BlackRock Inc: 2Q26 Review: Solid Organic Growth, Operating Leverage on Display

Research evidence excerpt

BlackRock Inc: 2Q26 Review: Solid Organic Growth, Operating Leverage on Display

Barclays | BlackRock Inc

acquisition, can approach "best-in-class" private markets margins (e.g., BX, APO, KKR at 60%

+) and 2) continuing to grow their scaled franchises such as iShares.

• Active flows. Active equity and fixed income flows were positive during the quarter, with

equity flows generating positive flows for second consecutive quarter and fixed income

breaking its prolonged streak of net outflows. On the call, management highlighted that the

strong flows into active fixed income were driven by demand in the retail channel.

Additionally, management stated that the firm had $20B of active ETFs net flows in the

quarter, now ranking as the third largest active ETF provider.

Key items to monitor:

• Private markets fee rate decline; should rebound in Q3. BLK's private markets

management fees declined Q/Q, despite a record quarter of net flows. This, however, was

largely related to timing of realizations (a number of realizations out of high-fee GIP III early in

the quarter), lower-fee high-grade inflows through the quarter, and some higher-fee AUM

inflows later in the quarter, which ended up dragging down the in-period fee rate. Moving into

Q3, we anticipate the fee rate should look more similar to Q1, and at a higher starting AUM

level.

• Performance fees. HPS carry and HLEND Part I fees both declined sequentially, and HPS

total (and ex-HLEND) performance fees were at the lowest level since the acquisition closed

last year. Performance fees are likely to be somewhat unpredictable, however, and while we

would expect HLEND-related fees to continue to decline, given visibility into net flows and

NAV, we would not be surprised to see overall ex-HLEND performance fees normalize around