Gary Shedlin
Chief Financial Officer at BlackRock
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'll 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 continue to expand our organic growth premium versus the industry, even as our assets under management reach 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're 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 continue 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 return 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 co-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 beta 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 two tenths [Phonetic] of the basis point 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 see shortly after the first 25 basis point increase in the Fed funds rate, resulting in a 1.5 [Phonetic] 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 a 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 -- heavily investing to scale Aladdin for its next leg of growth and were 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 determined 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&E 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 costs 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 had 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 in 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 in 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 to 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 of $3.7 billion to shareholders in 2021. Since inception of our current capital management strategy in 2013, we've now repurchased over $11 billion of BlackRock 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 3.38 [Phonetic] 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 focus 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 a 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 continue 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 reflecting 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 rebalance 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, evident 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 peer medians for the trailing five-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'll turn it over to Larry.
