The asset manager was the first firm to break through $10 trillion of assets under management. But the bigger they are the harder they fall. And this year BlackRock chalked up another record: the largest amount of money lost by a single firm over a six-month period. In the first half of this year, it lost $1.7 trillion of clients’ money.
BlackRock management was quick to invoke the first-half market carnage when revealing the investment performance last week. “2022 ranks as the worst start in 50 years for both stocks and bonds,” Chairman and Chief Executive Officer Larry Fink said on his earnings call.
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While few firms are able to avoid what the market throws at them, some at least try to overcome it. BlackRock is increasingly giving up: At the end of June, only about a quarter of its assets were actively managed to beat a benchmark -- rather than track it seamlessly as passive strategies are designed to do. That’s down from a third when BlackRock acquired Barclays Global Investors in 2009 to become the leading player in exchange-traded funds.
Within the equities business, the divergence is especially pronounced. Across the industry, assets have leached away from active strategies and into passive. In BlackRock’s case, around $21 billion has flowed out of active equity in the past decade, with $730 billion flowing into indexed equity. The firm’s passive equity holdings are now 10 times larger than its active business, although it does operate some active multi-asset and alternatives strategies that narrow the gap.
For portfolio managers on the fixed-income side, the evolution of the business portends an ominous future.
BlackRock’s roots lie in active fixed income. Fink founded the company in 1988 around strategies that “emphasize value creation through security selection…and are implemented by a team of highly qualified portfolio managers employing a strictly disciplined investment process,” according to the 1999 listing prospectus.
Although the firm also launched the first US-domiciled bond ETF in December 2002, it didn’t catch on the way stock ETFs did. In BlackRock’s case, $280 billion has continued to flow into active fixed income in the past 10 years. Fixed income is the biggest slug of what’s left of the firm’s active-management businesses — it had $954 billion of actively managed bond funds as of June 30, compared to $393 billion of actively managed stocks. Passive has grown, but it’s only 1.5 times bigger than active in fixed income – a much smaller gap than in equity.
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All that may be about to change. The collapse in bond markets this year has shaken money out of active fixed-income funds. BlackRock saw clients pull more than $20 billion during the first half of the year in a rout that has seen over $200 billion leave the industry. Some of that is rolling into passive funds, in particular ETFs, where BlackRock is picking up more than its fair share. So far this year, it has gained $39 billion of new money in ETFs and $25 billion in other indexed strategies. The shift toward passive that started in equity is now accelerating in fixed income.
Until recently, bond ETFs were viewed with suspicion. Back in 2015, investor Carl Icahn, sitting alongside Fink on TV, called BlackRock “an extremely dangerous company.” His rationale was that the firm’s ETFs embed illiquid bonds in unsuitably liquid wrappers. “They are going to hit a black rock,” he said.
Yet during the panic of March 2020, when bond markets froze, ETFs performed efficiently. They moved to a discount to the value of the underlying bonds, but that didn’t lead to a fire sale of the securities. Rather than transmitting stress, bond ETFs absorbed it while providing investors with much-needed liquidity. This real-life stress test validated the structure, and now that bonds are sagging, money is flooding across.
On his earnings call, Fink explained the benefits. He observed that investors are using ETFs to quickly and efficiently gain exposure to thousands of global bonds and recalibrate their portfolios. “The challenges associated with high inflation to rising interest rates are attracting more first-time bond ETF users and prompting existing investors to find new ways to use ETFs in their portfolios,” he said.
For now, BlackRock’s fixed-income portfolio managers are mounting a solid defense. Unlike their colleagues in equities, their performance has been relatively strong. In the first six months of the year, the funds they oversaw declined by 10.6%, marginally better than the firm’s fixed-income ETFs. According to the company, about half of taxable fixed-income assets are performing above their benchmark on a one-year view, compared with about a third of traditionally managed equity assets.
But if fixed-income follows the path of equities, the divergence between passive flows and active flows will only grow. “This is the early days of a major transformation of how people invest in fixed income,” said Fink last week. “We expect the bond ETF industry will nearly triple and reach $5 trillion in AUM at the end of the decade.”
By then, BlackRock could be a lot larger but its fortunes will remain firmly tied to the markets.
BlackRock management was quick to invoke the first-half market carnage when revealing the investment performance last week. “2022 ranks as the worst start in 50 years for both stocks and bonds,” Chairman and Chief Executive Officer Larry Fink said on his earnings call.
BlackRock's odds of distress is less than 5% at the moment. It is unlikely to undergo any financial straits in the next 24 months. Odds of financial distress prediction helps decision makers evaluate BlackRock's chance of financial distress in relation to its going-concern outlook and evaluation.
BlackRock, Inc. is an American multinational investment company. It is the world's largest asset manager, with $10 trillion in assets under management as of December 31, 2023. Headquartered in New York City, BlackRock has 78 offices in 38 countries, and clients in 100 countries.
Now, it is the world's largest asset manager with $10 trillion currently in its portfolio. According to Marketwatch, there is currently around $40 trillion in circulation around the world — which means BlackRock manages a quarter of the world's money.
As a Participant of the United Nations Global Compact, BlackRock considers methods to implement practices that align its corporate operations with the universal principles on human rights, labor, environment and anti-corruption.
Adrian Shelley, director of left-leaning nonprofit Public Citizen, said the move to pull PSF investments out of BlackRock amounted to a government mandate to support the fossil fuel industry. “The state is essentially saying private companies must invest in fossil fuels to do business with the state,” Shelley said.
April 4 (Reuters) - BlackRock (BLK. N) , opens new tab CEO Laurence Fink's total pay for 2023 was $26.9 million, down from $32.7 million a year earlier, according to the company's regulatory filings on Thursday.
Companies using BlackRock Aladdin for Portfolio and Investment Management include: Microsoft, a United States based Professional Services organisation with 221000 employees and revenues of $211.92 billion, MetLife, a United States based Insurance organisation with 45000 employees and revenues of $66.41 billion, Swiss ...
BlackRock is one of the world's largest investment management companies by AUM. The company operates as a single business segment. The firm derives most of its revenue from investment advisory and administration fees. BlackRock said that it has halted purchases of Russian securities amid Russia's invasion of Ukraine.
Actual Assets Under Management (AUM) is this value plus cash (which is not disclosed). BlackRock Inc.'s top holdings are Microsoft Corporation (US:MSFT) , Apple Inc.(US:AAPL) , Amazon.com, Inc.(US:AMZN) , NVIDIA Corporation (US:NVDA) , and Alphabet Inc.
Critics argue that BlackRock has too much control over housing, markets, policymaking, and more. For example, BlackRock was accused of worsening housing unaffordability by buying tens of thousands of homes during the Great Recession, raising prices. Its significant ownership stakes also concentrate on corporate power.
Larry Fink is the founder, CEO and chairman of powerhouse investment management firm BlackRock, one of the world's largest asset managers. He and seven partners founded BlackRock in 1988. Originally it was part of The Blackstone Group. BlackRock was spun off from Blackstone in 1994 and went public in 1999.
They also invest heavily in companies driving deforestation and back firms that undermine Indigenous rights. Asset managers that continue to fund the climate crisis face exponential risks, both environmental and financial. That's BlackRock's Big Problem.
BlackRock has been under fire from conservative U.S. politicians who say it has over-emphasized sustainability issues, citing past proxy votes. BlackRock did not address how the criticism may have shaped votes this year. Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter.
Although the Fund seeks to preserve your investment at $1.00 per share, you still may lose money. Investing in this Fund is not a bank deposit. Your investment is not insured nor guaranteed by the Federal Deposit Insurance Corporation, bank or government agency.
Total debt on the balance sheet as of December 2023 : $9.70 B. According to BlackRock's latest financial reports the company's total debt is $9.70 B. A company's total debt is the sum of all current and non-current debts.
Introduction: My name is Merrill Bechtelar CPA, I am a clean, agreeable, glorious, magnificent, witty, enchanting, comfortable person who loves writing and wants to share my knowledge and understanding with you.
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