BlackRock Investment Management, LLC
Item 1 Cover Page
BlackRock Investment Management, LLC
1 University Square Drive Princeton, NJ 08540 609-282-2000
August 20, 2020
This Brochure provides information about the qualifications and business practices of BlackRock Investment Management, LLC as well as certain other affiliated registered investment adviser subsidiaries (the "Advisers") of BlackRock, Inc. (together with its subsidiaries, "BlackRock"). If you have any questions about the contents of this Brochure, please contact BlackRock Investment Management, LLC at the telephone number provided above. Information in this Brochure has not been approved or verified by the United States Securities and Exchange Commission ("SEC") or by any state securities authority. BlackRock Investment Management, LLC is registered as an investment adviser with the SEC. Registration as an investment adviser does not imply any level of skill or training. Additional information about BlackRock Investment Management, LLC is available on the SEC's website at adviserinfo..
Item 2 Material Changes
Item 2 Material Changes
Since the last annual update to the Form ADV Part 2A (the "Brochure") on March 26, 2020 material changes to this Brochure include amendments to the following items:
Item 4 Advisory Business - Portfolio Research Services and Digital Investment Tools and Analysis and Private Investors
? References to the inclusion of models provided by third parties in Research and Digital Services have been added.
? On June 30, 2020, the Private Investors program will be "soft closed". This program status change means that no new accounts will be opened on the Private Investors platform after June 30, 2020. However, existing Private Investors clients will be able to add and withdraw funds in their existing accounts as well as make strategy changes after this date.
Item 5 - Fees and Compensation ? The fee schedule for the new Tax Managed Equity Investment Strategies has been added for BlackRock's Dual Contract Separately Managed Account Program.
Item 8 - Methods of Analysis, Investment Strategies and Risk of Loss ? Certain risks associated with tax managed investment strategies have been added in this section.
Item 10 - Other Financial Industry Activities and Affiliations ? Relationships or Arrangements with Affiliates and/or Related Persons
? On May 15, 2020, PNC completed a secondary offering of 31,628,573 shares of common stock, par value
$0.01 per share ("Common Stock") of BlackRock, Inc. (which included Common Stock issuable upon the conversion of BlackRock's Series B Convertible Participating Preferred Stock). In addition, on May 15, 2020, BlackRock completed its repurchase from PNC of 2,650,857 shares of Common Stock from PNC. As of March 31, 2020, PNC had owned approximately 22.0% of BlackRock's voting common stock outstanding and held approximately 22.4% of BlackRock's capital stock. Following the completion of the secondary offering, as well as BlackRock's repurchase of common stock from PNC (the "PNC Transaction"), PNC has no significant interest in BlackRock. As a result of the PNC Transaction, Item 10 has been updated to remove reference to PNC's ownership interest in BlackRock.
Item 11 - Code of Ethics, Participation or Interest in Client Transactions and Personal Trading ? References to and/or conflicts relating to products or services of PNC and/or its respective other affiliates, directors, partners, trustees, managers, members, officers, and employees have been removed. ? Disclosure regarding the inclusion of models provided by third parties in Research and Digital Services has been added.
Item 12 - Selection of Broker, Dealers and Other Trading Venus and Methods
? References to PNC Broker Dealers have been removed.
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Item 3 Table of Contents
Item 3 Table of Contents
Item 1 Cover Page ........................................................................................................................................................ i
Item 2 Material Changes ............................................................................................................................................. ii
Item 3 Table of Contents ........................................................................................................................................... iii
Item 4 Advisory Business .......................................................................................................................................... 1
OVERVIEW OF BLACKROCK REGISTERED INVESTMENT ADVISERS ....................................1 ADVISORY SERVICES .................................................................................................................1
Institutional Separate Accounts and Separately Managed Accounts .......................................................... 3 Model-Based SMA Programs....................................................................................................................... 4 Portfolio Research Services and Digital Investment Tools and Analysis..................................................... 5
SERVICES OF AFFILIATES..........................................................................................................5
Item 5 Fees and Compensation ................................................................................................................................. 6
ADVISORY FEES..........................................................................................................................6 FEE SCHEDULES.........................................................................................................................6
US Registered Funds ................................................................................................................................... 6 Private Funds ............................................................................................................................................... 6 Institutional Separate Accounts.................................................................................................................... 6 Private Investors Accounts........................................................................................................................... 6 Separately Managed Accounts (Other than Private Investors Accounts) .................................................. 10 Dual Contract SMA Program Accounts...................................................................................................... 10
TIMING AND PAYMENT OF ADVISORY FEES ..........................................................................11 OTHER FEES AND EXPENSES .................................................................................................12 FEES PAID TO ADVISER BY THIRD PARTIES..........................................................................13 CO-INVESTMENTS..................................................................................................................... 13
Item 6 Performance-Based Compensation and Side-By-Side Management....................................................... 14
Item 7 Types of Clients ............................................................................................................................................. 15
OVERVIEW OF CLIENTS ...........................................................................................................15
US Registered Funds ................................................................................................................................. 16 Private Funds ............................................................................................................................................. 16 Other Pooled Investment Vehicles ............................................................................................................. 17 Institutional Separate Accounts and Separately Managed Accounts ........................................................ 17
Item 8 Methods of Analysis, Investment Strategies and Risk of Loss ................................................................ 19
FIXED INCOME MANDATES ......................................................................................................19 EQUITY MANDATES ..................................................................................................................20 CASH MANAGEMENT MANDATES ...........................................................................................20 ALTERNATIVE MANDATES .......................................................................................................20 MULTI-ASSET MANDATES ........................................................................................................21 INDEX MANDATES.....................................................................................................................21 INVESTMENT STRATEGY RISKS..............................................................................................21 TECHNOLOGY AND CYBERSECURITY RISK...........................................................................29 OPERATING EVENTS ................................................................................................................31
Item 9 Disciplinary Information................................................................................................................................ 32
Item 10 Other Financial Industry Activities and Affiliations ................................................................................. 33
AFFILIATED BROKER-DEALERS...............................................................................................33
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Item 3 Table of Contents
AFFILIATED REGISTERED INVESTMENT ADVISERS..............................................................33 AFFILIATED COMMODITY POOL OPERATOR / COMMODITY TRADING ADVISOR ...............33 RELATIONSHIPS OR ARRANGEMENTS WITH AFFILIATES AND/OR RELATED PERSONS ..34
Securities Lending ...................................................................................................................................... 36 Transition Management ............................................................................................................................. 36 BlackRock Solutions? ................................................................................................................................ 36 Client Portfolio Solutions ............................................................................................................................ 37 Financial Markets Advisory ........................................................................................................................ 39
Item 11 Code of Ethics, Participation or Interest in Client Transactions and Personal Trading ...................... 41
BLACKROCK'S GLOBAL PERSONAL TRADING POLICY AND OTHER ETHICAL RESTRICTIONS .......................................................................................................................... 42 OUTSIDE ACTIVITIES ................................................................................................................43 POLITICAL CONTRIBUTIONS....................................................................................................43 POTENTIAL CONFLICTS RELATING TO ADVISORY ACTIVITIES............................................43
Financial or Other Interests in Underlying Funds....................................................................................... 43 Cross Trades .............................................................................................................................................. 43 Inconsistent Investment Positions and Timing of Competing Transactions............................................... 44 Conflicts Relating to Portfolio Management of Various Accounts.............................................................. 45
SIDE-BY-SIDE MANAGEMENT ..................................................................................................45 MANAGEMENT OF INDEX FUNDS ............................................................................................46 CERTAIN PRINCIPAL TRANSACTIONS IN CONNECTION WITH THE ORGANIZATION OF A PRIVATE FUND AND BLACKROCK US FUND ..........................................................................46 CERTAIN PROPRIETARY TRANSACTIONS BY BLACKROCK .................................................47 POTENTIAL RESTRICTIONS AND CONFLICTS RELATING TO INFORMATION POSSESSED OR PROVIDED BY BLACKROCK ...............................................................................................47
Availability of Proprietary Information......................................................................................................... 47 Material Non-Public Information/Insider Trading........................................................................................ 48
POTENTIAL CONFLICTS THAT ARISE WITH RESPECT TO SERVICES PROVIDED BY OR THROUGH VARIOUS BLACKROCK ENTITIES..........................................................................48
Services Provided to a BlackRock Client by other BlackRock Investment Advisers or through Investments in a BlackRock Investment Product ........................................................................................................... 49 BlackRock's Registered Investment Companies, Private Funds and Other Investment Products ............ 49 Rule 12b-1 Plans of BlackRock US Registered Funds and Additional Payments ..................................... 52 Borrowing or Lending Funds or Securities ................................................................................................. 52 Pricing and Valuation of Securities and Other Investments ....................................................................... 52 Banking, Custodial and Related Services .................................................................................................. 54 Conflicts of Interest Presented by the Retention of Third-Party Fees........................................................ 55 Investments in Service Clients of the BlackRock Group ............................................................................ 55
POTENTIAL CONFLICTS RELATING TO BLACKROCK CLIENTS' USE OF INVESTMENT CONSULTANTS AND BLACKROCK'S RELATIONSHIP WITH PENSION CONSULTANTS.......55 BLACKROCK IN-SOURCES OR OUTSOURCES CERTAIN SERVICES TO THIRD PARTIES ..55 POTENTIAL RESTRICTIONS ON INVESTMENT ADVISER ACTIVITY ......................................56
Item 12 Brokerage Practices .................................................................................................................................... 58
SELECTION OF BROKERS, DEALERS AND OTHER TRADING VENUES AND METHODS ....58
Trade Reporting ......................................................................................................................................... 59 Research and Soft Dollars ........................................................................................................................ 59
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Item 3 Table of Contents
Access Fees Paid to, and Discounts Provided by, ECNs, Derivatives Clearing Firms and Other Trading Systems...................................................................................................................................................... 60
COMPETING OR COMPLEMENTARY INVESTMENTS AND TRADE AGGREGATION.............61 DIRECTED BROKERAGE...........................................................................................................62 NON-DISCRETIONARY ACCOUNTS .........................................................................................63 MODEL-BASED SMA PROGRAMS ............................................................................................64 RESEARCH AND DIGITAL SERVICES.......................................................................................64 PORTFOLIO TRADING UPON RECEIPT OF NOTICE OF CONTRIBUTION OR WITHDRAWAL .................................................................................................................................................... 64 CHANGES TO BLACKROCK'S BROKERAGE ARRANGEMENTS.............................................64
Item 13 Review of Accounts..................................................................................................................................... 65
NATURE AND FREQUENCY OF CLIENT ACCOUNT REVIEW .................................................65 FREQUENCY AND CONTENT OF CLIENT ACCOUNT REPORTS............................................65
Item 14 Client Referrals and Other Compensation ................................................................................................ 66
PAYMENTS TO BLACKROCK BY A NON-CLIENT IN CONNECTION WITH ADVICE PROVIDED TO A CLIENT ..............................................................................................................................66 SOLICITATION, INTRODUCTION OR PLACEMENT ARRANGEMENTS ...................................66 SOLICITATIONS BY MLPF&S OR ITS EMPLOYEES .................................................................66
Item 15 Custody......................................................................................................................................................... 68 Item 16 Investment Discretion ................................................................................................................................. 69 Item 17 Voting Client Securities .............................................................................................................................. 70 Item 18 Financial Information .................................................................................................................................. 73 GLOSSARY ................................................................................................................................................................ 74 BlackRock Client and Vendor Privacy Notice ........................................................................................................ 78
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