Cuộc họp công bố kết quả kinh doanh Quý 3/2026 của BlackRock (BLK): Dòng vốn vào 205 tỷ USD và tăng trưởng EPS 38%

Cuộc họp báo cáo kết quả kinh doanh quý 3/2026 của BlackRock nổi bật với doanh thu, lợi nhuận hoạt động và lợi nhuận trên mỗi cổ phần (EPS) điều chỉnh đạt mức kỷ lục, nhờ dòng vốn vào diện rộng, thị trường khởi sắc cùng sự mở rộng trên các mảng ETF, thị trường tư nhân và công nghệ. Tổng tài sản quản lý (AUM) đạt 15,5 nghìn tỷ USD.

Những điểm chính

• Doanh thu điều chỉnh tăng 19% so với cùng kỳ năm trước lên 7,8 tỷ USD, lợi nhuận hoạt động tăng 27% lên 3,3 tỷ USD và EPS tăng 38% lên 15,93 USD.
• Dòng vốn ròng đạt tổng cộng 205 tỷ USD, thúc đẩy mức tăng trưởng phí cơ bản tự thân 11%. Đây là quý thứ chín liên tiếp BlackRock đạt hoặc vượt mức 5%.
• AUM đạt 15,5 nghìn tỷ USD, tăng hơn 2 nghìn tỷ USD trong năm qua. Công ty đã thu hút gần 870 tỷ USD dòng vốn ròng trong 12 tháng qua.
• Các quỹ ETF tạo ra 135 tỷ USD dòng vốn ròng trong quý, dẫn đầu là 61 tỷ USD vào các quỹ ETF trái phiếu chỉ số, 41 tỷ USD vào các quỹ ETF chính xác và kỷ lục 22 tỷ USD vào các quỹ ETF chủ động.
• Biên lợi nhuận hoạt động điều chỉnh mở rộng 320 điểm cơ bản so với cùng kỳ năm trước lên 47,8%. Nếu không tính phí thưởng hiệu quả đầu tư và chi phí thù lao liên quan, biên phí thường xuyên đạt 48,6%, tăng 230 điểm cơ bản.
• Ban lãnh đạo xác định hạ tầng AI và tài trợ năng lực tính toán là cơ hội dài hạn lớn, đồng thời nhấn mạnh rằng việc chứng khoán hóa rộng rãi hơn sẽ đòi hỏi dữ liệu đáng tin cậy, phân tích rủi ro và các chỉ số hiệu suất chuẩn hóa.

Dữ liệu tài chính quan trọng

Kết quả ngoài hoạt động kinh doanh bao gồm 164 triệu USD lãi đầu tư ròng, chủ yếu là lãi phi tiền mặt từ đánh giá lại theo giá thị trường liên quan đến các khoản đầu tư thiểu số vào Securitize và Circle. Thuế suất điều chỉnh là khoảng 24%.

Kết quả hoạt động kinh doanh

Các quỹ ETF và thị trường đại chúng

Mảng kinh doanh ETF của BlackRock ghi nhận dòng vốn ròng 135 tỷ USD. Các quỹ ETF trái phiếu chỉ số dẫn đầu với 61 tỷ USD, trong khi các quỹ ETF chính xác thu hút 41 tỷ USD. Các quỹ ETF chủ động đóng góp mức kỷ lục 22 tỷ USD và các sản phẩm ETP tài sản kỹ thuật số huy động được 8 tỷ USD.

AUM chủ động của iShares đã tăng hơn gấp đôi trong năm qua lên trên 160 tỷ USD. Ban lãnh đạo cho biết các quỹ ETF chủ động đã tạo ra 60 tỷ USD dòng vốn vào tính đến hết quý 3 năm 2026.

Mảng thu nhập cố định tạo ra 78 tỷ USD dòng vốn ròng trong quý và 205 tỷ USD từ đầu năm đến nay. Ban lãnh đạo cho rằng nhu cầu này xuất phát từ lợi suất ban đầu cao hơn cũng như sự chú trọng của nhà đầu tư vào thu nhập và khả năng chống chịu của danh mục. Thu nhập cố định chủ động đóng góp 14 tỷ USD dòng vốn ròng.

Mảng cổ phiếu định lượng tạo ra gần 30 tỷ USD dòng vốn ròng trong quý và hơn 60 tỷ USD trong năm 2026. Tổng AUM cổ phiếu chủ động định lượng tiến gần mức 500 tỷ USD, với hơn 90% AUM cổ phiếu định lượng đạt hiệu suất vượt chỉ số tham chiếu hoặc mức trung vị của các quỹ cùng ngành, theo công ty.

Dòng vốn định chế, bán lẻ và tiền mặt

Dòng vốn ròng từ nhà đầu tư cá nhân đạt 23 tỷ USD, nhờ sự hỗ trợ của các sản phẩm đầu tư thay thế thanh khoản cao, thu nhập cố định chủ động tại Mỹ, Aperio và SpiderRock.

Các chiến lược chủ động của khách hàng định chế đã thu hút 44 tỷ USD, với dòng vốn dương ở các mảng thị trường tư nhân, thu nhập cố định, cổ phiếu định lượng và đầu tư thay thế thanh khoản cao. Các chiến lược chỉ số định chế ghi nhận 27 tỷ USD dòng vốn rút ròng, tập trung ở các quỹ cổ phiếu chỉ số phí thấp.

Mảng quản lý tiền mặt tạo ra 31 tỷ USD dòng vốn ròng, bao gồm các ủy thác thanh khoản tùy chỉnh, các quỹ chính phủ và sự tăng trưởng liên quan đến Circle.

Thị trường tư nhân và hạ tầng AI

Thị trường tư nhân tạo ra 15 tỷ USD dòng vốn ròng theo quý, chủ yếu từ việc giải ngân vào hạ tầng, tín dụng tư nhân và tiếp nhận một hợp đồng ủy thác bất động sản mới. BlackRock đã huy động được 68 tỷ USD trên các thị trường tư nhân trong 12 tháng qua, bao gồm 25 tỷ USD thuộc mảng tín dụng tư nhân trong năm đầu tiên hợp tác đầy đủ với HPS.

Đối tác hạ tầng AI của công ty đã hoàn tất đợt giải ngân đầu tiên thông qua thương vụ Aligned Data Centers, vốn có giá trị doanh nghiệp khoảng 40 tỷ USD. BlackRock cũng tham gia tài trợ cho trung tâm dữ liệu trị giá 14 tỷ USD dự kiến của Meta tại Texas thông qua các khoản đầu tư hạ tầng của GIP và năng lực tài trợ tư nhân của HPS.

Ban lãnh đạo kỳ vọng có nhiều cơ hội trên toàn bộ cấu trúc vốn, bao gồm nợ cấp đầu tư, phát hành riêng lẻ, tài trợ vốn thứ cấp, vốn cổ phần và các chứng khoán nợ thứ cấp. Tuy nhiên, họ cho biết việc phát triển một thị trường tài trợ năng lực tính toán được giao dịch rộng rãi sẽ cần thời gian và đòi hỏi dữ liệu lịch sử, khung đánh giá của các tổ chức xếp hạng tín nhiệm cũng như phân tích rủi ro.

Công nghệ và dữ liệu

Doanh thu dịch vụ công nghệ và thuê bao tăng 14%, trong khi giá trị hợp đồng hàng năm tăng 12%, hoặc ước tính 13% tính theo tỷ giá cố định. Tăng trưởng này phản ánh việc tiếp nhận thêm khách hàng mới và việc sử dụng rộng rãi hơn các nền tảng Aladdin, eFront và Preqin.

Ban lãnh đạo cho biết nhu cầu về sự minh bạch, phân tích danh mục đầu tư và quản trị rủi ro dự kiến sẽ tăng lên khi thị trường tư nhân trở thành một phần lớn hơn trong danh mục của khách hàng.

Các chiến lược tối ưu hóa thuế

AUM của Aperio đã mở rộng từ khoảng 40 tỷ USD tại thời điểm thâu tóm lên gần 200 tỷ USD. AUM của chiến lược chỉ số trực tiếp chỉ mua đạt tổng cộng 175 tỷ USD, với 13 tỷ USD dòng vốn vào tính từ đầu năm. AUM của chiến lược mua-bán khống đạt 19 tỷ USD, với 12 tỷ USD dòng vốn vào tính từ đầu năm.

Aperio tạo ra 5 tỷ USD dòng vốn vào trong quý 3, bao gồm 4 tỷ USD vào các chiến lược mua-bán khống và 1 tỷ USD vào các chiến lược chỉ mua. Tổng dòng vốn vào các chiến lược tối ưu hóa thuế trong năm 2026 đạt 25 tỷ USD, cao hơn 70% so với mức kỷ lục của năm trước.

Dự báo của ban lãnh đạo

• BlackRock tiếp tục coi 6% đến 8% là khoảng tăng trưởng phí cơ bản tự thân bền vững, với khả năng tiến lên mức một chữ số ở vùng cao hoặc hai chữ số ở vùng thấp trong các giai đoạn hoạt động của khách hàng tăng cao. Mục tiêu dài hạn của công ty vẫn giữ ở mức ít nhất 5%.
• Ban lãnh đạo dự kiến thuế suất điều chỉnh quý 4/2026 vào khoảng 25%, tùy thuộc vào các khoản mục riêng lẻ và khả năng thay đổi luật thuế.
• Sau khi quy năm ảnh hưởng từ HPS và Preqin, công ty tiếp tục dự kiến chi phí quản lý doanh nghiệp và bán hàng cả năm sẽ tăng ở mức một chữ số tầm trung.
• BlackRock vẫn cam kết duy trì mức tăng trưởng giá trị hợp đồng hàng năm trong khoảng từ 10% đến 15% trong dài hạn.
• Tùy thuộc vào điều kiện thị trường và kế hoạch chi tiêu vốn, công ty dự kiến sẽ mua lại ít nhất 550 triệu USD cổ phiếu trong quý 4, tương đương với mức mua lại của quý 3.
• Ban lãnh đạo dự kiến hoạt động huy động vốn trên thị trường tư nhân sẽ mạnh mẽ hơn trong quý 4 và cho biết quý này thường là thời điểm cao điểm theo mùa đối với dòng vốn vào iShares.

Rủi ro và các yếu tố cần theo dõi

Ban lãnh đạo dự đoán lãi suất sẽ tiếp tục biến động do lạm phát, giá năng lượng, diễn biến địa chính trị, thâm hụt ngân sách chính phủ và sự mất cân đối giữa cung và cầu vốn. Họ cũng dự báo lãi suất dài hạn sẽ cao hơn về mặt cấu trúc khi hoạt động vay nợ của khu vực công cạnh tranh với nhu cầu tài trợ ngày càng tăng của khu vực tư nhân.

Biên lợi nhuận vẫn nhạy cảm với các mức biến động của thị trường và cơ cấu phí thưởng hiệu quả đầu tư, vốn có tỷ lệ chi trả thù lao khác nhau. Thuế suất thực tế cũng có thể thay đổi do các khoản mục không thường xuyên hoặc thay đổi trong luật thuế.

Trong các chiến lược mua-bán khống tối ưu hóa thuế, các mô hình lưu ký và tài trợ vẫn đang điều chỉnh để thích ứng với sự tăng trưởng nhanh chóng của ngành. BlackRock cho biết họ đang mở rộng các đối tác tài trợ và kênh phân phối để quản lý các hạn chế về công suất.

Ban lãnh đạo cũng lưu ý rằng các quỹ mở thị trường tư nhân vẫn còn các yêu cầu rút vốn đang chờ xử lý và tỷ lệ rút vốn toàn ngành vẫn ở mức cao, mặc dù họ kỳ vọng môi trường sẽ thuận lợi hơn trong quý 4 và nửa đầu năm 2027.

Tóm tắt phần Hỏi & Đáp với chuyên gia phân tích

Các chuyên gia phân tích tập trung vào tính bền vững của tăng trưởng tự thân, tác động của lãi suất dài hạn cao hơn, công suất chiến lược tối ưu hóa thuế, sự mở rộng biên lợi nhuận và tài trợ AI.

Về tăng trưởng tự thân, ban lãnh đạo cho biết dòng vốn vào được đa dạng hóa trên các sản phẩm phân bổ cốt lõi, quỹ ETF chủ động, chiến lược định lượng, thị trường tư nhân, các giải pháp đầu tư thay thế thanh khoản cao và giải pháp tối ưu hóa thuế. BlackRock cũng kỳ vọng các quan hệ đối tác thuê ngoài quy mô lớn và hợp đồng ủy thác bảo hiểm chất lượng cao sẽ hỗ trợ AUM tạo thu nhập phí trong tương lai.

Về biên lợi nhuận, ban lãnh đạo giải thích sự mở rộng này là nhờ tăng trưởng phí thường xuyên, đòn bẩy hoạt động và việc hợp nhất GIP và HPS — cả hai đơn vị này đều hoạt động với biên lợi nhuận thu nhập từ phí trên 50%. Công ty nhận thấy vẫn còn dư địa để mở rộng biên phí thường xuyên, nhưng không đưa ra dự báo biên lợi nhuận cụ thể cho năm 2027.

Về AI, ban lãnh đạo cho biết BlackRock có kế hoạch ưu tiên đưa các khoản đầu tư được khởi tạo vào các danh mục đầu tư dài hạn của khách hàng nhằm tạo ra phí quản lý thường xuyên. Doanh thu từ đồng tài trợ hoặc phân phối sẽ mang tính bổ sung thay vì là động lực kinh tế chính.

Toàn văn biên bản cuộc họp báo cáo kết quả kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Good morning. My name is Jen, and I will be your conference facilitator today. At this time, I'd like to welcome everyone to the BlackRock, Inc. Third Quarter 2026 Earnings Teleconference. Our host for today's call will be Chairman and Chief Executive Officer, Laurence D. Fink; Chief Financial Officer; Martin S. Small; President, Robert S. Kapito; and General Counsel, Christopher J. Meade. [Operator Instructions]

Mr. Meade, you may begin your conference.

Christopher Meade

Good morning, everyone. I'm Chris Meade, the General Counsel of BlackRock. Before we begin, I'd like to remind you that during the course of this call, we may make a number of forward-looking statements. We call your attention to the fact that BlackRock's actual results may, of course, differ from these statements. As you know, BlackRock has filed reports with the SEC, which lists some of the factors that may cause the results of BlackRock to differ materially from what we say today. BlackRock assumes no duty and does not undertake to update any forward-looking statements.

So with that, I'll turn it over to Martin.

Martin Small

Thanks, Chris, and good morning, everyone. It's my pleasure to present results for the third quarter of 2026. Before I turn it over to Larry, I'll review our financial performance and business results. Our earnings release discloses both GAAP and as adjusted financial results. A reconciliation between GAAP and our as adjusted results has been included in the tables attached to today's press release. I'll be focusing primarily on our as-adjusted results.

A year ago, our clients were focused on managing uncertainty around inflation rates and growth. Today, they're focused on capturing the opportunities created by technology and artificial intelligence. They're focused on infrastructure investment and a renaissance for income investing. Their aiming to secure returns fuels from a new wave of productivity and innovation. There's more money in motion across global capital markets, and there's expanding opportunities for BlackRock and our clients. They're powered by earnings-driven returns, higher yields and broader opportunities to diversify and manage risk through our whole portfolio approach.

The breadth of our platform is deepening our relationships with clients across all channels, retail and institutional and all over the world. Capital is flowing into the infrastructure required to power AI and digital transformation. Wealth portfolios are broadening beyond traditional allocations into personalized solutions delivered at scale. And retirement is being reshaped by growing demand for income and broader investment access.

When clients need advice on capital markets, portfolio construction or a partner to deploy capital at scale across public and private markets, they're coming to BlackRock. We've methodically invested through cycles to build a scaled platform, one that can connect clients across public and private markets with technology. It's paying off now in our results and in the accelerating pipeline ahead. Clients entrusted us with nearly $870 billion of net inflows over the last 12 months, driving 10% organic base fee growth. That's not one product or one region carrying the firm. It's broad-based across client channels, asset classes and geographies.

As we set out in our 2030 plan at last year's Investor Day, we're driving growth in higher value, higher base fee rate categories. And our business mix across public, private and technology is creating more durable and all-weather growth in revenue and earnings. Shareholders are benefiting from that growth. In our first comparable quarter since the HPS close, year-on-year EPS growth accelerated to over 35%.

High momentum across our business is translating into stronger financial outcomes. We again delivered double-digit growth in revenue, operating income and earnings per share, with all 3 measures reaching new records. Our scaled and disciplined financial rubric are helping translate growth into the bottom line. Our operating margin reached 47.8%, up 320 basis points year-over-year.

In the third quarter, BlackRock generated $205 billion of net inflows. Organic base fee growth of 11% marks our ninth consecutive quarter at or above 5%. Our growth continues to broaden across active ETFs, private markets, systematic, SMAs, digital assets and technology. These capabilities are scaling simultaneously, demonstrating the power of BlackRock's platform breadth and the durability of our growth model.

Third quarter revenue of $7.8 billion was 19% higher year-over-year, driven by organic base fee growth, the impact of higher markets on average AUM, higher performance fees and higher technology services and subscription revenue. Operating income of $3.3 billion was up 27% year-over-year. Earnings per share of $15.93 increased 38% versus a year ago, also reflecting higher nonoperating income and a lower diluted share count in the current quarter. Nonoperating results for the quarter included $164 million of net investment gains, primarily due to mark-to-market noncash gains linked to our minority investments in Securitize and Circle.

Our as-adjusted tax rate for the third quarter was approximately 24%. We continue to estimate that 25% is a reasonable projected tax run rate for the fourth quarter of 2026. The actual effective tax rate may differ because of nonrecurring or discrete items or potential changes in tax legislation.

Third quarter base fee and securities lending revenue of $6 billion increased 20% year-over-year, reflecting the positive impact of market beta on average AUM, organic base fee growth and higher securities lending revenue. On an equivalent day count basis, our annualized effective fee rate was approximately flat compared to the second quarter. Sustained client demand for high-value categories, including private markets, active ETFs and systematic continues to support fee rates on net inflows that are well above the firm's blended effective fee rate.

Performance fees of $630 million increased 22% from a year ago, primarily reflecting higher revenue from alternatives, including $110 million of performance fees from HPS. Quarterly technology services and subscription revenue was up 14% compared to a year ago, reflecting sustained demand for our full range of technology offerings.

Annual contract value, or ACV, increased 12% year-over-year. On a constant currency basis, we estimate ACV would have increased 13% from a year ago. We remain committed to low to mid-teens ACV growth over the long term.

Total expense increased 14% year-over-year, primarily driven by higher compensation, sales, asset and account and G&A expense. Employee compensation and benefit expense was up 12% year-over-year, reflecting higher incentive compensation linked to higher operating income and higher performance-related compensation versus the prior year period.

Sales, asset and account expense increased 22% compared to a year ago, driven by higher distribution and servicing costs and direct fund expense. G&A expense was up 6% year-over-year, primarily due to higher technology investment spend. Consistent with our G&A outlook provided in January, after annualizing for the impact of HPS and Preqin, we continue to expect a mid-single-digit percentage increase in full year G&A.

We continue to deliver margin expansion on recurring fee-related earnings. Excluding the impact of all performance fees and related compensation, our adjusted operating margin for the third quarter would have been 48.6%, up 230 basis points year-over-year.

Our capital management strategy remains consistent. We invest first in the business and then return excess cash to shareholders through a combination of dividends and share repurchases. In the third quarter, we repurchased $550 million worth of shares. At present, based on our capital spending plans for the year and subject to market and other conditions, we anticipate repurchasing at least $550 million worth of shares in the fourth quarter. That's consistent with our previous guidance communicated in July.

Turning to flows. BlackRock's third quarter net inflows of $205 billion were diversified across product types, client channels, regions and active and index strategies. ETFs generated $135 billion of net inflows in the third quarter. Index bond ETFs and precision ETFs led the way, generating $61 billion and $41 billion of net inflows, respectively. Continued demand for our growing lineup of active ETFs added $22 billion of net inflows. Our digital assets ETPs raised $8 billion in the quarter. Our ETFs have now delivered a sixth consecutive quarter of double-digit organic base fee growth, powered by higher-value ETF categories such as active and precision.

Retail net inflows of $23 billion were driven by sustained momentum in liquid alternatives, broad-based demand for our U.S. active fixed income offerings and continued inflows across Aperio and SpiderRock. Institutional active net inflows of $44 billion were positive across all product types and were led by strength in private markets, fixed income, systematic equities and liquid alternatives. Institutional index net outflows of $27 billion were concentrated in low fee index equities. In private markets, we saw $15 billion of net inflows, mainly from deployment across infrastructure and private credit and the onboarding of a real estate mandate.

This quarter, we updated our earnings supplement to provide greater transparency into our private market activity and drivers of fee paying AUM. These include metrics such as fundraising, deployment, total AUM and dry powder, which can be found on Pages 9 through 11 of our earnings supplement.

Finally, our cash management platform generated $31 billion of net inflows in the third quarter. These results include fundings into customized liquidity solutions, demand for government funds and continued growth from Circle.

At our Investor Day in June 2025, we set out a vision and a business plan for BlackRock in 2030. Five quarters into the plan, we're delivering at or well above its targets, higher and more consistent organic base fee growth, a more all-weather durable mix of asset management and technology capabilities across public and private markets, consistent operating margin expansion and higher earnings per share. This third quarter notched another strong step on our way to 2030. In more uneven markets, we generated record revenue, operating income and EPS, a more than 47% operating margin and 11% organic base fee growth.

The opportunities ahead for BlackRock continue to expand. Clients are looking for a partner that can connect the whole portfolio to navigate a new environment of capital scarcity, higher long-term yields and a redesign of diversification. I don't believe we can evaluate the investment environment as risk on or risk off any longer. This new environment is about capital allocation acumen. It's about financing advantages through scale, access and breadth of opportunities, and it's about redesigning diversification across the client portfolio. Our industry is being reshaped by the blending of public and private markets and growing demand for technology and data to secure success in client portfolios. These conditions play directly to BlackRock's strength. Client engagement is higher than ever, and we enter our seasonally strongest fourth quarter with significant momentum across the firm and a long runway for growth ahead.

With that, I'll turn it over to Larry.

Laurence Fink

Thank you, Martin. Good morning, everyone, and thank you for joining the call. We've built BlackRock to be a partner to clients everywhere capital markets are moving. We advise clients holistically across public markets, private markets and technology. We do it with a global perspective but with a local lens. In that reach, that ability to cover every corner of a client's whole portfolio puts BlackRock at the center of how capital is moving in the world today. And it's showing up in our results.

Third quarter earnings per share rose 38%. Our operating margins reached 47.8%. Organic base fee growth of 11% growth, reflecting net inflows of $205 billion. Year-to-date net inflows and organic base fee growth are both more than 45% higher than this time last year. Our results reflect the scale of BlackRock today. We generated net inflows across every asset class, every client type, every region and across both active and index. AUM is up over $2 trillion in the last year, and it has now reached $15.5 trillion. We've now operated for a full year with GIP, HPS and Preqin as part of BlackRock. This quarter is the clearest view yet of the earnings power of our integrated platform. It's helping us serve more clients' needs and create more value for shareholders.

For the first time in my career, that's 50 years of a career, I'm seeing genuine shortages of capital. Governments are running historically large deficits, while at the same time, demand for private capital is rising across the economy. Governments need financing for infrastructure. Companies need to fund a generational AI build-out. Individuals need better ways to invest and retire. Everyone is rethinking how they deploy capital, and BlackRock is at the center of many of these conversations. We're both a trusted adviser and a destination for global client capital. That's driving meaningful activity across the firm and a growing pipeline for the future.

This is especially visible through our work with the leading companies at the center of the AI buildout. We have long-standing relationships with these hyperscalers and sovereign wealth funds and pension funds and corporate clients around the world. These long-term relationships are now underpinning some of the largest financing engagements in the market. We partnered with Meta on the financing of its planned $14 billion data center in Texas, bringing together infrastructure investments from GIP, private financing capabilities from HPS. We're also working alongside leading technology companies to create dedicated pools of financing for the customers to expand compute capabilities and capacity. In the near term, these can supply private placements into high-grade insurance mandates. But over time, there's even a larger opportunity to securitize them into tradable structures for a much broader set of clients.

Rob Kapito and I have lived through this playbook before. In the early 1980s, mortgages were loans sitting on bank's balance sheets, [ illiquid ] and hard to price. Fannie Mae and Freddie Mac began cooling them, but that alone didn't make them tradable. What made them tradable was data, years of performance history and understanding of how the performance would move with interest rates and with the changes of the broader economy. Once investors had a trusted time series of data, issuers had a standard to build against and the market opened up for a much bigger group of investors. That combination took the MBS market from a few billion dollars when I started to the trillions of dollars it is today.

Compute capacity is now following a similar path, and we intend at BlackRock to be the center of it as we were then in the beginnings of the mortgage-backed securities market. BlackRock is particularly well positioned to help develop this market because we combine capital formation, but most importantly, technology and data and scale. Thousands of investment professionals just participated in the Aladdin community using our analytics and risk framework to make investment decisions. AI is amplifying the value of Aladdin as we accelerate innovation and create better analytics. As compute capacity emerges as an asset class, the markets will need trusted data, standardized performance metrics and a common framework for risk analytics. These are the capabilities we've spent decades building. They now differentiate BlackRock and working alongside technology companies, investors to establish the infrastructure this potential new market will need and require. These opportunities underscore the strategic logic behind our private markets acquisitions.

We're already mobilizing capital at a greater scale than ever before. Our AI infrastructure partnership recently made its first deployment with the closing of Aligned Data Center transaction, which had an approximately $40 billion enterprise value. We raised $68 billion in private markets over the last 12 months. In private credit, higher base fees are supporting stronger income for investors, making private credit an increasingly attractive source of yield and portfolio diversification.

We raised $25 billion in private credit in our first full year with HPS. We're seeing especially strong traction with insurance companies rotating or adding to high-grade solutions. We expect that to accelerate into year-end and into 2027. Across private markets, we have a strong pipeline of future capital raises and deployment opportunities.

Clients want scaled capital markets access across their entire portfolio, and that's how iShares have led the growth of the ETF industry. iShare's flows were again led by our index bond ETFs with [ $61 billion ] of net inflows as investors shifted into long and short end of the curve. We also saw a strong demand for our AI-linked exposures, our semiconductor and South Korea ETFs were among the highest inflowing products. What sets iShares apart is the breadth and the precision of what we offer. Whatever view an investor holds, they can express it through iShares.

The ETF wrapper is also evolving how investors access actively managed strategies, and iShares is leading the industry with $60 billion of active inflows in 2026, including a record $22 billion of inflows this quarter. iShare's active AUM has doubled in the last year to more than $160 billion. We're already tracking ahead of the $500 million avenue revenue ambition that we laid out last summer.

Investment performance is what ultimately drives active net returns and flows. Performance and scale reinforces each other. BlackRock's technological-driven process delivered investment insights across vast sets of securities. And that scale is what powers consistent performance. Over 90% of our systematic equity AUM is above benchmark or peer media. That performance [indiscernible] second straight record quarter across our broader systematic active equity business. Systematic equity generated nearly $30 billion of net inflows in the third quarter and more than $60 billion of net inflows in 2026. Our systematic equity flows are up 50% compared to last year, and the total AUM is now approaching $500 billion of active investments.

We're seeing the same dynamic in fixed income. Approximately 85% of our taxable fixed income assets were above benchmark or peer medium over 3 and 5 years. That consistently is why clients keep bringing us more of their portfolio. Active fixed net inflows of $14 billion reflected strength across both institutional and retail channels. Clients turn to strategy like strategic income opportunities and total return to capture income in a higher rate environment. Rick and his team has built this performance over decades, and we're reporting it across new wrappers, including our lineup of fixed income ETFs.

Clients are also capturing income opportunities at the short end of the curve. Cash net inflows of $31 billion included several scaled mandates from clients consolidating fragmented liquidity programs into more customized solutions with BlackRock.

Income is especially critical in retirement. In recent years, we innovated to deliver an option for guaranteed income in retirement through LifePath Paycheck. And last month, we introduced our LifePath Solutions framework. It is designed to bring capabilities historically reserved for the largest retirement plans to a broader set of planned sponsors. Our $700 billion global LifePath platform reflects more than 30 years of expertise and gives us a distinctive ability to meet the challenging client needs.

Our brand and reputation are further strengthening through initiatives like BlackRock future builders. As part of the program BlackRock Foundation is deploying capital to connect workers to skill trade training. It's also embedding financial education and digital savings tools to help workers build a more durable economic security, from their first paycheck all the way through to their retirement.

Many of our international pension and corporate clients are navigating structural shifts in retirement savings plans as defined contribution models continue to grow worldwide. For example, plan sponsors in the Netherlands need a partner who can help them manage the shift from defined benefits to defined contribution at scale. And we've already onboarded multiple pension mandates in connection with this transaction.

Last month, the pension fund from the Dutch construction industry named BlackRock as its preferred candidate for an $80 billion outsourced fiduciary mandates, citing our global scale, our execution capabilities and our technology. We're advising clients and government around the world on building durable retirement systems and deepening their local capital markets. And when capital is moving across borders, much of it moves through platforms like ours.

[ Forward ] investment is moving into the U.S. equities and funds in record amounts. That activity is [ benefiting ] BlackRock, with 1/3 of our long-term net inflows coming from clients outside the United States. It's even more pronounced in systematic equity, with more than 70% of the net inflows are coming from international clients. Europe and Asia each saw double-digit organic base fee growth, and the Middle East delivered over 20% global base fee growth. We have a long-term local presence and years of expertise in executing in these regions. It's showing up in strong engagement in some of our highest value growth engines, including systematic equity, private markets, retirement and technology.

Aladdin underpins everything we deliver to clients. Our ACV grew at 12% in the third quarter, reflecting both new onboardings and existing clients expanding their relationship across our technology stack. We have a comprehensive public and private market workflow and data offerings through Aladdin, eFront and Preqin. As private markets become a larger part of client portfolios, the need for transparency, the need for risk management, the need for portfolio analytics can only increase. That's a natural extension of Aladdin's role as an operating system for our entire portfolio for investors worldwide.

Our results prove the power and potential of our integrated firm. Our shareholders are participating in that growth through a 38% increase in earnings per share, a more than 47% operating margin and double-digit organic base fee growth. BlackRock brings together issuer relationships built over decades through public market platforms, financing expertise, investment performance and the technology and data that connects it all. That combination is differentiating BlackRock in every category where we compete and in every region in which we operate. It's why BlackRock has winning mandates at the cutting edge of the capital markets from hyperscalers to compute financing, to pension outsourcing, to Aladdin and frequent partnerships.

We're having accelerated momentum and a broad pipeline spanning whole portfolios, private markets, retirement and throughout our international platforms. More clients are turning to BlackRock as a destination for capital and for a partner for their growth. I'm confident in the opportunities and growth ahead for BlackRock, for our clients and importantly, for our shareholders.

Operator, let's open it up for questions.

Operator

[Operator Instructions] Your first question comes from Michael Cho of JPMorgan.

Phần hỏi đáp

Y. Cho

I just wanted to touch on organic base fee growth during the quarter. It was a nice acceleration. And we can see from the different contributors, the flows that help drive that. And Martin, I think you called out a few drivers as well. But wondering if you can unpack maybe where you're seeing increasing and maybe increasingly sustained contribution inside some of the various businesses that you highlighted?

Laurence Fink

We'll let's get -- Martin, why don't you take that?

Martin Small

Great. Thanks, Mike. So I'd start by saying we're continuing to execute on the 2030 plan. That's to deliver that durable premium organic base fee growth. Third quarter organic base fee growth was 11%. That's 9 consecutive quarters at or above our 5% long-term target. And it's also the fifth consecutive quarter at or above 8%. I think we've demonstrated that BlackRock can sustainably deliver in that 6% to 8% range. And there's clearly the ability to move above it to high single digits, low double digits in periods of elevated client activity, and you see that in high-value category and strong markets. That can be driven by client preferences, can be driven by increased exposure to international markets, precision semiconductors, the onboarding of large mandates and the timing also, I think, of private markets, fundraising and deployment.

Organic base fee growth this quarter, I think, as Larry and I referenced, it was very well diversified across the platform. We have strong contributions from the systematic businesses, active management broadly, deployment from our AI partnership, fundraising and fee paying on day 1 in our infrastructure mid-market strategies, precision ETFs, Aperio and SpiderRock tax aware as well as cash.

Just a few financial highlights, I think might be helpful to unpack just the breadth that we're delivering in sort of core asset allocation, portfolio diversifiers, tax aware strategies in private markets. If you were to take the $524 billion of year-to-date flows, about $220 billion are in the 5 to 10 bps range. Let's call that broad asset allocation models, core exposures that clients use for long-term holdings. About $270 billion was in the 10 to 60 basis point range, and that's where you're going to find kind of active ETFs, you're going to find country funds, you're going to find exposures that are about managing diversification and also tactical opportunities. And the balance of the flows above 60 basis points are going to be in private markets. They're going to be in liquid alternatives, where we had $25 billion of flows in the quarter with $15 billion in private markets, $9 billion in hedge fund strategies and liquid alternatives.

We see that mix as being strong and durable. And we think that durability really comes from 2 places. It's from what we've talked about consistently as being structural growers. These are just categories that when markets are strong, they're going to grow faster. And when markets are weak, they'll still grow. That's ETFs, that's active management, private markets, systematic SMA solutions. That's showing up in our pipeline. We've got several scaled outsourcing relationships that we expect to fund towards the end of the year and in '27, and we've won a number of these high-grade insurance mandates that are going to drive growth as they're deployed over the coming months and days. So that future organic base fee growth, I think, is strong on the come, and we have line of sight to it.

In private markets, our fundraising plan remains diversified across infrastructure, private credit, multi-alternatives. We have a mix of strategies that are fee paying on raise and others that scale with deployment, and that's going to also support near-term revenue longer-term growth and the sustained ability to deliver at least in that 6% to 8% range.

Second, we're a consolidator. If you look at flows in the industry over the last several years, the top 5 asset managers are consolidating around 80% of the flows. But there's still just this extraordinary amount of industry fragmentation by assets and revenue, so the opportunity to consolidate share in a very, very big fragmented market, where every investor wants to consolidate its relationships to get the most out of its partner, that consolidation of share for us is an avenue of sustained organic growth. Clients really want to do more with BlackRock. You see it in the flows. We've seen it in the momentum in this quarter and this last year. I think it gives the management team here a lot of confidence that we're on the right track and a lot of optimism about our ability to deliver this sustained organic growth that's above target.

Operator

Your next question comes from Michael Cyprys from Morgan Stanley.

Michael Cyprys

I wanted to ask about what you're seeing and hearing from asset owner clients, given the recent move that we've seen higher in terms of long-term interest rates. And to what extent are you seeing clients changing? How they're thinking about relative value? Where they're allocating incremental capital? And if you could maybe tie this into the significant AI infrastructure build-out that's underway. How sensitive do you think that investment opportunity is to higher financing costs? And are you seeing any sort of changes in the pace or economics of those AI projects?

Laurence Fink

Let me turn it to Rob and I'll finish up.

Robert Kapito

So I remember the last time you asked that question, Michael, many years ago, and the answer was bonds are back. And I would say right now, clearly, interest rates are going to be impacted by all of the obvious things, inflation, energy prices, capital supply and demand imbalances and worldwide deficits, geopolitics. And we are expecting more volatility until we can find a balance that right now suggest slightly higher rates, especially in the longer end of the curve.

But let me say that we think fixed income demand remains at the early innings. As you know, for years, investors were forced to take equity risk to generate meaningful income. And today, that has changed dramatically. The 10-year treasury yields more than 5%. Wheel rates are close to 3%. And in the strategies that you know that we have like a bank and SI, we are able to generate yields around 7% in a diversified, high-quality portfolio.

Now these are bellwether returns for creating, what Larry mentioned, our goal of resiliency and durability in portfolios. But what is particularly compelling is that historically for intermediate term bond portfolios, future returns usually tend to track starting yields quite closely. In other words, investors don't need a heroic market outcome. And much of the return opportunity is already embedded in today's income levels.

So we're seeing clients recognize that opportunity. Fixed income generated $78 billion of net inflows in the third quarter and $205 billion year-to-date, reflecting demand for high-quality income and more resilient portfolio construction. And that environment plays directly to BlackRock's strength. Investors can earn attractive levels of income without taking significant duration, volatility and drawdown risk. So if rates stabilize slightly from here, we think there is substantial room for fixed income allocations continue to grow, and our clients now can use the better wrappers that we have for fixed income, especially in bond ETFs, and they are looking to lock in these yields going forward.

Laurence Fink

Related to data centers and financing, let's put it in the context of the overall federal deficits. Federal deficits up to 232 years was $8 trillion, 26 years later, that's $40 trillion. And so the demand and the need of financing the deficits are at obviously record levels. I've been talking about the need for unlocking private capital. We are seeing that unlock, which is fantastic for the United States and fantastic for our potential growth.

But unlocking private capital means a lot of financing, whether it's financing for AI and data centers or financing for companies like Humana, where we announced the big financing yesterday or last week when we announced the financing for AT&T. That is one of the special ingredients for growth in the United States at the role of the capital markets is playing a larger, larger component in that. And so the competition for capital is growing between the federal deficits, which are at record levels. And now we're unlocking private capital and demand for capital in the private sector is growing. And all that means is, at this moment, it means we're going to have structurally higher interest rates for longer and especially out of the curve, and I think that's going to be with us.

Obviously, -- as I spoke in my prepared remarks, it is -- I don't see us having the ability to raise trillions and trillions of dollars of bespoke transactions related to data centers. The need to create a new financing vehicle for compute for chips is imperative for the U.S. to continue to build out to the scale that is necessary. And once we build this out, the entire world is going to be needing to build this out. If you think about a 1 gigawatt data center in the United States is about a $50 billion enterprise cost. 40% of that is the cost of GPUs and chips. The other 60% is power, grid [indiscernible] shell. And all of that comes together.

It is -- we are now seeing financing for the data centers that are based on the lease of the credit. So that's -- and -- but now what we are also [ witnessing ] is the need to build out the scale of chips and compute. If we're going to democratize AI, the faster we could do this, the better we'll be in broadening economic success. This is an imperative.

We cannot have just 5 companies or 7 companies entirely buying out every chip production that is being produced right now. We need the ability to finance startup AI companies, startup companies, but each one of these companies are going to meet the ability to buy these new innovative compute chips. They don't have a credit rating, obviously. And so we have to come up with innovative ways. The best way is that we could do an asset-based financing related to the chips through data, through analytics. Then we could help finance startup companies, the growth of new and young companies. And it can transform America to grow at 3% or greater. And then the debt that I would just talked about will not be as consequential because we can continue to grow our economy at 3-plus percent, our debt to GDP should fall.

Operator

Your next question comes from Craig Siegenthaler with Bank of America.

Laurence Fink

Craig, my team is making fun of me from my last comment.

Craig Siegenthaler

Larry, I hope everyone is doing well. We wanted to dive a little deep into your tax aware suite, both inside and outside the $200 billion plus that sits in Aperio. Where are you seeing the most demand? Can you quantify the 3Q flow? You gave us $7 billion of Aperio flows last quarter. And on the long short tax were specifically, how are you handling the capacity constraints at the 2 largest RA custodians? They've actually been tightening inflows recently and doesn't even matter because these products are going on so many other wealth management platforms, banks, online brokers in parallel?

Unknown Executive

Martin, why don't you take that?

Martin Small

Craig, thanks so much for the question. I heard basically 3 things. Sort of demand overview flows, a little bit of a breakdown and some color on the tax aware strategies and the like. And then second, kind of the growth of long short strategies and the financing of them in and around the custodian. So let me start by saying, I just -- philosophically, you put the clients at the center of these strategies. And for taxable clients, maximizing returns means managing markets and taxes. We're seeing strong demand for tax aware solutions. That's direct indexing. It's long short, and it's SpiderRock's option-based strategy that help with concentrated stock positions and liquidity events.

The Aperio platform has grown from about $40 billion of assets on acquisition to nearly $200 billion in 5 years. It's continuing to see double-digit organic growth. Our direct indexing, sort of traditional long-only AUMs, $175 billion, with about $13 billion of net inflows year-to-date in '26. Long-short AUM is $19 billion, with about $12 billion of net inflows year-to-date '26. Aperio had $5 billion of net inflows in the third quarter, including $4 billion into long short and $1 billion into long only. Our '26 flows in these tax aware strategies of $25 billion are 70% higher than they were in 2025, where we had a record $15 billion, and that's our fifth straight record year in these strategies.

Through SpiderRock, we also offer options-based overlay capabilities that complement direct indexing and tax aware long short strategies as part of a broader whole portfolio solution. SpiderRock generated $3 billion of net inflows [ in '25 ]. Now have 3 back-to-back record quarters in 2026, including $2 billion in the third quarter. So congratulations to Eric Metz and team.

I'd say BlackRock is really differentiating in this space based on service, the breadth of the platform and obviously delivering the outcomes. We're really working with clients not just in the SMAs, but across ETFs, SMAs, direct indexing, long short public-private models, whole portfolio orientation. So that continues to grow well, and we have a really strong pipeline ahead.

In terms of the growth of long short strategies and some of the dynamics happening with the custodians, I'd again start by saying we have a broad value proposition across a whole array of tax advantage strategies. Long/short is a category that's seen rapid expansion. And I'd say the industry custodial model and financing models, they're adjusting. There are really compelling return and financing economics, Craig, for banks, for broker-dealers, the custodians, and we see additional parties entering the market to finance that growth. Long-short industry assets reached $170 billion, I think, that's up -- that's 3x year-over-year. And as I mentioned, our AUM is sort of closing in on $20 billion.

Client demand for these strategy is very strong. As I mentioned, $4 billion of inflows into long short. Our focus is really on doing everything we did long only. And long only, we maximize the number of custodial attachment points we had all around the industry. Our aim is to do the same thing and increase the number of financing counterparties for these strategies for the benefit of our clients. We're broadening our platform relationships, and we'd expect additional access points through distributors and custody partners.

There's been, I think, understandable and appropriate focus on many of these custodial changes. But we've got a diversified group of financing partners and distribution partners and several other providers that are ramping up their capacity. We're working very, very closely with our clients, who are sophisticated private wealth managers, on expanding access at the custodial platforms, on broadening the delivery options through new structures or alternative SMA options like SpiderRock and direct indexing. And then also just providing a lot of clear guidance, education, interfacing with all the partners and financing counterparties to make sure everybody manages the onboarding, the reporting, the operations, the financing with all the high-quality fiduciary care that our clients would expect. But I think a lot more to come in this space, it serves a valuable place in the client's portfolio.

Operator

Your next question comes from Michael Brown with UBS.

Michael Brown

So clearly, very impressive margin expansion this quarter. Maybe just if you could spend a little bit of time unpacking some of the biggest drivers there? And maybe how we should think about the puts and takes into 4Q. Is kind of flattish margins quarter-over-quarter reasonable assumption? And then more broadly, you're on track for roughly 200 basis points of expansion this year. Appreciating you don't like to bake in beta into your outlook, but what does the margin expansion opportunity look like in 2027, assuming a typical market backdrop?

Laurence Fink

Martin?

Martin Small

Thanks. So we continue to deliver industry-leading margins. That's been part of our 2030 strategy. Our operating and recurring fee margins each expanded, as you mentioned, by 200 to 300 basis points year-over-year. Operating margin for the quarter was 47.8%, that's up 320 basis points. And our margin ex performance fees and related comp was 48.6%, up 230 basis points.

In terms of unpacking some of the puts and takes, our reported operating margin, I think you guys understand well, can vary quarter-to-quarter depending on the composition of performance fees, which have varied payout ranges depending on the strategy. Our operating margin was higher this quarter, partially due to the performance fee mix, but excluding performance fees and related comps, we still saw 230 basis points of expansion in our recurring fee margin.

We've talked about building BlackRock around this whole portfolio around the structural growth categories of investment solutions. Those structural growers or private markets, ETFs, SMAs, models, target date technology and flows and base fee growth in these categories, they're just all -- they're all weather, they're less market sensitive. And so we see them as playing a key part in driving structurally higher adjusted operating margins.

The markets continue to have an impact on BlackRock's margins, both up and down, as you mentioned. But our 2030 goal of reaching over 30% of revenue from private markets and technology, that's aimed to dampen that effect and power more steady double-digit EPS growth and margin expansion and also provide more resiliency in client portfolios.

The difference today is that we have the engines in the private markets of Global Infrastructure Partners and HPS, both of which came to BlackRock and operate at FRE margins of north of 50%. Building on that and our other franchises, we think the outlook for margin growth is that we can propel 2 things. First, we can see the margin on fee recurring earnings driving upwards towards the trajectories of all the best-in-class private markets name, so north of 50%. We can do that through the acquired businesses, but we can also do it through highly scaled franchises that we have in ETFs, digital assets and systematic equities, which have high operating leverage, and the ability to grow and create more expansion and profitability. Then with constructive markets, higher fee rates on flows, strong organic growth, we think we can lift the fully burdened adjusted operating margin of the company up even further as well. We operate today at leading margins, and we still see room to scale them going forward.

Operator

Your next question comes from Alex Blostein of Goldman Sachs.

Alexander Blostein

I was hoping to pull on that string of questions around AI for maybe a couple more minutes. So obviously, lots of discussion around the need for capital. I think it's quite well understood, and you obviously articulated that well as well. So as you think about which part of the ecosystem BlackRock feels most comfortable participating in today, whether it's compute or the data center, which part of the capital structure, it feels like building a fully securitized traded market around this could take some time. So how much of a bridge you guys are likely to provide within this over the next couple of years? How it could translate into revenue opportunities for BlackRock? And ultimately, is there a room to build out a capital markets syndication business around that as well like we've seen with some of your alternative peers?

Laurence Fink

Let me start and Martin will follow up. Good question. A, you're right. It's going to take time to get the data and analytics. It will take time to get rating agencies to opine on this new market and come up with metrics. It's going to take time for Aladdin and Preqin to have the data set so we could do the proper analytics and -- but it is a huge priority, and we're focused on it now.

That being said, we are in the mix of [indiscernible] every conversation. In the past week, I've had conversations with every major hyperscaler. It is a large opportunity, both in the financing of GPUs. It is a large opportunity for GPU financing for our HPS team. It is a large opportunity for our GIP team in terms of the build-out and working alongside hyperscalers. Alongside for data centers, as we -- as I announced, we did close on the Aligned Data Center platform. We're actually looking at 2 more platforms that -- throughout the world where we could play a larger, larger role.

But what I said in my prepared remarks does really resonate. As one of the largest shareholders of every major public hyperscaler and technology platform, we're having broad-based conversations with all of them. Obviously, many of them are looking not just to be building out in the United States, but building out in other parts of the world as compute. It could be necessary throughout the world. We're engaged with that. We're going to be a part of that. And I do believe it is going to be a major source of opportunity.

That being said, the clients worldwide are hearing from some of our competitors, at the same time, they're all looking to do the same type of financing. And so it really requires having the unique structuring capabilities working with the hyperscalers, but then working with our clients in terms of what are they looking for, what type of structure are they looking for, what type of guarantees do they need in the back end if it's compute. So all of this is something that we are in front and center and we're working on. And I do believe, as indicated in our private markets growth, in our announced numbers, we're involved. We're getting more involved. And I see this as a major platform for us to grow on. We're presently in the market with a very large transaction now and that we'll know in the next number of months, how that plays out. But we're having conversations literally daily on opportunities that we could help out.

If you think about the need in the United States alone between the need of building at our power grid, the need for securing power and the need for the build-out of [ core ] and shell, we're talking $7 trillion to $9 trillion over the course of the number of years. Obviously, that is a lot of financing. And that's just in the United States. You have other places in the world that are looking for the same type of financing capabilities, too. So it's going to be broad. It's a role that the U.S. capital markets can play, and it's a big opportunity for BlackRock to be a part of this large opportunity.

Martin, do you want to go on and talk about more of that?

Martin Small

I just want to amplify, Alex, one thing that Larry said sort of the CFO's perspective on these things. The future of Western Capital Markets like -- it's here, it's happening right now. And when we talk about the blending of public and private and portfolios, we're not just talking about the client portfolio. We're also talking about how companies finance themselves. The options, the flexibility, the fluidity across public and private markets in financing businesses directly off balance sheet through public private structures, there's going to be so much more of that and it's imperative that it happens well in order to finance this incredible opportunity we have for productivity and innovation through AI.

I think for BlackRock, you're going to see more of the transactions that you've seen already, where we participate in the senior investment-grade public debt markets or 144A that we're participating in kind of holdco notes and mezzanine financing through insurance accounts, and we're participating in equity and junior securities especially through the HPS and GIP platforms. But the ability to deliver that whole cap stack financing and do it at great breadth across geographies, client types, we think that's integral in providing financing solutions for the issuers who we also think of very much as being our clients.

So there's just much more to come. I think that's why Larry's passion is so evident on these calls, which is these pockets are still specialist capital. And if we're going to see a much broader participation, we need to see some weighting basically in the aggregate that becomes GPUs, data centers, compute, et cetera. That's going to require a tremendous amount of analytics, but it's also going to require opening up pension plans and traditional fixed income allocations to these exposures.

And so to your second question, just on syndication, we're first and foremost, a fiduciary business. And our objective is to source attractive investments and then place them in long-term client accounts that generate long-term recurring management fees. So when we originate, the focus is on where that investment can create the most value across our institutional, wealth and insurance client portfolios. Again, our advantage is the breadth of our client base. We have substantial demand across private credit funds, insurance mandates, customized client accounts, pension funds, OCIO mandates. That gives us significant flexibility in matching assets against long-term capital.

So our focus is really on growing fee-paying AUM, placing assets as a fiduciary into long-term client portfolios. If and when there's appropriate syndication and distribution revenues to secure, we will do so. But any syndication and distribution revenues, I think you all should think of as incremental to our model, not the primary driver of value creation. We think there's a much larger opportunity that's more durable in delivering private high grade, private credit in for debt across our platform and just deepening our client relationships over time.

Operator

Your next question comes from Dan Fannon of Jefferies.

Daniel Fannon

So Martin, I wanted to unpack some of your earlier comments around flows and you mentioned an accelerating pipeline. So curious, as you look ahead, what you see as a bigger contributor or what might be changing in some of the mix or asset classes or products as what you've seen here thus far in the first kind of 9 months of the year?

Martin Small

Thanks for the question. So the first thing I'd flag is we are heading into our seasonally strongest fourth quarter. We tend to see sort of 30% to 40% of iShares annual flows happening in the fourth quarter. So I'd expect as we get out into the end of the year here, we'll see that typical seasonality in iShares flows. I think the difference will be that we'll continue to see this mix towards higher value, higher fee rate categories and ETFs, including precision exposures, active ETFs, digital assets, factors and the like.

Second is third quarter tends to be sort of the softest in around private markets fundraising. And so we'd expect to close out the fourth quarter with stronger fundraising towards our annual goals, which includes fee paying day 1 strategies. And then I'm more optimistic that we're going to start seeing evergreen funds in the private markets in the fourth quarter and into the first half of next year, really turn a quarter. We've got about $20 billion in evergreens. We've had about $1.2 billion basically in the quarter of flows, $800 million of gross subscriptions. So I see a turning of the corner there.

I'd flag that just, I think, an increase in base rates is going to bring back, I think, kind of constructive allocations to private credit and retail BDCs in the direct lending space. [ SOFA ] rates go up, private credit performance has been resilient. I think you'll see, and we're having very constructive conversations with distributors around that. We still have redemptions in the queue. The industry rates are higher than they have been, but I think we're heading for a much more constructive environment in Q4 and into the first half when it comes to the returns and the cash on cash yields from evergreen's structures.

Operator

Ladies and gentlemen, we have reached the allotted time for questions. Mr. Fink, do you have any closing remarks?

Laurence Fink

Thank you, operator. I want to thank everybody for joining this call this morning and for your continued interest in BlackRock. Our quarter's result reflects a clear view yet of the strength of our integrated platform. I think we can all see the investments we made are showing up in the growth well above our targets. We're just getting started on what we can achieve in the years ahead. We have growing momentum heading into the end of the year, and I'm confident in what's ahead for us, our clients and you, our shareholders.

Thank you, everyone, and have a very nice quarter.

Operator

This concludes today's teleconference. You may now disconnect.