“Two, with constructive markets, a higher fee rate on flows—which we have been driving—and strong organic growth, we can pull the fully burdened operating margin of the company up as well.”

In context

“sis lower than average. Our operating margin for the quarter was 44.5%, while the margin excluding performance fees and related comp was 45.6%. Looking forward, we have run BlackRock, Inc. at margins north of 45% before—close to 47% back in 2021. We did that at a time when we did not have a large-scale private markets franchise. Now we have added engines of infrastructure and alternative credit with our colleagues from GIP and HPS. Both franchises were north of 50% FRE margins when they joined BlackRock, Inc. Over time, we see two things. One, the margin on recurring fee-related earnings can trend upwards toward the trajectory of best-in-class private markets names—north of 50%—driven by the acquired businesses and highly scaled franchises in ETFs, digital assets, and systematic equities. Two, with constructive markets, a higher fee rate on flows—which we have been driving—and strong organic growth, we can pull the fully burdened operating margin of the company up as well. We have run the company at 47%, so I do not see 45% or 46% as a ceiling. As you mentioned, we had 8% annualized organic base fee growth in the quarter and 10% over the last twelve months—that is seven consecutive quarters over 5%. The fee rate was up 0.2 basis point sequentially, driven by strong market performance in our higher-fee public markets book, particularly EM and international equities, along with client demand for international iShares exposures and structural growers like systematic equities, private markets, Aperio, and active ETFs. Global equity markets improved in April. We always disclose the revenue-weighted index in the supplement, but the BlackRock, Inc. equity index is up about 5% in the first two weeks of April. At March, our base fee entry rate was approximately 2% l”