Laurence Fink : Michael, I would just add, as we continue to be investing in AI, our most recent experience of having $2.5 trillion more assets with the same headcount is a real good indication of how we are trying to drive more efficiencies, more productivity. I think this is critical. We’re going to bring down an inflation in America. This is how it’s going to have to be done, driven through technology and which will increase more productivity. And overall and actually through that process, we continue to drive more productivity. What it also means is rising wages. So people do more and the whole organization is doing more with less people as a percent of the overall organization. That is really our ambition.
Operator: Your next question comes from Ken Worthington with JP Morgan.
Kenneth Worthington : Fixed income flows have picked up for U.S. — the U.S. mutual fund industry so far this year, but the same data services that track the industry don’t show a proportionate pickup for BlackRock. Your fixed income ETF sales were solid at $18 billion but below levels seen last year. Can you talk about the competitive landscape for fixed income retail and fixed income ETFs, both inside and outside the U.S.? And to what extent do you think investor appetite may have changed in 2024?
Robert Kapito : So, Rob here. The conversations that we’re having across all of the distribution systems are about a new allocation into fixed income. It’s been very much clouded by all the noise around inflation and the Fed. So the yield curve remains inverted and investors are currently getting paid to wait. And a more balanced term structure of interest rates is going to be the indicator to watch and that’s where we’ll start to see demand for intermediate and longer-term fixed income. So the first quarter for us flows of $42 billion, which I think is considerable, we saw the strength in the bond ETFs from immunization activity in institutional and about 25% of the flows were into active strategies. So we’re seeing renewed demand for active fixed income and that’s led to flows into the high yield, the unconstrained and the total return strategies and the fact that our longer term performance has about 93% of our taxable active fixed income AUM above the benchmark or peer medium in the last five years are really set up to capture this.
But I do think the noise that’s out there focused on inflation and the fact that you can still earn 5%, which is very attractive right now is causing the delay in more allocations to fixed income. The other part of why I’m more encouraged is we are finding a growing interest in high-performing active fixed income strategies alongside private market strategies. So I think that we stand to bode very well once you see some changes in the yield curve.
Laurence Fink : Let me just add, operator to Ken’s question. Ken, I do believe as an industry, the large pension funds that have an over allocation of private equity and the rotation of money in the private equity area has slowed down precipitously. We are also seeing evidence that more and more clients are keeping a higher balance of cash to meet their liability discharges. And so without the momentum and the velocity of money in private equity, they actually have to keep higher cash balances, too. So I think that is something to be watched to. If there is an unlock in the movement of private equity, I do believe you would see a factor allocation for the industry in fixed income and other income-producing products.
Operator: We’ll go next to Alex Blostein with Goldman Sachs.
Alexander Blostein : My question is related to private markets and GIP. Larry, you referred to it again this morning as a transformational deal for BlackRock maybe similar to some of the other large ones you’ve done. Does this give you enough in terms of what you’re trying to accomplish in the private markets broadly? Or do you expect to pursue more acquisitions that are related in this area? And I guess somewhat related to that, growth in private markets, retail products has been quite significant and still early days. Maybe just remind us on how BlackRock is pursuing that opportunity.
Martin Small : It’s Martin. I’ll offer a few thoughts and then Larry will jump in. Let’s say, look, all of our clients continue to increase their allocations to private markets. That’s what drove our acquisition of eFront. It’s what drove our planned acquisition of GIP. And it’s also a great focus of the organic investments we’ve made to build in a liquid alternatives business of size. There are sort of liquid alternatives business, we’ve reached $167 billion of assets, roughly $140 billion fee paying. We had a good quarter there. Infrastructure and private credit deployment added $1 billion of inflows offset by a return of capital that I talked about. We’re getting close on our final closes for our BlackRock Infrastructure IV Fund for decarbonization partners, which has been a great first time funded vintage.
We’ve got $30 billion of committed but uninvested capital. So there’s good dry powder in the system. As Larry mentioned, we’re originating really strong unique transactions there. So we think our capabilities are expanding in a way that’s going to plan. Just yesterday, we announced an infrastructure debt deal with Santander where we’re going to be financing about $600 million of infrastructure loans in a structured transaction. And we just see good fundraising momentum, which we think we can kick into next year with GIP. Since 2021, we’ve had $140 billion of gross capital across the platform continue to see good momentum with clients. And to the topic you mentioned, we’ve been building out our semi-liquid products for retail with credit strategies.
