fixed income 246,712 72,177 - 11,342 (769 ) 329,462 286,110
Multi-asset 1,808 577 - 120 1 2,506 2,246
Alternatives 13,515 6,824   - 2,843   6   23,188 17,042
iShares subtotal 1,010,493 151,402 - 85,414 (1,143 ) 1,246,166 1,126,436
Institutional:
Active:
Equity 116,718 (4,421 ) - 14,226 (2,753 ) 123,770 120,066
Fixed income 522,509 5,581 - 32,670 39 560,799 538,467
Multi-asset 245,776 10,674 - 27,244 (3,288 ) 280,406 261,256
Alternatives 74,351 160   560 362   (755 ) 74,678 74,820
Active subtotal 959,354 11,994 560 74,502 (6,757 ) 1,039,653 994,609
Index:
Equity 1,223,796 (18,036 ) - 152,702 (3,334 ) 1,355,128 1,289,332
Fixed income 465,811 2,872 - 66,253 (27,771 ) 507,165 473,484
Multi-asset 6,931 (869 ) - 1,557 361 7,980 7,282
Alternatives 6,201 1,161   - 253   (387 ) 7,228 6,454
Index subtotal 1,702,739 (14,872 ) - 220,765   (31,131 ) 1,877,501 1,776,552
Institutional subtotal 2,662,093 (2,878 ) 560 295,267   (37,888 ) 2,917,154 2,771,161
Long-term 4,207,794 146,665 926 407,058 (44,345 ) 4,718,098 4,441,321
Cash management 285,692 27,323 80,635 29 (4,697 ) 388,982 332,029
Advisory (4) 12,235 (1,963 ) - (124 ) 193   10,341 10,596
Total $4,505,721 $172,025   $81,561 $406,963   $(48,849 ) $5,117,421 $4,783,946
 
Year-over-Year Component Changes by Product Type (Long-term)
Net
September 30, inflows September 30,
2015 (outflows) Acquisitions(1) Market Change FX impact (2) 2016 Average AUM (3)
 
Equity:
Active $270,423 $(10,814 ) $ - $26,313 $(4,196 ) $281,726 $277,777
iShares 748,458 71,824 - 71,109 (381 ) 891,010 821,038
Non-ETF index 1,254,356 (14,086 ) - 158,818   (5,785 ) 1,393,303 1,323,981
Equity subtotal 2,273,237 46,924 - 256,240 (10,362 ) 2,566,039 2,422,796
Fixed income:
Active 725,802 18,341 - 38,470 245 782,858 749,590
iShares 246,712 72,177 - 11,342 (769 ) 329,462 286,110
Non-ETF index 473,123 4,287   - 67,208   (28,670 ) 515,948 481,262
Fixed income subtotal 1,445,637 94,805 - 117,020 (29,194 ) 1,628,268 1,516,962
Multi-asset 375,001 (851 ) 366 31,365 (3,620 ) 402,261 384,873
Alternatives:
Core 91,358 (1,424 ) 560 (667 ) (1,096 ) 88,731 90,760
Currency and

commodities (5)

22,561 7,211   - 3,100   (73 ) 32,799 25,930
Alternatives subtotal 113,919 5,787   560 2,433   (1,169 ) 121,530 116,690
Long-term $4,207,794 $146,665   $926 $407,058   $(44,345 ) $4,718,098 $4,441,321
 
Year-over-Year Component Changes by Investment Style (Long-term)
Net
September 30, inflows September 30,
2015 (outflows) Acquisitions(1) Market Change FX impact (2) 2016 Average AUM (3)
Active $1,456,692 $4,771 $926 $93,805 $(8,721 ) $1,547,473 $1,495,906
Index and iShares 2,751,102 141,894   - 313,253   (35,624 ) 3,170,625 2,945,415
Long-term $4,207,794 $146,665   $926 $407,058   $(44,345 ) $4,718,098 $4,441,321
(1)  

Amounts represent $560 million of AUM acquired in the Infraestructura Institucional acquisition in October 2015, $366 million of AUM acquired in the FutureAdvisor acquisition in October 2015 and $80.6 billion of AUM acquired in the BofA Global Capital Management transaction in April 2016. The FutureAdvisor acquisition amount does not include AUM that was held in iShares holdings.

(2) Foreign exchange reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.
(3) Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing thirteen months.
(4) Advisory AUM represents long-term portfolio liquidation assignments.
(5)

Amounts include commodity iShares.

SUMMARY OF REVENUE

  Three Months Ended
September 30,
  Change  

Three Months
Ended
June 30, 2016

  Change  

Nine Months Ended
September 30,

 
(in millions), (unaudited) 2016   2015 2016   2015 Change

Investment advisory, administration fees
and securities lending revenue:

Equity:
Active $409 $427 $(18 ) $406 $3 $1,201 $1,296 $(95 )
iShares 691 673 18 656 35 1,970 2,085 (115 )
Non-ETF Index 170 158 12   174 (4 ) 508 511 (3 )
Equity subtotal 1,270 1,258 12 1,236 34 3,679 3,892 (213 )
Fixed income:
Active 427 402 25 414 13 1,237 1,162 75
iShares 188 139 49 172 16 512 407 105
Non-ETF Index 78 70 8   69 9