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BlackRock Financial Management, Inc. - blackrock financial management inc


BlackRock Financial Management, Inc.-blackrock financial management inc

Item 1 Cover Page
BlackRock Financial Management, Inc.
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055
212-810-5300
http://www.blackrock.com
March 31, 2011
This Brochure provides information about the qualifications and business practices of BlackRock Financial Management, Inc. as
well as certain other affiliated registered investment adviser subsidiaries of BlackRock, Inc. If you have any questions about the
contents of this Brochure, please contact BlackRock Financial Management, Inc. at 212-810-5300. The 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 Financial Management, Inc. 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 Financial Management, Inc. is available on the SEC's website at
www.adviserinfo.sec.gov.
Item 2 Material Changes
Not applicable
Item 3 Table of Contents
Item 3 Table of Contents
Item 1 Cover Page........................................................................................................................i
Item 2 Material Changes..............................................................................................................i
Item 3 Table of Contents ............................................................................................................ii
Item 4 Advisory Business ..........................................................................................................1
OVERVIEW OF BLACKROCK REGISTERED INVESTMENT ADVISERS .................................... 1
ADVISORY SERVICES................................................................................................................... 1
Separately Managed Accounts .................................................................................................................... 3
SERVICES OF AFFILIATES ........................................................................................................... 4
Item 5 Fees and Compensation .................................................................................................5
ADVISORY FEES............................................................................................................................ 5
FEE SCHEDULES........................................................................................................................... 5
U.S. Registered Funds ................................................................................................................................. 5
Private Funds ............................................................................................................................................... 5
Private Investors Accounts........................................................................................................................... 5
Separately Managed Accounts (Other than Private Investors Accounts).................................................... 8
Dual Contract SMA Program Accounts........................................................................................................ 8
TIMING AND PAYMENT OF ADVISORY FEES ............................................................................. 9
OTHER FEES AND EXPENSES..................................................................................................... 9
Item 6 Performance Based Fees and Side-By-Side Management.........................................10
Item 7 Types of Clients.............................................................................................................11
OVERVIEW OF CLIENTS ............................................................................................................. 11
U.S. Registered Funds ............................................................................................................................... 11
Institutional Separate Accounts.................................................................................................................. 12
Private Funds ............................................................................................................................................. 12
Other Pooled Investment Vehicles............................................................................................................. 13
Separately Managed Accounts .................................................................................................................. 13
Item 8 Methods of Analysis, Investment Strategies and Risk of Loss .................................14
FIXED INCOME MANDATES........................................................................................................ 14
EQUITY MANDATES .................................................................................................................... 14
CASH MANAGEMENT MANDATES............................................................................................. 15
ALTERNATIVE MANDATES ......................................................................................................... 15
MULTI-ASSET MANDATES.......................................................................................................... 15
INDEX MANDATES....................................................................................................................... 15
OTHER STRATEGIES .................................................................................................................. 15
Borrowing Arrangements ........................................................................................................................... 15
Risk Management ...................................................................................................................................... 16
INVESTMENT STRATEGY RISKS ............................................................................................... 16
Item 9 Disciplinary Information................................................................................................18
Item 10 Other Financial Industry Activities and Affiliations..................................................18
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Item 3 Table of Contents
AFFILIATED BROKER-DEALERS ................................................................................................ 18
COMMODITY POOL OPERATOR / COMMODITY TRADING ADVISER..................................... 18
RELATIONSHIPS OR ARRANGEMENTS WITH AFFILIATES AND/OR RELATED PERSONS . 18
Securities Lending...................................................................................................................................... 20
Transition Investment Management........................................................................................................... 20
BlackRock Alternative Products ................................................................................................................. 20
BlackRock Solutions?................................................................................................................................. 20
Item 11 Code of Ethics, Participation or Interest in Client Transactions and Personal
Trading.......................................................................................................................................21
BLACKROCK'S ADVISORY EMPLOYEE INVESTMENT TRANSACTION POLICY AND OTHER
ETHICAL RESTRICTIONS............................................................................................................ 22
POLITICAL CONTRIBUTIONS ..................................................................................................... 22
POTENTIAL CONFLICTS RELATING TO ADVISORY ACTIVITIES ............................................ 23
Conflicts Relating to Portfolio Management of Various Accounts.............................................................. 23
Financial or Other Interests in Underlying Funds....................................................................................... 23
Cross Trades.............................................................................................................................................. 23
Inconsistent Investment Positions and Timing of Competing Transactions............................................... 24
SIDE-BY-SIDE MANAGEMENT.................................................................................................... 24
MANAGEMENT OF INDEX FUNDS ............................................................................................. 25
CERTAIN PRINCIPAL TRANSACTIONS IN CONNECTION WITH THE ORGANIZATION OF A
PRIVATE FUND ............................................................................................................................ 25
POTENTIAL RESTRICTIONS AND CONFLICTS RELATING TO INFORMATION POSSESSED
OR PROVIDED BY BLACKROCK ................................................................................................ 25
Availability of Proprietary Information......................................................................................................... 25
Material Non-Public Information/Insider Trading........................................................................................ 26
POTENTIAL CONFLICTS THAT MAY ARISE WITH RESPECT TO SERVICES PROVIDED BY
OR THROUGH VARIOUS BLACKROCK ENTITIES AND THE BARCLAYS/ML/BAC/PNC
AFFILIATES .................................................................................................................................. 26
Services Provided to a BlackRock Client by other BlackRock Investment Advisers or through Investments
in a BlackRock Investment Product ........................................................................................................... 27
BlackRock's Registered Investment Companies, Private Funds and Other Investment Products............ 27
Rule 12b-1 Plans of BlackRock U.S. Registered Funds and Additional Payments................................... 28
Use of BARCLAYS/ML/BAC/PNC Affiliates to Provide Services or Execute Transactions....................... 28
Transactions in Securities, Futures and Similar Instruments..................................................................... 28
Purchases of Unregistered Securities through a BARCLAYS/ML/BAC/PNC Broker-Dealer .................... 29
Purchases of Securities for which a BARCLAYS/ML/BAC/PNC Broker-Dealer is an Underwriter............ 29
Borrowing or Lending Funds or Securities and Cash Management .......................................................... 29
Pricing and Valuation of Securities and Other Investments....................................................................... 30
Banking, Custodial and Related Services .................................................................................................. 32
Cross-Compensation Arrangements among BlackRock and Certain Affiliates ......................................... 32
Considerations for ERISA Clients .............................................................................................................. 32
POTENTIAL CONFLICTS RELATED TO PRODUCTS AND SERVICES OF
BARCLAYS/ML/BAC/PNC AFFILIATES ....................................................................................... 33
Investment Products or Services of BARCLAYS/ML/BAC/PNC Affiliates may Compete with BlackRock
Clients ........................................................................................................................................................ 33
Investments in Service Clients or Portfolio Companies of the BlackRock Group or the
BARCLAYS/ML/BAC/PNC Affiliates .......................................................................................................... 33
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