It’s been a difficult 12 months for asset management firms, with the Dow Jones U.S. Asset Managers (stock) Index, falling 3% during that period.
But it’s been a different story for BlackRock (NYSE: BLK), the world’s largest asset manager, with $14 trillion under management. Its stock climbed 14% over the last year. (Over the last five years, BlackRock stock rose 56%, compared to 51% for the index).
The $14 trillion asset figure stood as of Dec. 31, representing a 22% increase from a year earlier. That includes $698 billion of net inflows.
Many factors explain the firm’s status as king of asset management. First, 74% of its long-term assets ($9.5 trillion) sit in passive holdings, like index funds. That sets BlackRock from many of its competitors, who rely on active fund management. Extensive research has shown that passive fund management generally outperforms active.
“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, BlackRock is well-positioned,” wrote Morningstar analyst Greggory Warren.
ETFs, alternative investments thrive
The explosive expansion of exchange-traded funds (ETFs) in recent years has been kind to BlackRock. That segment accounts for 42% of its long-term assets. The firm scored a record $181 billion in net ETF inflows in the fourth quarter, and analysts expect continued growth.
BlackRock also benefits from its expansion into alternative assets, such as hedge funds and private equity. Alternative assets, at $424 billion, make up 3.3% of BlackRock’s long-term assets and enjoyed a net inflow of $15.6 billion in the fourth quarter.
The firm has made multiple acquisitions to expand its alternative holdings. That includes Global Infrastructure Partners for $12.5 billion in 2024, private credit firm HPS Investment Partners for $12 billion in 2025 and private market information provider Preqin for $3.2 billion in 2025.
Also last year, BlackRock agreed to manage $80 billion of assets belonging to Citigroup’s (NYSE: C) wealthiest clients. BlackRock already managed some of the bank’s $635 billion of client investments.
Bright future for BlackRock
All this bodes well for BlackRock’s future. “Looking out over the next five-plus years, an expanding ETF market, improved active fund operations, increased … alternatives exposure (primarily through acquisitions), and ongoing investments in technology will help drive top- and bottom-line growth for the firm,” said Morningstar’s Warren.
In 2025, BlackRock’s revenue soared 19% to $24.2 billion, thanks largely to rising financial markets and fees, much of which reflects investment inflow. Fees constituted 88% of the revenue. Adjusted operating income jumped 18%.
Warren was impressed with the earnings report. “BlackRock continues to outperform most of its traditional asset management peers from an organic AUM (assets under management) growth perspective,” he said.
“BlackRock’s size and scale, the strength of its brands, and the diversity of its AUM by investment strategy, asset class, distribution channel, and geographic reach provide it with a leg up over peers.”
So BlackRock has a good chance to outshine its competitors, regardless of the market environment.
The author owns shares of BlackRock.
Comments