EUR 850.00 For Business Accounts Only

Morningstar | Industry headwinds will keep BlackRock's organic growth more in line with our 3%-5% annual forecast.

BlackRock is at its core a passive investor. Through its iShares exchange-traded fund platform and institutional index fund offerings, the wide-moat firm sources close to two thirds of its managed assets (and nearly half its annual revenue) from passive products. In an environment where investors and the advisors that serve them are expected to seek out providers of passive products, as well as active asset managers that have greater scale, established brands, solid long-term performance, and reasonable fees, BlackRock is well positioned. The biggest differentiators for the firm are its scale, ability to offer both passive and active products, greater focus on institutional investors, strong brands, and reasonable fees. We believe that the iShares ETF platform as well as technology that provides risk management and product/portfolio construction tools directly to end users, which makes them stickier in the long run, should allow BlackRock to generate higher and more stable levels of organic growth than its publicly traded peers the next five years.With $6.3 trillion in total assets under management at the end of June 2018, BlackRock is the largest asset manager in the world. Unlike many of its peers, the firm is currently generating solid organic growth with its operations, with its iShares platform, which is the leading domestic and global provider of ETFs, riding a secular trend toward passively managed products that began more than two decades ago. This helped the company maintain average annual organic growth of 4%-5% the past several years despite the increased size and scale of its operations. As we expect the headwinds for the asset managers to be stiffer as we move forward (even incorporating a major equity market decline midway through our five-year forecast), we envision BlackRock generating 3%-5% average annual organic AUM growth, with slightly better levels of revenue growth but relatively flattish margins on average during 2018-22.