Performance Fees Show Up When Everything Else Is QuietNarrow moat

BlackRock (BLK) — moat facet

The one revenue line not set by the fee rate, and it nearly tripled in two years on a business BlackRock did not previously own.

Performance fees reached $1,424 million in 2025, up from $1,207 million in 2024 and $554 million in 20231. Nearly tripling in two years, from a line that most descriptions of BlackRock do not mention.

Performance fees ($m)$554m2023$1,207m2024$1,424m2025Private markets: $273m to $308m to $695m; liquid alternatives fell to $558m in 2025
Nearly tripling in two years, and all of the recent growth is the acquired private-markets business.

The composition is instructive. Private markets contributed $695 million against $308 million a year earlier; liquid alternatives contributed $558 million against $680 million2. So the growth is entirely the acquired private-markets business, and the hedge-fund-style piece actually shrank.

Why this matters is that performance fees are the one revenue line in the company not determined by the fee rate on assets. They are a share of returns above a hurdle, earned when the manager does well, and they are worth a great deal more per dollar of assets than anything BlackRock charges elsewhere. They are also the mechanism by which the acquisitions pay for themselves faster than the base-fee arithmetic suggests.

They are lumpy, and BlackRock is right to present them separately. A crystallisation in one quarter can be several hundred million dollars — the second quarter of 2026 produced $305 million against $94 million a year earlier3 — and reading a run rate off a single period is a mistake.

The useful way to hold this is as evidence rather than as earnings. Growing performance fees mean the private-markets funds are performing, which means the next fund raises more, which is how a private-markets franchise compounds. That is the mechanism BlackRock spent $30 billion of equity to acquire, and this line is the first place it becomes visible.

Moat trajectory: Widening

From $554 million in 2023 to $1,424 million in 2025, and $305 million in a single quarter of 2026 against $94 million a year earlier. The private-markets half is doing all the work, which is exactly what the acquisitions were bought to produce.

The number that tests this moat
Reported
Private markets performance fees
$695M, from $308M

More than doubling in a year, while the liquid alternatives half fell from $680M to $558M. All of the growth in the performance fee line is the acquired business, which is the first visible evidence the franchises are performing.

Source: BlackRock Form 10-K, fiscal year 2025 ↗
⚠ Threats to the moat
⚠ THREAT 01
Performance Fees Are Not Recurring, and Are Reported As If They Were
The liquid-alternatives half already fell while everything else rose — nothing failed, the returns were simply less good.
References
  1. ReportedPerformance fees reached $1,424 million in 2025, up from $1,207 million in 2024 and $554 million in 2023
    BlackRock, Inc. Form 10-K, FY2025, MD&A — total revenue $24,216M against $20,407M in 2024; base fees and securities lending $19,179M against $16,100M, including securities lending revenue of $705M against $615M; performance fees $1,424M against $1,207M, of which private markets $695M against $308M and liquid alternatives $558M against $680M; technology services and subscription revenue $1,981M against $1,603M, an increase of $378M "reflecting the sustained demand for Aladdin technology offerings and approximately $210 million of revenue related to the Preqin Transaction"; distribution fees $1,355M; advisory and other revenue $277M; annual contract value growth of 31% including Preqin and 16% excluding it; employee compensation and benefits $8,446M — FY2025 · publ. February 2026 · source ↗
  2. ReportedPrivate markets contributed $695 million against $308 million a year earlier; liquid alternatives contributed $558 million against $680 million
    BlackRock, Inc. Form 10-K, FY2025, MD&A — total revenue $24,216M against $20,407M in 2024; base fees and securities lending $19,179M against $16,100M, including securities lending revenue of $705M against $615M; performance fees $1,424M against $1,207M, of which private markets $695M against $308M and liquid alternatives $558M against $680M; technology services and subscription revenue $1,981M against $1,603M, an increase of $378M "reflecting the sustained demand for Aladdin technology offerings and approximately $210 million of revenue related to the Preqin Transaction"; distribution fees $1,355M; advisory and other revenue $277M; annual contract value growth of 31% including Preqin and 16% excluding it; employee compensation and benefits $8,446M — FY2025 · publ. February 2026 · source ↗
  3. ReportedA crystallisation in one quarter can be several hundred million dollars — the second quarter of 2026 produced $305 million against $94 million a year earlier — and reading a run rate off a single period is a mistake
    BlackRock, Inc. Form 10-Q, quarter ended 30 June 2026 — assets under management $15.3 trillion at 30 June 2026 against $13.9 trillion at 31 March; revenue $7,084M against $5,423M a year earlier, base fees and securities lending $5,726M, performance fees $305M against $94M, technology services and subscription $566M; operating income $2,461M against $1,731M; net income attributable to BlackRock $1,914M and diluted earnings per share $12.19 against $10.19; diluted shares including Subco Units 164.6 million against 156.3 million; long-term net inflows of $199 billion in the quarter, of which ETFs $178 billion, retail $19 billion and institutional $2 billion; six months revenue $13,782M, operating income $5,275M, net income $4,126M and diluted EPS $26.25, including a $538M reduction in the fair value of contingent consideration; 154,996,807 shares of common stock outstanding; total assets $175,875M and BlackRock stockholders' equity $57,613M; approximately 26,200 employees — Q2 2026 · publ. August 2026 · source ↗
Sources
Generated September 23, 2026