EUR 850.00 For Business Accounts Only

Morningstar | Strong Tailwinds Provided by ETFs and Technology Initiatives Support BlackRock's Premium Multiple

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 two thirds of its managed assets (and close to half of annual revenue) from passive products. In an environment where retail-advised and institutional clients 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, we believe that 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 $6.444 trillion in total assets under management at the end of September 2018, BlackRock is the largest asset manager in the world. Unlike many of its competitors, 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 above average levels of annual organic growth despite the increased size and scale of its operations. As we expect the headwinds facing the U.S.-based asset managers to continue over the next five to 10 years, while also incorporating a major equity market decline midway through our five-year forecast, we see BlackRock generating 2%-4% average annual organic AUM growth, with slightly lower levels of revenue growth but steadily improving margins (albeit range-bound between 39% and 40% of revenue) during 2018-22.