Question-and-Answer Session
Operator
[Operator Instructions]. Your first question comes from Craig Siegenthaler with Credit Suisse.
Craig Siegenthaler - Credit Suisse
Thanks. The performance fee number, you mentioned international equity hedge funds, can you give us some more detail what's in this number in terms of percentage from international equity and in terms of private equity, I thought I heard you mentioned negative marks?
Paul L. Audet - Chief Financial Officer
Well, not negative marks, they were not as positive as the second quarter, which were very high. We generally do not disclose the nature of performance fees by products. What we try to say was that, if you kind of look at the mix of the business, we saw a lot of revenue growth coming from all over the business.
Laurence D. Fink - Chief Executive Officer and Chairman
I would say clearly our performance fees were across the board in almost every one of our alternative products. We... real estate was very strong, our European hedge funds, our domestic hedge funds, Paul mentioned our very large fixed income hedge fund had an extraordinary quarter, and so I think it's fair to say it was broad base.
Craig Siegenthaler - Credit Suisse
Okay. Thanks. And one more question, can you give us your thoughts on the cap rates proposal to eliminate management fees and solely pay performance fees if you outperform a benchmark and how do you think this could impact the industry and BlackRock in general?
Laurence D. Fink - Chief Executive Officer and Chairman
Well I was with Chris yesterday; he was at a meeting with us yesterday. I had lunch with him yesterday. I think it's... I don't know enough about it. But I... we discussed it at lunch. I think it's pretty fair proposal. I don't think it's going to change business that much; obviously it's going to make the stronger, stronger and the weaker, weaker. I think the ultimate response to that is.
I think there are too many organizations are... have survived with mediocre performance probably for too long. So if this becomes an industry trend, you are going to see more volatility in the investment management business with some of the weaker players. But I don't know the tonality, what it is. Is it a one year look back, a three-year look back, a five-year look back, we didn't get into that, but I understand the notion. I don't think it really makes long only investment management similar to absolute return strategies and you get paid if you do well, you don't get paid if you don't perform.
Craig Siegenthaler - Credit Suisse
I guess the big question is, is it going to add a lot of volatility to quarterly EPS and the answer is probably, yes?
Laurence D. Fink - Chief Executive Officer and Chairman
No, I... if it became the prominent strategy, yes. I think that's true I don't believe we will become the prominent strategy for everything. So, the answer is yes. If it really is adopted by everybody, no question, it creates greater volatility. I don't believe it will do that though. I mean I don't believe it is going to have a big impact on the marketplace and how we do business in the near-term.
Operator
Your next question comes from Douglas Sipkin with Wachovia.
Douglas Sipkin - Wachovia
Hi.
Laurence D. Fink - Chief Executive Officer and Chairman
Hi Doug, how are you?
Douglas Sipkin - Wachovia
Good morning. How are you guys? Just a couple of questions, first just I might have missed did you guys made some color about how much incremental operating income you would generate from basically taking the Merrill Lynch fees in-house. Can you provide that again?
Paul L. Audet - Chief Financial Officer
Yes, it was $15 million on an annualized basis.
Douglas Sipkin - Wachovia
Okay perfect. That's helpful. And then Larry you mentioned the interest in long-dated strategies obviously veined throughout the quarter, any pick up in that interest or a little bit of return given that the credit markets parts of the credit markets are starting to act a little bit better?
Laurence D. Fink - Chief Executive Officer and Chairman
I would say lot of the credit markets are not acting a little better but its just the visible ones are subprime certainly is not acting any better and lot of the housing products are certainly not acting better. As you look at our searches, searches are bigger than ever we have more searches going on, more of off keys than we've ever had right now. So they're existing people are just delaying decisions and so for me to tell you at this moment whether there's a real change its too early for me to tell, but we are very constructive on the long-dated business in the future with the amount of searches we have and or up ease we have, coupled with the performance we've had over the last quarter.
Douglas Sipkin - Wachovia
Okay. So, in respect to your terms about some of the problems still lingering you provide a little bit of color for how long you see this playing out but I mean just giving your experience in the industry, how long do you think it's going to work through the system. Obviously, I guess, I got a flavor for your comments about this subs these major SIV that they are thinking about putting together to save sort of the money markets. But just curious what your thoughts on the overall credit markets and how long this thing could potentially play out?
Laurence D. Fink - Chief Executive Officer and Chairman
Secretary Paulson is doing a very good job in alerting the world as to this housing price is not over and we got to get our arms around it. So I really do think with Secretary Paulson is doing very good because I think he has cracked in stating this prices is not over and as we saw in housing start today was clearly evident its having an impact on the U.S. economy. To me it's pretty binary I think we need to see some form of... if we see that Fannie Mae and Freddie Mac have certain expanded power for securitization and I am not talking about balance sheet issues. In terms of allowing more types of mortgages to be securitized and so the housing market will be less depended on the conventional housing market where there is a lot of congestion and problems.
I think that housing market could resolve itself, but if the housing market does not resolve itself and the mortgage debt market doesn't resolve itself. I think it's going to play out in so many different areas and other types of credit and for me its kind of binary. I do see solutions at hand; I do see Congress talking about these types of solutions. Unfortunately politics are once again playing a wicked hand and hopefully the housing start numbers today will alert our government that this problem is not getting better it's getting worse and it's going to jeopardize the future of our economy and you know I am a long-term believer of our economy, but I do believe that the housing market will erode consumer confidence will erode the capital markets, if we don't solve these issues.
So it's kind of hard for me to tell when it will be over because I think there are solutions and that can fix it but if we don't find ways to making these solutions happen than we are going to get in to deeper problems or going to have a much wider spreads and probably a much more difficult capital markets in the future.
Douglas Sipkin - Wachovia
Great. And then just finally, any guidance, I mean how should we be thinking about potential performance fees in the fourth quarter, I know it seems like the outlook for performance fees has improved throughout the year as you are positioning in products has worked to your advantage. Any color around the fourth quarter that can you shed some light?
Laurence D. Fink - Chief Executive Officer and Chairman
We... really hard to do I would tell you that there are a number of products which lock in the fourth quarter and performance is... has been as strong as we have seen year-to-date in the third. But it's hard to put in an exact number on it. Obviously, you are not going to see anything like you saw in the third quarter, its coming way back. But I think that we continue to see some positive opportunities there.
Douglas Sipkin - Wachovia
Great. Thanks a lot and congratulations on an exceptional quarter.
Laurence D. Fink - Chief Executive Officer and Chairman
Thank you.
Operator
Your next question comes from Marc Irizarry with Goldman Sachs.
Marc Irizarry - Goldman Sachs
Great thanks. Hi everybody.
Laurence D. Fink - Chief Executive Officer and Chairman
Hi Marc.
Marc Irizarry - Goldman Sachs
Larry, maybe we can start with the dollar demise and just the shape of the business overtime in terms of U.S. versus global. How will acquisitions sort of play out, in the dollar demise in terms of getting more non-dollar denominated assets? Thanks.
Laurence D. Fink - Chief Executive Officer and Chairman
I know... hello... we are looking at any acquisitions overseas. We... so we did [Technical Difficulty] Europe equities. Looking other teams to help us expand --. Can we get the operator on? There is still a lot of disturbance.
Operator
Okay. Mr. Irizarry, if you could mute your line, while Mr. Fink is speaking?
Laurence D. Fink - Chief Executive Officer and Chairman
Hello. Operator, are you getting this feedback?
Operator
I am hearing the feedback, why don't you go ahead and clear the question and you can go ahead respond to it. Go ahead,
Laurence D. Fink - Chief Executive Officer and Chairman
Okay, there we go. Thank you. We are presently not looking at any acquisitions internationally. We are working on expanding our presence in with... to our joint ventures in India. We have a platform already in China. We're doing... list out teams in terms of equities overseas where we see huge opportunities. I would not say we're going to have the demise of the U.S. dollar, I actually believe in some areas the U.S. dollar is cheap. Especially versus Euro I do believe European markets are going to have just as many problems as the U.S. So, I am not here to suggest, but I think the dollar will be... will weaken a lot further. But I do believe more-and-more investors... more-and-more U.S. investors are looking for more diversification away from dollar assets.
So it's not just our global clients are looking for greater diversification away from the dollar, but even our U.S. clients are looking for more diversification. Not just in bonds, not just in equities, but in alternatives, in real estate and in all the type of products that we have.
Operator
And our next question comes from Michael Hecht with Banc of America.
Michael Hecht - Banc of America
Hi guys, good morning,
Laurence D. Fink - Chief Executive Officer and Chairman
Good morning,
Michael Hecht - Banc of America
I just wanted to... question on the fixed income performance this quarter which seem to slip again, I guess a bit with 57% of top half of feasible one, three and five years. I think, on the last quarter was 63%. So I was wondering if you can recap for us which product areas you are seeing kind of weaker performance and in whether, you think this is help lead to some of the slowing organic growth that's you are seeing on long-term fixed income side this quarter, you think its really just more function of the macro issues you've already talked about in commentary?
Laurence D. Fink - Chief Executive Officer and Chairman
I think... the issue in fixed income performance have nothing to do with the long-term trends this time. We are... our areas of strength have been in the high yield where we continue to have great performance. One of our credit products are having very good performance, in line of our global products who are having good performance.
I think, some of the long-term trends have been... we are seeing more-and-more clients looking to move away from core strategy to which we did discuss into LDI and other types of products. And it is that type week construction that we are seeing a slow down in as people are trying to digest what the capital markets and credit markets are doing. So, I still believe we are going to see huge, huge transformation out of core strategies into longer dated strategies, better matching assets and liabilities. We are going to see more-and-more global mandates and we are going to see more global mandate that are longer dated.
Michael Hecht - Banc of America
Okay. And then can you just touch on some of the maybe areas that are or a little bit weaker performance wise that maybe drove the overall performance number down?
Laurence D. Fink - Chief Executive Officer and Chairman
Its not performance. It's just... I would clearly tell you we have not seen any slow down due to performance issues. We've seen slow down just in deferral decisions and as I said, if you look at our pipelines, if you look at our RRPs, this is no different than what we saw in the third quarter of last year when we had a remarkable slowdown in some of the long-dated mandates. But overall, I mean the asset mix is strong, the growth of our asset mix is getting stronger and having a $123 billion of organic growth in over a rolling 12 months is something that has exceeded our expectations and we think we have great opportunities to continue to build momentum in the future.
Michael Hecht - Banc of America
Okay, that's great. And then let me shift a little to the competitive dynamic you're seeing again like kind of institutional fixed income space just for a minute I mean, some of your big competitors on the fixed income side without many names have seen some weaker performance and that benefiting you guys at all and then also are you seeing any impact from other players who've entered the institutional fixed income space maybe more recently outside of the Big Three players and whether you are seeing any impact there?
Laurence D. Fink - Chief Executive Officer and Chairman
First of all, the other big, the other two players out of the Big Three are doing great. Short-term some, one of that may have better performance than the other; they are both really incredible firms that we respect a lot. They are going to get their lion share of business. I think the biggest change in the fixed income market has been clients are moving out of core bond strategies into other strategies and so with that with long-dated products with other transport products you are going to see a different mix of investors, a different mix of investment managers.
And so I think because the business mix is changing because client needs a changing, you are going to see changes in terms of investment managers. I do believe the Big Three are adapting very rapidly into offering the longer dated strategies and different product strategies. So I don't see any change in terms of the Big Three having a pretty tight dominance in the marketplace but there's always room for the big eight or big ten. They are having more players in the fixed income market. We are... we don't feel threatened in that market at this moment of time and in fact we believe our performance in the third quarter in terms of avoiding credit proves again BlackRock may not be the sexiest of bond managers, but we are very consistent in terms of risk avoidance and risk management.
Michael Hecht - Banc of America
Okay that's helpful. And can you talk a little bit about the retail opportunity you see on the fixed income side and whether you see upside there over time as well and I guess what I am getting out is are you seeing any evidence of demand or the pick up in demand for yield for meet down investors. And then the $400 billion milestone you mentioned you reached in retail, how much of that is fixed income versus equity?
Laurence D. Fink - Chief Executive Officer and Chairman
It's de minimus in fixed income its probably I am going to guess if you strip out money markets its people running and looking before... my estimate is probably closer to $10 billion over that it so. Excuse me... $82 billion in fixed does that includes in liquidity, okay, $250 billion is in equities. The... I forgot municipals and all the other products. So that's where I was. We have huge opportunities in fixed we just launched our fixed income platform in our... with our European and Asia platform where we really had no fixed income... the very de minimus fixed income platform in Europe and Asia and so we are just rolling that out now. And we continue to roll out more fixed income strategies and equity strategies with third party distributors in the United States. So it should be a very large component of our business.
Michael Hecht - Banc of America
Okay. And then can we shift over to the integration at MLIM which you mentioned is not kind of a one quarter, one year type of event, that it takes time. Can you touch a little on the morale? I guess you are seeing on the equity side of the business and kind of general levels of attrition and whether the equity side of the business in terms of the integration has lived up to your expectations, and just how much more work do you really have to really do there?
Laurence D. Fink - Chief Executive Officer and Chairman
I don't think work is ever finished. In terms of the equity integration, it has gone great. I mean, I can't say one real hiccup that we've had in terms of our equity platform in terms of the integration. Where we've had turnover, it was more in the fixed income side where there was some redundancies and rolls and responsibilities, that's where we have had some turnover. And in all the cases, we didn't have one of these people to lead, but we have a real strong depth of people and a real talented full base. And so, we had turnover there over the last nine months, but I can't think of one... well we had one person in our European equity team left, and as we announced, we have just brought in a brand new team of six people to be part of our European equity team to replace the one person so, we already had a pretty fine European equity team, but we just doubled the scale and size to build it up for multiple types of products in European equity. So, emphasizing your question of Europe equities I would say it's gone as well as one could ever dream of.
Michael Hecht - Banc of America
Okay great. And then just last question. Could you talk a little bit about the long term outlook for operating margins, obviously you saw good improvement versus last quarter although a bit below year ago, kind of pre MLIM, do you still see off side to the margin and should we think about this as a franchise of long-term, talking three to five years out can sustain 40% plus kind of margins and what you think of this kind of the key drivers there. Just like a combination of comp and non-comp expense leverage in the model?
Laurence D. Fink - Chief Executive Officer and Chairman
Look, I think that... yes you saw some operating leverage in this quarter. We signaled that we saw that coming. If you are evaluating... operating margin before the MLIM trade, please understand add back intangible amortization and you are going to come... you are going to add 3% to what we are reporting.
Michael Hecht - Banc of America
Right.
Paul L. Audet - Chief Financial Officer
The non-cash items. So it really we are in excess of what we are reporting before. I would tell you that the one issue that this organization will always be interested in looking at our margins. Is that, at what point in time does operating leverage should be invested back into the business to sustain the growth rates. It's hard to have revenue growth rates like we are doing and not invest back in the business. If I would tell you if we try to milk every piece of margin, will it come up every quarter, yes. What I think we would be short changing our growth rates into the future if we did, I would also say yes.
So I think there is room for operating leverage growth overtime, but I also would tell you that we also believe there is a lot of investment opportunity to grow our revenue base and we are not going to be afraid to do it that's what BlackRock is always done. So, I would tell you that I wouldn't like to see us over 40% ever in terms of operating margin. I think we will be making a bad trade for investors.
Laurence D. Fink - Chief Executive Officer and Chairman
The biggest tension, we have is, as we see the opportunity to global as we see more-and-more clients are looking for non-dollar based investing. I mean our need is to really continue to build out and invest. And so I will critics [ph]... If I was one of you guys it will be critical for us if we had those types of margins.
Michael Hecht - Banc of America
Okay, great. That's fair enough. Thanks for taking all of my question. Great quarter guys.
Laurence D. Fink - Chief Executive Officer and Chairman
Thanks.
Operator
Your next question comes from Robert Lee with KBW.
Laurence D. Fink - Chief Executive Officer and Chairman
Hi Rob.
Robert Lee - Keefe, Bruyette & Woods
Hi. Good morning. Thank you. I have a quick question on capital management and I guess mainly of the payout ratio. I mean you have the credit facilities generate a lot of cash and I understand you look for strategic opportunities, and how should we think of the payout ratio going forward in the dividend and particularity in light of the growing importance of performance fees, how do you work that into your thinking in what you want to payout?
Laurence D. Fink - Chief Executive Officer and Chairman
I think that we'd established a 40% payout right now and what we are operating under which is pretty significant. I also said... I think we've also said to the marketplace that as our earnings and cash flow grows, we are not adverse to looking to increase that in order to make sure that we are not in effect investing excess capital at lower rates of return within the business. I think it's hard right now, we are only in the first year of this integration and it's hard to tell you exactly where all these pieces are coming. But I thing you are starting from 40%, you are moving most probably higher giving what we know to be the growth in cash flow in the business over time. And we will keep you, obviously abreast of where we go with it. I still think we are going to always be a pretty of high return on our capital back to shareholders.
Robert Lee - Keefe, Bruyette & Woods
Okay great. And I had a question on retail business could you maybe give us a little bit of color, a lot of the assets are clearly and still Merrill centric in retail business in the U.S. Could you talk a little bit about your flows there and some proportion of what and how much of your business is starting to come outside of Merrill versus and still be independent on Merrill?
Laurence D. Fink - Chief Executive Officer and Chairman
First of all our global pickup platform is very diverse, we are... our European and Asia flows are heavily dominated by other players beyond Merrill Lynch, we are one of the top mutual fund platforms overseas is dominated by, 30 or 40 different distributors and we continue to expand our platforms there.
In the U.S. a greater percentage of our flows are with strategic partners, I don't have the actual flows right at the moment. But we can get them for you, they are... I would say our market share within Merrill Lynch has grown. So the concept of independent name has helped us within the Merrill Lynch system. But we're seeing more-and-more flows with our strategic partners in retail, and just, and slowly but surely we're adding more-and-more of our products with our other third party distributors. So it's just a slow process, we just were given notice with one of our large third party distributors that they are adding our, many of our large cap products on to their platform. And so, we are slowly getting more-and-more products on to these third party distributors and we continue to be selling through these strategic relationships where we have... where the manager with their mutual fund. So it is not a BlackRock product, but we are the manager of one of their products.
So we are seeing more-and-more strategic type of opportunities there. So, we can get you that number but I would say the percentages have moved greater towards third party providers and strategic partnerships.
Robert Lee - Keefe, Bruyette & Woods
Great. And that's all questions I had, a very next quarters. Thank you,
Operator
Your next question comes from Prashant Bhatia with Citigroup.
Laurence D. Fink - Chief Executive Officer and Chairman
Hello Prashant.
Prashant Bhatia - Citigroup
Hi. Just real quick on the money market funds, the money is flowing in there? How much of that you think you could retain overtime put it into new strategies and so on?
Laurence D. Fink - Chief Executive Officer and Chairman
I have asked that question every hour. So it's not its... Paul why don't you answer that one?
Paul L. Audet - Chief Financial Officer
I... this is a great question for some, we are all playing with it. I would tell you that what I kind of told Larry so far, within the quarter the $30 billion that we grew, this tended to be largely as we said to flight the quality safety type money. A lot of this came with a lot of our existing clients to just increase their business with us. I think we have a pretty... because of our reputation and all the rest of it, I don't think it was long-dated movements. I think this was actually money that's always been in the cash marketplace. I think we have a pretty good chance to hold that.
I do think where you are going to see hard press rest to whole lot is, what we are seeing right now that's in our pipeline. Because what really is ended up happening is we also had a fed funds decline, in our early... late in the third quarter. Certainly all money market funds have our outperforming direct investments that will equalize overtime. We also happened to be in the top of the peer group in terms of performance. So we are probably catching a little bit more of that benefit. That... this $18 billion or so that we have see since quarter end, that I think is a harder one to see us retain over time.
Prashant Bhatia - Citigroup
Okay, okay that's very helpful. And then on the alternative product side, some of the longer dated products, could you give us a feel for what some of the new products are that you are going to introduce over the next 6, 12 months?
Laurence D. Fink - Chief Executive Officer and Chairman
We really on a number of global real estate products right now. We are rolling out right at this moment agriculture fund in the hedge fund space, with our natural resources and mineral mining team in the UK, where we continue to... we are trying to build out our science and technology hedge fund here. We just... we are... we believe we have opportunities in rolling out distressed funds in terms of taking advantage of the opportunities in the distressed mortgage area. So. we are contemplating a big rollout of those types of products.
We are in the market right now, so I can't speak too broadly about this, Mr. Connolly is sitting here he will get mad at me. Our private equity fund to funds, we are as has been reported in the marketplace in rolling out a distressed debt fund. And so, unfortunately because we are in the marketplace, I cannot really talk about in any extent of what we're doing in these areas. But I certainly believe Prashant we have great opportunities in rolling out some rather large products on behalf of our clients.
Prashant Bhatia - Citigroup
Okay that's helpful. And then just maybe broadly in terms of the large SIV that's being put together now. Just your thought process on why you've been getting involved with it? You've avoided as you said, most of these problems altogether, why step into it now, it is just an incremental fee or what would be the purpose?
Laurence D. Fink - Chief Executive Officer and Chairman
I don't see any fees in it, the real issue is if a broad base support helps the capital markets and helps our clients, we need to do that, I mean
Prashant Bhatia - Citigroup
Was more stabilization type of incentive?
Laurence D. Fink - Chief Executive Officer and Chairman
Yes I mean, so we want to be helpful if that's where in our participation helps whether we have issues or not, I think that's important point. Not big as issue there, as the competitor lot other people who need to participate have needy issues and as a competitor you would like to shine a little better relative to our needy competitors, and so in some respect I think it marginalizes our success. But on the other hand, you got to have the bigger picture of making sure if this works, it helps stabilizes our markets, it helps stabilizes our issues surrounding our clients, and whether it benefits our competitors more than we do, is probably the right thing to do.
Prashant Bhatia - Citigroup
Okay, that makes sense. And then just finally in terms of Quellos, how did that manage to the three key dislocations? Did it have any of its fund to funds that they have some of the big funds that had issues or?
Laurence D. Fink - Chief Executive Officer and Chairman
No, we have once again, this is I cannot talk about. This is private, we have had great performance.
Prashant Bhatia - Citigroup
Okay. Great thank you so much.
Operator
Your next question comes from William Katz with Buckingham Research.
Laurence D. Fink - Chief Executive Officer and Chairman
Hi Bill.
William R. Katz - Buckingham Research
Hi, Good morning everybody. Just a couple of questions, still wondering a little bit of tactical question at this point, you have been, is it kind of your revenue yield in the fixed income business, may be it's a function of volatility of the asset in the quarter. But could you give us a sense of seeing a decline in the revenue yield as you are shifting facilities for bonds to more specialized products.
Laurence D. Fink - Chief Executive Officer and Chairman
Well there's no question. As you give it the more specialized products you need more teams, and so you can say the margins do decline initially as you start growing. So there's no question as you asked, more specialized products by definition, you have more specialized teams and then the net results would be lower margins. On the other hand, as those... as we believe we are going to see more and more products like that, we will get the leverage of that and as you know we have our own BlackRock Solutions platform our own technology and that gives us an advantage over a lot of people and during customized solutions. And so it allows us to be more adapted to our clients and most of our peers.
Paul L. Audet - Chief Financial Officer
Bill one thing too that you should be aware of with respect there was a re-class smallest one but $10 million and would have a definite impact to your yield of computation a re-class between equity and fixed income revenues of our second quarter. It had to do with something that was positioned in appropriately and some of our overseas mutual funds and that implicating that fixed income yield. So if you come back to me I can show you where that is and I think it will take off some of the risk that you are talking about there.
William R. Katz - Buckingham Research
Okay that's helpful. In terms of the... give a lot of color on your... little curious you have obviously talked about the shift within fixed income, could you talk a little bit about what you are seeing whether shifts in terms of some fixed income back to equity whether the shift back... passes back to active and may be even styles then just value for growth?
Laurence D. Fink - Chief Executive Officer and Chairman
Actually we are seeing as equity markets rally we are starting to and we saw it in September we are starting to see some very large reallocations out of equities in to fixed. We are actually seeing as that happens and then the clients are looking actually to do more LDI and more of locking in their liability as they have enough gains from the equity side to lock in an immunized portion of the portfolio. So that's what we are seeing now and this is where we think that will continue to grow and build and we had a client conference yesterday where we did hear from a lot of clients that are really lot of more contemplating doing more LDI. And so we are seeing more of that.
In terms of style irrespective of the market volatility we are still seeing overall clients are looking to diversify more out of dollars, diversify more out of core equity, core bond strategies into more alternatives and I actually believe the volatility in the marketplace and we see more dispersion in returns among hedge fund managers and probably private equity managers and I think that dispersion is going to help BlackRock as we build out our alternative platforms.
I think it will be beneficiary of that and so if anything, we need to be even little more aggressive in building out our alternative strategies and offering more products to our clients as they are started contemplate to navigate away from some of the historical core strategies.
William R. Katz - Buckingham Research
Okay. And then just in terms of Quellos it looks like maybe answered in the last question. It looks like your assets were up about $2 billion from the time the deal was announced in June to what you sort of put in the pro forma data is press release?
Laurence D. Fink - Chief Executive Officer and Chairman
That's true.
William R. Katz - Buckingham Research
How much of that was performance versus new business and where do you see the immediate leverage on the combined franchise?
Laurence D. Fink - Chief Executive Officer and Chairman
Well, we are already... we have a notification that we want a very large assignment. We are actually in fee negotiation in that one and that is a great example because the major substantial client are BlackRock that we're now... we can add to our fund to funds platform and so we are starting to see some opportunities and synergies already.
So the opportunities I believe are going to be large. It is my belief with more dispersion with hedge fund managers more and more clients are going to look for fund to fund strategies because its hard for lot of clients to have event risk with one manager blowing up and they may have a perfectly fine portfolio, but having professionals in the fund to fund space navigating and managing all their hedge funds making sure there isn't a style drift among hedge funds as you know, that's one of the biggest problems in hedge funds base because it is very opaque and less transparent that having a team of professionals navigating and reviewing all the different hedge funds and private equity managers to make sure there isn't style drift.
And so, we believe there is dispersion in these returns help the platform and make it even more powerful. We're going to need get back to on actually how much was it organic and how much was it in terms of just market appreciation. I would, my belief is its more new clients in knowing where, I think the returns in the third quarter by most hedge funds but the fund to funds is maybe 1% or 2%. So it has to be almost highly a large percentage of it in organic growth.
William R. Katz - Buckingham Research
Okay. Thank you very much.
Operator
: Ladies and gentlemen, we have reached our allotted time for questions. Gentlemen, are there any closing remarks?
Laurence D. Fink - Chief Executive Officer and Chairman
I would just like to thank all the employees of BlackRock for really creating a real exceptional quarter. We did it, as I said to all of us, it is a culture that binds us, it is the organization that makes us special with our clients and I truly believe our model of being a unified platform with one brand name, with one technology with one unified platform to market products to our clients, to work with our clients, allows us to have a better linkage with our clients and the reason why we're doing it and doing it well is because everyone at the firm is believing that a unified platform, a unified culture is the right structure for our clients.
I would like thank all our shareholders for standing by and working with us and we'll be talking to you in the next few months. Have a good fourth quarter. Bye-bye now.
Operator
This concludes today's teleconference. You may now disconnect.
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