Good morning. My name is Jerome and I will be your conference facilitator today. At this time, I would like to welcome everyone to the BlackRock Inc. Fourth Quarter 2021 Earnings Teleconference. Our host for today’s call will be Chairman and Chief Executive Officer, Laurence D. Fink; Chief Financial Officer, Gary S. Shedlin; President, Robert S. Kapito; and General Counsel, Christopher J. Meade. [Operator Instructions] Thank you. Mr. Meade, you may begin your conference.

Good morning, everyone. I am 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 [Technical Difficulty] which was some of the factors that may cause the results of BlackRock to differ materially from what we say today. BlackRock assumes no duty not undertake to update any forward-looking statements. So with that, I will turn it over to Gary.

Thanks, Chris. Good morning and Happy New Year to everyone. I hope everyone and their families are remaining safe and healthy. It’s my pleasure to present results for the fourth quarter and full year 2021. Before I turn it over to Larry, I will review our financial performance and business results, while our earnings release discloses both GAAP and as adjusted financial results. As always, I will be focusing primarily on our as-adjusted results. Throughout BlackRock’s history, we have consistently and systematically invested in our business with a long-term focus and commitment to serving clients, employees, shareholders, and the communities in which we operate. As a result of these long-term investments in 2021, we grew organically at our fastest rate ever and continued to expand our organic growth premium versus the industry even as our assets under management reached new highs. We have continually invested to develop industry leading franchises in ETFs, private markets, technology, our active investment platform, and more recently in ESG and in China. These investments all reflect a singular focus on helping clients construct resilient whole portfolios and they are driving the record levels of growth we are seeing today. BlackRock generated net inflows of $540 billion in 2021, representing 6% organic asset growth and 11% organic base fee growth. Each of our strategic priority areas drove significant growth during the year. Importantly, despite fourth quarter volatility, we finished the year with strong momentum, generating $212 billion of total net inflows, reflecting annualized organic base fee growth of 9%. Continued strong flows from our entire active franchise along with record iShares flows, which benefited from typical year end rebalancing and tax management contributed to the fourth quarter’s robust organic growth. We continued to build out our platform in 2021 as the strength and stability of our operating model allowed us to aggressively reinvest in our business, deliver record financial results, and returned approximately $3.7 billion of capital to shareholders. Full year revenue of $19.4 billion was up 20%. Operating income of $7.5 billion rose 19%, and earnings per share of $39.18 was up 16% versus 2020. For the fourth quarter, BlackRock generated revenue of $5.1 billion and operating income of $2.1 billion, up 14% and 11% respectively from a year ago. Quarterly earnings per share of $10.42, was up 2% versus a year ago, reflecting a higher effective tax rate and lower non-operating income in the current quarter. Non-operating results for the quarter included $86 million of net investment income, driven primarily by mark-to-market gains in our private equity total investment portfolio. Our as-adjusted tax rate for the fourth quarter was approximately 25%, driven in part by discrete items. We currently estimate that 24% is a reasonable projected tax rate for 2022, though the actual effective tax rate may differ because of non-recurring or discrete items or potential changes in tax legislation. Fourth quarter base fee and securities lending revenue of $4 billion was up 17% year-over-year, primarily driven by 11% organic base fee growth and the positive impact of market data on average AUM, partially offset by higher discretionary money market fee waivers versus a year ago and strategic pricing investments over the last year. Sequentially, fourth quarter base fee and securities lending revenue was up approximately 1%. Our fourth quarter annualized effective fee rate decreased by 0.2 basis points from the third quarter as the continued positive impact of strong organic base fee growth was more than offset by the negative impact of divergent equity beta, which accelerated into quarter end and lower securities lending revenue in the current quarter. We incurred approximately $135 million of gross discretionary yield support waivers in the fourth quarter, essentially the same as the third quarter bringing total waivers to approximately $500 million for the full year. Given the current prospects for higher rates in the near term, we now anticipate most of these waivers would cease shortly after the first 25 basis point increase in the Fed Funds rate, resulting in a one-half basis point increase to our annualized effective fee rate. Recall that approximately 50% of these gross fee waivers are generally shared with distributors, reducing the impact on operating income. For the year, we generated record performance fees of $1.1 billion, which were increasingly diversified compared to a year ago and reflected strong alpha generation across our platform. Notably, since a year ago, performance fees from liquid alternatives have increased more than 150% and our unrecognized deferred carry balance has more than doubled to over $1.4 billion as our private markets platform continues to scale. Quarterly technology services revenue was up 11% year-over-year, and full year revenue of $1.3 billion increased 12%. Annual contract value, or ACV, increased 13% year-over-year, and we remain confident in our ability to continue delivering low to mid-teens ACV growth as demand for Aladdin’s end-to-end, cloud-based SaaS solution is stronger than ever. We are heavily investing to scale Aladdin for its next leg of growth in order to extend our capabilities in high demand areas such as the whole portfolio, private markets, wealth, and sustainability. Total expense increased 20% in 2021, driven primarily by higher compensation, G&A, and direct fund expense. For the full year, compensation expense increased 20%, reflecting higher base salaries and higher incentive compensation driven by growth in operating income and higher deferred compensation expense. Recall that year-over-year comparisons of fourth quarter compensation expense are less relevant because we determine final full year compensation in the fourth quarter. Fourth quarter G&A expense increased 15% year-over-year, reflecting higher marketing and promotional expense, which included higher T&D expense, higher occupancy expense partially driven by higher COVID testing costs and higher portfolio services and technology expense. For the full year, excluding approximately $350 million of non-core G&A expense, which included $274 million of aggregate fund launch costs, core G&A expense was up 15% compared to 2020. Recall that we exclude the impact of fund launch costs when reporting our as-adjusted operating margin. The year-over-year increase in core G&A was largely attributable to technology, data, and portfolio services expense, all of which drive revenue growth. Increased technology and data spend was driven by our Aladdin cloud migration, market data investments to support our index and ESG franchises, and broader tech spend to support productivity improvements. Approximately two-thirds of the increase in our 2021 portfolio services expense related to sub-advisory cost associated with significant OCIO wins and are offset by associated base fees. 2021 direct fund expense increased 24% year-over-year, primarily reflecting higher average index AUM. Sequentially, quarterly direct fund expense declined despite higher average index AUM due to higher rebates that seasonally occur in the fourth quarter. Finally, full year intangible amortization expense increased $41 million year-over-year due to our Aperio acquisition, which closed in February 2021. Our full year as-adjusted operating margin of 45.2% was up 30 basis points versus 2020. Our business has never been positioned to take advantage of the opportunities before us and we remain deeply committed to investing responsibly and aggressively through market cycles, so we can continue to generate differentiated organic growth over the long-term. Consistent with this growth ambition, we are once again targeting record investment in our people, strategic priorities and platform infrastructure during 2022. At present, we would expect headcount to increase by as much as 10% with a continued focus on optimizing our talent pyramid for more junior roles and growing our footprint and iHub innovation centers. We would also expect core G&A to increase by 15% to 20% as we continue to invest in technology to scale our operations and support future growth, including completing Aladdin’s cloud migration, delivering new Aladdin capabilities and continuing to open the platform to promote client innovation. We are also investing through prudent use of our balance sheet to best position BlackRock for continued success. During 2021, we allocated $1.5 billion of new seed and co-investment capital to support our growth and our year end portfolio now approximates $3.7 billion. Our strategic minority investments are reinforcing various elements of our strategy and simultaneously generating very attractive returns for our shareholders. And we continue to invest inorganically when we see opportunities to accelerate our organic growth in key strategic growth areas, as we did through our acquisitions of the physical climate and transition risk models of Rhodium and Baringa, which will be critical to building best-in-class ESG capabilities within Aladdin. We also remain committed to systematically returning excess cash to shareholders through a combination of dividends and share repurchases and returned an aggregate $3.7 billion to shareholders in 2021. Since inception of our current capital management strategy in 2013, we have now repurchased over $11 billion of BlackRock’s stock, reducing our outstanding total shares by 11% and generating an unlevered compound annual return of 20% for our shareholders. At present, based on capital spending plans for the year and subject to market conditions, including the relative valuation of our stock price, we are targeting the repurchase of $1.5 billion of shares during 2022. In addition, our Board of Directors has declared a quarterly cash dividend of $4.88 per share, representing an increase of 18% over the current level. Finally, in early December, we completed the debt issuance to take advantage of current low interest rates and pre-refinance our $750 million 3 and 3/8 notes to June 2022. We successfully raised $1 billion of new 10-year notes with a 2.1% coupon, the second lowest U.S. dollar coupon in BlackRock’s debt stack. As you will hear more from Larry, BlackRock’s strategy has always been guided by our clients’ needs. We relentlessly focused on helping them meet their financial objectives and our deeper and broader relationships with more clients are driving growth across our entire platform. Fourth quarter total net inflows of $212 billion, representing 9% annualized organic AUM and base fee growth, were led by flows into ETFs and our top performing active franchise. Record full year net inflows of $540 billion were positive across all client types, investment styles and regions and reflected records for both ETFs and active strategies. ETFs generated $306 billion of net inflows in 2021, representing 11% organic asset growth and 9% organic base fee growth. Record fourth quarter ETF flows of $104 billion reflected some seasonality, but also reflected the diversity of our product and client segments and accelerating secular shifts occurring in the market. We saw continued strength in core, but our strategic product segments, particularly sustainable and fixed income were the largest contributors to our fourth quarter flows. Sustainable ETF AUM of $150 billion nearly doubled during the year and our $750 billion fixed income ETF platform grew organically by double-digits, even in one of the most challenging macro environments for fixed income in several years. Clients also continued to use our broad-based precision exposures to express risk on sentiment during the year. BlackRock generated full year retail net inflows of $102 billion, representing 12% organic asset growth and 14% organic base fee growth, significantly outperforming the broader mutual fund industry. Retail flows were positive in both the U.S. and internationally, reflecting broad-based strength across our active platform. Fourth quarter retail net inflows of $22 billion reflected similar trends, but also included the seasonal impact of capital gains and dividend reinvestment. We remain well positioned to meet investor needs for risk-adjusted alpha and yield and our diversified fixed income platform with top performing strategies across total return, unconstrained, high yield and credit offers choice to investors in any rate environment. Institutional index net outflows of $118 billion in 2021 reflected equity net outflows, including the previously disclosed $58 billion low fee institutional redemption in the second quarter, partially offset by fixed income net inflows as many large clients rebalanced portfolios after significant equity market gains or tactically shifted assets to fixed income and cash. BlackRock’s institutional active franchise generated a record $169 billion of net inflows in 2021, reflecting broad-based strength across all product categories and the funding of several significant OCIO mandates. We are seeing strong momentum in our OCIO business, evidenced by another significant core fixed income funding in the fourth quarter. We also saw continued growth in our LifePath target date franchise and remain committed to helping investors around the world plan and invest for retirement. In the aggregate, strong growth across active strategies led to 7% organic base fee growth for our institutional channel in 2021. Across retail and institutional client types, BlackRock generated a record $49 billion of active equity net inflows for the full year, led by top performing franchises in technology, health sciences and U.S. growth equities as well as quantitative strategies. We remain well positioned for future growth in our active platform, with over 75% of our fundamental active equity, systematic active equity and taxable fixed income assets performing above their respective benchmarks or pure medians for the trailing 5-year period. Overall, demand for alternatives also continued, with $27 billion of net inflows into illiquid and liquid alternative strategies during the year driven by credit, infrastructure and our multi-strat and global event-driven hedge funds. Total alternatives fundraising notched a record in 2021 and we have approximately $36 billion of committed capital to deploy for institutional clients in a variety of strategies, representing over $230 million of future annual base fees and significant potential performance fees. Finally, BlackRock’s cash management platform generated $44 billion of net inflows in the fourth quarter and $94 billion of net inflows in 2021 as we continue to grow market share in a persistent low rate environment by leveraging our scale, product breadth, technology, and risk management on behalf of clients. It has been another strong year for BlackRock. Our global scale and diverse platform allow us to continue investing for the future, whether in good markets or more challenging ones and our differentiated business model remains incredibly well-positioned to sustain industry-leading organic growth and deliver long-term shareholder value. Our commitment remains to optimize organic growth in the most efficient way possible and we will do so responsibly to meet the needs of all stakeholders. With that, I will turn it over to Larry.

Thank you, Gary. Good morning, everyone and thank you for joining the call. I hope you all have had a healthy and happy holiday season that all of you are staying safe. Throughout BlackRock’s history, we have relentlessly focused on helping our clients meet their investment goals and solve their most complex challenges. We have continually invested and reinvested in our business to meet and anticipate our clients’ evolving and changing needs and to deliver the most comprehensive global investment and technology platform. Our 2021 results truly demonstrated the benefits of those investments. BlackRock delivered the strongest organic growth in our history even as our assets under management reached new highs. We generated $540 billion in net inflows in 2021, representing a record 11% organic base fee growth. We also ended the year with strong momentum with $212 billion of fourth quarter net inflows, reflecting our seventh consecutive quarter of organic base fee growth above our 5% target. And we have steadily expanded our organic growth premium relative to the industry, relative to our competitors as our clients continue to entrust us with more of their portfolios. Importantly, our growth is more diversified than it’s ever been. In 2021, our active platform, including alternatives, contributed $267 billion of inflows representing nearly half of our total net inflows. ETFs remained a significant growth driver with record flows of $306 billion. And our technology services revenues grew by 12%, reaching $1.3 billion. This strong momentum across our entire business drove record financial results. For the year, BlackRock delivered 20% revenue growth, 19% operating income growth, 16% ETFs growth and at the same time, we expanded our margins. Two years into the pandemic, we continue to confront new virus strains. We’re confining divergent restriction approaches country by country and even an uneven economy worldwide. Meanwhile, inflation has reached a 40-year high as we see several structural changes take hold. Consumer demand has shifted from services to household goods as people are spending more time at home and benefiting from higher levels of savings. Labor shortages are causing supply chain bottlenecks as people have more choice in the gig economy. The quit rate in the United States has ever been higher reflecting the confidence of employees. And we will need to recognize that the energy transition is inherently inflationary given the significant cost differential between clean and traditional technology today. And that is why we are so optimistic about investing in green technology to move the energy transition forward. BlackRock has always focused on evolving and staying ahead of our clients’ needs as they navigate change, and they are coming to BlackRock more than ever before. They value BlackRock’s insights, they value the breadth of our solutions. They certainly value our global footprint. As a result, BlackRock is building deeper partnerships with more clients across their whole portfolio throughout the world. We have strong conviction in our ability to continue generating differentiated organic growth over the long-term because we have built a platform to help our clients as a fiduciary to meet their objectives in all market environments. And we continue to invest ahead of their evolving needs and are swiftly and aggressively trying to embrace new market opportunities. Our long-term strategy remains to be – remains to keep up and performance at the heart of BlackRock to accelerate growth in iShares to build out our illiquid alternatives that continue to differentiate our technology to deliver a whole portfolio solution and become a global leader in sustainable investing. BlackRock is a $2.6 trillion active manager and our multiyear investment in incorporating data science, sustainability and new tools for portfolio construction is resulting in stronger growth than at any time in our corporate history. We generated a record $267 billion of net inflows from active strategies in 2021, including a second consecutive year of record active equity inflows. Active strategies contributed over 60% of our annual organic base fees, and our growth is significantly outpacing that of our peers and the broader industry as we take market share in this fragmented landscape. BlackRock’s active mutual fund captured the number one share of industry flows in 2021, and our organic growth rate has tripled the industry. As Gary discussed, our investment performance remained strong with 88% of retractable fix system and 78% of our fundamental active equity funds above benchmark or peer median for a 5-year period. And in the U.S., nearly 80% of our active mutual funds are rated either a Morningstar 4 or Morningstar 5, positioning us well for future growth. Clients are increasingly – increasing their allocation to alternative strategies as they search for diversification and higher returns. BlackRock has built a broad platform across infrastructure, private credit, real estate and private equity to meet that demand. We raised a record $42 billion in client capital in 2021 and are confident in our ability to accelerate our growth as a leader in private markets. Infrastructure, for example, has significant secular tailwinds, driving growth and will be an important engine of fiscal stimulus for economies looking to build for their future. BlackRock is incredibly well positioned to capture opportunity in this area. We are one of the largest infrastructure managers in the industry with over $35 billion of client assets, including one of the largest renewable power platform. We have grown our platform fourfold in the last 5 years and look forward to partnering with more clients as we raise new vintages in our flagship funds and launched new innovative strategies in this asset class. iShares also had a record year as the global ETF industry crossed $1 trillion in annual inflows for the first time. Growth was driven by greater adoption globally from asset owners, asset managers, wealth managers and more recently, for many of the approximately 40 million first-time investors who opened self-directed investment accounts over the last 2 years. BlackRock and iShares ETFs generated a record $306 billion of net inflows in 2021. We saw strength across each of our product categories including over $100 billion of net inflows into our core ETFs for the first time and nearly $80 billion in our fixed income ETF and more than $50 billion into each of our sustainable and precision ETF categories. We saw strong client demand for fixed income ETFs despite a challenging macro environment for fixed income more broadly. Our growth benefited from the diversity of our product range across inflation rate bonds, municipal bonds, sustainability and emerging market exposures and the diversity of our client base, many of whom are increasingly using ETFs are part of their active portfolio construction. Worldwide ETFs are increasingly becoming the vehicle of choice for accessing a broad range of investment exposures, both in a passive way and in an active way. And as barriers for ETF adoption comes down, it is enabling a new generation of investors to access markets and more and more of them are looking to ETFs as a default investment vehicle. For those wanting to create more customized indexes, our Aladdin technology has long provided this capability to institutions. And through our recent Aperio acquisition, we can now provide custom index capabilities to U.S. wealth advisers. Following a breakout in 2020, momentum and sustainable investments continued, and we generated a record $104 billion of net inflows in 2021 as client demand for sustainable strategies accelerated. We now manage $509 billion in sustainable AUM, more than double from a year ago and remain committed to innovating and expanding choice for our clients. One of the biggest opportunities of this generation will be helping our clients navigate the global transition to a net zero economy. We have already seen $4 trillion of capital move from traditional investments to sustainability ones in the last 2 years alone and this is just the beginning. The transition will not happen overnight and it will require significant investment in technology. BlackRock is working with companies across a wide range of carbon-intensive sectors that are proactively transforming their businesses and whose innovation will be critical to the world’s decarbonization agenda. We believe these companies will present an important investment opportunity for investors. BlackRock is intently focused on helping our clients participate in these opportunities and understand the impact of the transition on their portfolios through better data and analytics. Our ambition is to move more capital into transition than anyone else. Our multi-decade investment into Aladdin technology platform continues to differentiate BlackRock both as an asset manager and a leading fin-tech provider. We generated $1.3 billion in annual technology revenues, up 12% year-over-year. We remain focused on continually evolving Aladdin for the next decade and beyond. We are innovating and extending our capabilities into areas of high client demand, including whole portfolios, wealth and sustainability. The combination of Aladdin and eFront for example, which allows a client to bring together their whole portfolio in one place and customized at scale has already been embraced by over two dozen clients, and the pipeline is the strongest it has ever been and growing. The breadth of BlackRock investment strategies, our technology capabilities and our one BlackRock culture are truly, what differentiates us in providing global portfolio solutions to our clients. In my conversations with clients around the world, I’m hearing about the challenges they are facing and their desire to consolidate the number of partners that they work with. They are increasingly choosing BlackRock as their partner of choice for those large strategic complex relationships. This is resonating, especially in our work with insurance clients. Our strong fourth quarter inflows included a previously announced $49 billion of active fixed income mandate from a large strategic insurance client. Our role at BlackRock is to leverage our insurers expertise and our diversified global platform across asset management, technology, sustainability, advisory solutions to deliver fully and completely to our clients. We see significant opportunity to work more closely with our insurance and broader OCIO clients in 2022 and beyond. Our ability to address client challenges enables us to fulfill our purpose and drive long-term performance that benefits all our stakeholders. Over the last 5 years, clients have entrusted us with $1.8 trillion of net new assets. That’s our organic growth for the last 5 years. We crossed $10 trillion in AUM in the fourth quarter. As with every milestone we reached over the decade, we are incredibly humbled by our client support and their incredible trust they have placed on us. All of us at BlackRock feel and take this deep responsibility in managing every dollar our clients awarded us, whether it is an individual investor using one of our ETFs is their first portfolio or investment account or a very large pension fund entrusting us with their whole portfolio. It is truly an honor that we recognize every moment and every day. BlackRock’s consistent results are possible because of our dedicated employees. I often talk about the importance of putting a company’s purpose at the foundation of a relationship with all stakeholders. Our purpose is resonating with our employees more than ever. BlackRock employee base has remained stable over the last 2 years amidst its turbulent environment. And I’m extremely proud of how passionate our 18,000 employees are in helping more and more people experience financial well-being. I want to take this moment to thank each and every one of our employees and every one of them individually for their continued partnership resilience and hard work and dedication through another difficult year. Everything BlackRock does is rooted in our culture of focusing on the long-term, and we will continue to innovate. We will continue to be using our scale and contributing to a more equitable and more resilient future to benefit more clients to benefit our employees, and to benefit our shareholders and the people and communities worldwide where we operate. I firmly believe that the efforts of 2021 will position BlackRock to deliver value over the long run for all our stakeholders. With that, let me open it up for questions.

[Operator Instructions] Your first question comes from the line of Alex Blostein with Goldman Sachs. Your line is open.

Hi, Alex. Happy New Year.

Hi, good morning, everybody. Happy New Year to you as well. So maybe we could start with a question around just the active dynamics for BlackRock in 2021. Clearly, a great year, record year in active flows across the board, equity, fixed income etcetera. How sustainable do you think this trend will be, I guess, into ‘22. And then I also was hoping you could expand on how faster increases in interest rates could also impact asset allocation decisions over the next 12 to 18 months?

Sure. Excuse me. I’m getting over a cold from my grandchild. Our results in our active investment strategies is really one of the core transformations of BlackRock over many years of work. The history of BlackRock was an active fixed income manager, our acquisition of BGI with our fantastic quantitative approach to both fixed income and equity active strategies, our development in our illiquid space where we built out that platform, our recommitment and fortifying our fundamental equity teams over the last 5 years, which led to great performance. In addition, over the last 5 years, Alex, and you’re aware of this, our build-out of our distribution team, our build-out in the RIA channel, having $102 billion of inflows from retail globally, the large portion of that was active. So it’s not just building out our investment teams and fortifying them, but it was building out also our distribution side of our businesses, too. That’s all built -- led to a well-positioned as active strategies continue to be a choice with more and more investors worldwide. And let’s be clear, many of our flows in ETFs were from active strategies too. So, across the board, the $267 billion of inflows represented from great performance, well positioned, and I think that will continue to build in 2022. I would say the other major thing is, and I talked about this quite a bit in my prepared remarks was our whole portfolio approach. We believe more and more organizations are going to be looking to outsource large components of their balance sheets, whether it’s in insurance company, a pension fund and endowment, and we are looking for an organization that can position that quite well because of our business model of having both active and index products across having the technology to interface with our clients, whereas we are probably the best positioned organization in the world to meet those types of opportunities. And so if anything, I think that momentum in active is going to accelerate going forward, especially in the OCIO area and whole portfolios. This is going to be driving more and more of our success. Obviously, we saw flows in sustainability that continues to be driven our success in illiquids has really been a cornerstone of our 2021 results. So, I am extremely optimistic on our positioning for ‘22 and beyond. In terms of rising rates, it really depends on how rising rates are going to be resulting in. Are we going to see a flattening yield curve with rising rates, are we going to see a steepening yield curve? I tend to believe we are going to have more of a flat there on. If central banks raise rates 8x to 10x, which the forward curve suggests, we did have a 2.25-year, 2.5-year, let’s say, short-term rate. The real question is what does that mean for the 10-year rate. Those questions and how that plays out is going to be very important. The biggest opportunity that we have is how BlackRock is positioned in the opportunities we have. I really do believe whether we have rising rates, a flattening yield curve, a steepening yield curve, we will be part of the conversation with all our investors worldwide.

Yes, Larry, maybe I can just jump in on the rates, just one thing for Alex. I think obviously, the dynamic between rates going up and our level of AUM, I think is well known. But I would just highlight a couple of things. One is – our $2.8 trillion is primarily institutional for sure. And obviously, those are very sticky assets that are both strategic and matched for liability. So, we think we have very sticky assets. Two is we are obviously very well positioned in terms of our broad-based fixed income platform. So, whether it’s unconstrained, high yield, total return or short duration, I think we have got that. So, we are ready for a rotation. And more importantly, I think really is if rates go up, a bunch of cash is likely to come off the sidelines, and so that will enable us to basically move that cash into other asset classes. And as I mentioned in my remarks, very importantly, we waived $500 million of fees last year in our cash business, that first 25 basis point move by the Fed, and as many people think that could come as early as the first quarter. We think that will free up almost all of those waivers. That will have about a 0.5 basis point increase on our annualized effective fee rate. And obviously, we have talked about while we share roughly half of that with our distributors that will drop a significant amount of incremental profitability to the bottom line.

Your next question comes from the line of Craig Siegenthaler with Bank of America. Your line is open.

Hi Craig. Happy New Year.

Hi, good morning Larry, Rob, Gary, Hope you are all doing well. First, I just want to congratulate you on being the first asset manager to reach $10 trillion.

Well, it is just a number. Thank you.

So, my question is on the ETF business. We saw that the New York State insurance regulator just published an update on the capital treatment of fixed income ETFs as bonds instead of equities. I know this has been a focus for a while, but do you think this could open the door to larger ETF allocations from your insurance company clients?

Let me give that to Rob.

That’s a great question, Craig. As to catch everybody up towards the end of 2021, you saw the New York Department of Financial Services published a rule which permits insurance firms to treat diversified liquid bond ETFs like bonds for the purpose of risk-based capital. And this puts bond ETFs on a level playing field with bonds in an insurance portfolio. So, so far we are really excited by the initial client feedback and interest to ETFs. Because of this rule, we are very optimistic as how this could lead to future growth. And this is just another sign of an unlock to come as ETFs are gaining increased understanding. And you know in the past, we have said that we expect by 2025 that ETFs are going to reach $15 trillion from $10 trillion today. We still believe that. And even at that level, ETFs would still be a small part of the capital markets, which is why we think there are decades of growth ahead. And so, we are very excited about the fact that insurers now will use more ETFs to represent their bond portfolio, but a good question and a good insight by you.

Your next question comes from the line of Michael Cyprys from Morgan Stanley. Your line is open.

Hi, good morning everyone. Happy New Year. Thanks for taking the question. Just wanted to ask on Aladdin, I was just hoping you could update us on your number of a lot of initiatives. You guys have a lot going on there from migrating to Microsoft Azure to the Snowflake partnership, Aladdin Climate. Maybe you could just expand upon the progress on those different initiatives where they stand. Some of them earlier stages than others. What’s been built out? What’s left and that sort of early feedback from clients, maybe you could talk a little bit how you see that unlocking the revenue growth ahead?

Let me tackle the scale of Aladdin Climate, and I will have Gary comment on the progress with Azure and Snowflake. As I said in my prepared remarks, client demand for Aladdin has accelerated, especially with more and more remote working, having a comprehensive platform, a whole portfolio solution platform is really highlights the opportunities and the strength of Aladdin and more and more investment firms, asset owners and insurance companies are looking for Aladdin as an opportunity to expand their ability to navigate markets. As we built out on Aladdin, as you suggested Michael, the whole space of where Aladdin is growing out, whether it is Aladdin provider, connecting every Aladdin user to its custodial relationship, intersecting that. Aladdin Wealth, connecting Aladdin to wealth managers and having them more connected. And we are in the beta sites right now of rolling out with some of our airline users already on Climate. And that will continue to be, in my mind, one of the principal drivers for Aladdin utilization going forward. And then the greater utilization of alternatives, the combination of Aladdin and eFront really extended Aladdin across the entire investment ecosystem end-to-end. And so with Aladdin provider with Aladdin Wealth and now Aladdin Climate across all the portfolios, I do believe it is going to drive accelerated growth for Aladdin going forward. I am incredibly optimistic about the opportunities we have. And I truly believe as more and more regulators are asking questions related to Climate and how do you quantify Climate as a risk, the need for Aladdin is essential in terms of understanding that risk as one measurement. I mean there are many other tools that people could use, but it will be one of the measurements that people can utilize. And I would also add one of the great strengths for Aladdin over the last 2 years and why greater utilization is open to Aladdin. We are now allowing every user of Aladdin to put their own models in that are proprietary to them. So, Aladdin as a risk management system is not a monolithic system, what Aladdin has become is more an operating ecosystem and helping the owners of money, the asset managers of money to really navigate across asset categories, communication to client, communication to the custodial bank and having your own proprietary risk system. And that has been one of the great transitions of Aladdin and then dovetailing that, the infrastructure of Aladdin related to Azure and Snowflake. And I will allow Gary to talk about what we are doing in the infrastructure to create a more resilient Aladdin.

Thanks, Larry. So, Mike, I think you were specifically asking about cloud, I will give you just a couple of comments. We are obviously migrating Aladdin from BlackRock managed data centers to the cloud. And we think that, that partnership with Microsoft, in particular, brings a number of enhanced capabilities to both ourselves and Aladdin clients. I mean the big four for us are to localize data hosting. As Larry talked about, really unlocking growth as a key part of our strategy to open Aladdin, where clients are really looking to use both data and APIs in ways that differentiate them and help to express their own competitive advantage. We are looking to accelerate innovation and finally, migrating to the cloud is going to help us support greater computing scale and elasticity at our clients as we see client demand to use data clearly increasing. More importantly, though, it’s beyond just the cloud. I mean we are making investments really to address the needs of what we consider the investor for the future. Obviously, a focus on whole portfolio solutions. You know about our acquisition of eFront, where we bring public and private capabilities together in one platform, sustainability data and analytics, which will be very critical. We talked about flexible tech solutions and connectivity that we just talked about, but also integrated data ecosystem that will allow clients to combine both Aladdin and non-Aladdin data, which I think is going to be important. We are about two-thirds complete with our client migrations. That is ahead of our initial plan and we anticipate completing the remainder of those client migrations likely in the first half of 2022.

Your next question comes from the line of Brian Bedell with Deutsche Bank. Your line is open.

Great. Thanks. Good morning. Happy New Year. Maybe just to circle back on sustainable investing. It looks like that continues to be about nearly 20% of your organic growth. And you are now at over $500 billion, you are well on your way to making that $1 trillion mark well before the end of the decade if this type of pace continues. But maybe, Larry, if you could talk about how you are seeing recent trends in demand momentum in the U.S. versus Europe. Obviously, Europe has been more of the growth engine over the long-term on sustainable investing. But maybe you can just talk about that differentiation. And then also just on carbon transition as well. This is such a developing market. I don’t know if you have a view on what a longer term market opportunity for investment product could be from AUM size in that area? And what sort of products you are targeting to do?

Great question. Thanks, Brian. Well, in 2020, we made a large statement related to the tectonic shift that we have seen is going to occur in the investment world. And we continue to see rising interest in sustainability worldwide. And I think just by evidence of 2021, we saw $31 billion of flows in the U.S. and sustainability. $65 billion of flows from EMEA, which you suggested more in Europe, $8 billion from APAC. And we went from about $100 billion in 2019 to $500 billion today. I think that we are in different spots as evidenced by those flows, as you suggested. In Europe, if you do not have a sustainability lens, you will not be awarded any mandates today. It is a component of all. I want to – we are all investing in Europe today. In the United States, it’s still quite mixed depending on the institution, but it’s growing. It’s growing because, a, we are able to create a customized portfolios, and this is the power of Aladdin for us. Customized portfolio for those clients are looking to – start looking at sustainability as an investment opportunity and an investment risk. And I believe this will continue to be driving flows in the coming years. The big opportunity and the greatest opportunity in this area is investing in new is a new technology. As I said in my prepared remarks, if we move to a green economy tomorrow without new technology, it’s going to lead to an unfair and unjust transition. And as we witnessed in so many places already with rising energy prices, we have seen governments capping energy costs to the consumer. Even the European countries that are so focused on sustainability like France and Spain have caps and heating and other things like that. So, this is going to be a very long as I discussed over the years, a very long transition and very – and it’s not going to be a straight line. The opportunity then is to be working with traditional hydrocarbon companies who are going to be part of the solution. It’s going to be working with agricultural companies who are part of the solution. It is investing in new start-ups whether it is to create blue or green hydrogen or blue or green ammonia to find new solutions for green cement and steel for investing in new opportunities and sequestering of hydrocarbons. So, we believe climate transition opportunities for renewable power for this new technology is going to be – are going to be great. And I do believe there is going to be huge investment opportunities going forward. So, it’s a combination of navigating your current portfolio as it lends, but also the opportunities in investing in side-by-side with hydrocarbon companies or investing in new technologies and new start-ups. Gary, why don’t you carry on and talk about sustainability, too, please?

I think you got it, Larry. I think you hit on all the key parts of the question in terms of just flows. I mean unless Brian, there was anything specific you wanted additional color on the flows. I think Larry captured it. EMEA was basically 65% of flows sustainability for the year. Larry mentioned the U.S. being about $30 billion. I think importantly, the U.S. was up 50% year-over-year, notwithstanding that it’s still only about a third of those flows. But otherwise, I think Larry, you captured it.

Thank you.

Okay.

Alright. Ladies and gentlemen, we have reached a lot of time for questions. Mr. Fink, do you have any closing remarks?

Thank you, operator. I want to thank all of you for joining us today and your continued interest in BlackRock. Our fourth quarter and full year performance is a direct result of our commitment to serving our clients, investing for the long-term anticipating their needs. And hopefully, you could hear from Gary and I and Rob, we see tremendous opportunities ahead. And BlackRock’s focus remains on investing in our people, investing in the communities where we operate and to stay in front of our clients’ needs. If we do all those well, our shareholders are going to be the biggest beneficiary. And I do believe this is what has enabled us to continue to deliver strong, durable, long-term returns for all of our shareholders. Thank you again, and let’s hope we have a great start in the New Year, and we all stay healthy and safe. Talk to you in a few months. Bye-bye now.

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