BlackRock is the largest investment manager in the world, and it has become a more important Wall Street player in Washington, DC. It is a good example of how people move back and forth between finance and politics.
As of March 2022, BlackRock, an investment management company based in Manhattan, had almost $9.6 trillion in assets under management (AUM). This made it the world’s largest investment management company.
Since 2008, the amount of money that BlackRock is in charge of has grown by more than six times. Notably, the company has put itself in the public eye as a leader in the fight against climate change by publicly committing to a net-zero carbon economy by 2050 and asking for more information about how they plan to fight climate change.
How does BlackRock handle things?
BlackRock’s AUM portfolio is mostly made up of shares in different sectors including sport management, which make up more than half of the company’s investments. Then come assets with a fixed income, like bonds, cash, and other investments, like real estate and commodities.
More than half of these assets belong to people who live in the Americas. Blackrock runs more than 1,000 different investment funds, and investors can buy shares in both actively managed and passively managed funds.
Blackrock funds are made up of different things. For example, they may be limited to a certain region or country, to certain financial assets, or to a certain stock index (through being comprised of the shares or commodities contained in that index).
The BlackRock investment funds that did the best over the past year were in a wide range of industries and financial instruments, from mining and oil and gas exploration to clean energy and electronic cars that drive themselves.
What are BlackRock’s biggest rivals?
Vanguard, based in Pennsylvania, is the second largest investment management company in the world, even though it has more than a trillion dollars less in assets under management than BlackRock.
Vanguard runs a number of different investment funds, just like BlackRock. The largest of these funds has over 1.2 trillion U.S. dollars in assets under management (AUM) by itself. Boston’s State Street is another big competitor of BlackRock.
As of March 2022, State Street was in charge of assets worth more than $4 trillion U.S. dollars. State Street’s AUM is a bit like BlackRock’s in that equities and fixed-income assets make up a bigger part of State Street’s portfolio overall.
As one of the largest investment managers in the world, BlackRock stocks has become a more important Wall Street player in Washington, DC. It is a good example of how the worlds of finance and politics are intertwined.
The firm has hired a number of well-known policymakers
Over the years, the firm has hired a number of well-known policymakers, and two executives whose resumes include the New York-based asset manager are now set to play important roles in President-elect Joe Biden’s cabinet.
Brian Deese, who is in charge of investments at BlackRock, will lead Biden’s National Economic Council and be his top economic advisor. Adewale “Wally” Adeyemo, who used to be the chief of staff for BlackRock CEO and longtime Democrat Larry Fink, will be a top official at the Treasury Department.
He was previously the chief of staff for Fink. Michael Pyle, who worked in the Obama administration before joining BlackRock, will be Kamala Harris’s chief economic advisor. Pyle is the global chief investment strategist for BlackRock.
But people outside of the investment industry don’t know as much about BlackRock as they do about Goldman Sachs. This is because Goldman Sachs is a well-known brand name that is often associated with executives who leave finance to work on public policy.
As of 2022, BlackRock was number 192 on the list of the 500 biggest companies in the United States based on revenue, which was made by Fortune.
In 2020, the non-profit American Economic Liberties Project released a report that said “the “Big Three” asset management firms—BlackRock, Vanguard, and State Street—manage more than $15 trillion in global assets under management, which is more than three-quarters of U.S. gross domestic product.”
The report called for changes to the way things are put together and for the financial markets to be better regulated. In 2021, BlackRock was in charge of more than $10 trillion worth of assets, which was about 40% of the US GDP (nominal $25.347 trillion in 2022).
Here are some quick facts about the company that you need to know.
1. BlackRock controls $7.8 trillion, making it the largest money manager in the world.
BlackRock manages $7.8 trillion of other people’s money, which is a huge amount. That’s more than the GDP of every country in the world except the US and China.
By the standards of Wall Street institutions, it’s a new firm in terms of how much money it manages. BlackRock was started in 1988 by Fink and seven other people, including BlackRock President Robert Kapito and Vice Chairman Barbara Novick. Fink is also the chairman of BlackRock.
Most of BlackRock’s money comes from helping outside clients, mostly institutions like public pension plans, endowments, and foundations, make investments.
As of September, 60% of the company’s total assets under management are for institutional investors. Most of these are stock market-related products. It also manages products like private equity, private credit, and hedge funds as part of a $222 billion alternative investments business.
2. It runs a massive technology platform that oversees at least $21.6 trillion in assets.
In 1999, BlackRock started selling Aladdin, a program that looks at investors’ portfolios and keeps track of them. This helps professional money managers spot risks. It is now a big deal that is used a lot in the money management business and beyond.
One of the best ways to describe Aladdin and all of its connections was in a February report in the Financial Times, which went into detail about how big it was:
After BlackRock, Vanguard and State Street Global Advisors are the largest fund managers. Half of the top 10 insurers by assets also use it, as does Japan’s $1.5tn government pension fund, which is the largest in the world. Apple, Microsoft, and Alphabet, which is the parent company of Google, are the three biggest public companies in the US. They all use the system to invest hundreds of billions of dollars in their corporate treasury.”
In February, just a third of the platform’s 240 clients had $21.6 trillion in assets on the platform, according to the FT, which used public documents and first-hand accounts from the companies to back up its claim. Companies have tried to make it into a product, but none of them have been able to do it on the same scale.
3. BlackRock has hired many former government officials into senior roles.
When Deese and Adeyemo started working at BlackRock, they had already worked for the government.
Deese was a senior advisor to President Barack Obama and was the deputy director of the National Economic Council, which he will now run as head of the National Economic Council under Vice President Joe Biden.
Adeyemo was put in charge of the Treasury as Biden’s deputy secretary. Before that, he was Obama’s top international economics advisor. While at BlackRock, one of his roles was Fink’s interim chief of staff.
Pyle has worked as the global chief investment strategist for BlackRock. Before he started at the asset manager, he had also worked in Obama’s administration. He worked in the Treasury Department and the Office of Management and Budget, and he was also the president’s special assistant for economic policy.
Thomas Donilon is now the chairman of the research arm of the asset manager. Before that, he was Obama’s national security advisor. During Biden’s run for president, Mike Donilon, who is the brother of Donilon, was Biden’s top strategist.
BlackRock has also hired people who used to make laws and rules. Coryann Stefansson joined BlackRock’s Financial Markets Advisory (FMA) unit in 2016. Before that, she worked on bank supervision issues at the Federal Reserve Board and held high-level jobs at the Federal Reserve Bank of New York. LinkedIn says that she left last year.
4. The firm played a significant role in aiding the Federal Reserve this year.
The US government’s response to the coronavirus pandemic this year was helped a lot by the FMA unit, which is basically BlackRock’s consulting arm and is separate from its investment management business.
In March, the Federal Reserve chose the FMA to run an emergency program to buy assets. A report in the Wall Street Journal says that there was no way for other asset managers to compete for the job.
During an April earnings call, an analyst said that investors saw BlackRock’s mandate as a “bailout” for his company or the exchange-traded fund industry as a whole. Fink said that the question was “insulting.”
5. The Federal Reserve tapped BlackRock during the last financial crisis, too.
The investment manager had been there before, defending its link to the Federal Reserve. During the global financial crisis of 2007–2009, the Federal Reserve Bank of New York asked BlackRock’s FMA division to take care of the assets of Bear Stearns and AIG, which were both on the verge of going bankrupt.
“They know when the Federal Reserve will try to sell securities and how much they will take for them. They also have complicated financial ties with people all over the world “Chuck Grassley, a Republican senator, told the New York Times at the time. “There is a lot of room for a conflict of interest, and it is hard to keep an eye on it.”
BlackRock has said that the FMA, the part of the company that handles Fed mandates, is separate from its main money management business to avoid problems.
6. Fink has been vocal on matters of climate change, urging other companies’ leaders to consider the associated risks.
In his open letter to CEOs in January, he said, “Climate change has become a defining factor in the long-term prospects of companies.”
“Disclosure should be a way to make capitalism more stable and open to everyone. Companies must be deliberate and committed to embracing purpose and serving all stakeholders, including shareholders, customers, employees, and the communities where they operate “he said.
The company launched related projects, such as getting out of investments that pose risks related to sustainability and putting out new products that check for exposure to fossil fuels.
7. But his firm has been scrutinized for its record on supporting shareholder requests for climate-related disclosures.
In a September report, Morningstar, a firm that analyzes fund information,said it found support for those type of requests rose at asset management giants Fidelity, State Street Global Advisors, and Vanguard, but fell at BlackRock compared to the year prior.
Analysts wrote that the 14 climate-related resolutions shareholders asked for this year received more support in 2020 than from 2016 to 2018 (when BlackRock’s support never reached double digits). However, the number of “for” votes in 2020 dropped from 25% in 2019 to 14% in 2020.
8. It has long been rumored that Fink himself will head to DC.
It was said that Hillary Clinton, who ran for president in 2016, was thinking about putting Larry Fink in charge of the Treasury Department. He was also said to be in the running for a job in Biden’s government.
But he has put an end to that talk. David Rubenstein, the founder of a private equity firm, asked Fink at Bloomberg’s virtual New Economy Forum last month what he would say if Biden asked him to join his cabinet.
“Thank you for the honor, but I’m happy where I am now. I have already promised to my employees, my board, and my family. I’m going to stay in New York for now, “A record of the event shows what he said.
9. BlackRock has made lots of acquisitions.
Think of BlackRock as a company that has eaten up many rivals over the years.
The company has bought legacy businesses and fintech startups to stay ahead of the competition because traditional money management isn’t as profitable or unique as it used to be.
Last month, the company said it would pay about $1 billion in cash to buy a California company called Aperio that helps people with their investments. BlackRock bought eFront, a French company that makes software for managing alternative investments, for $1.3 billion last year.
In 2009, BlackRock bought Barclays Global Investors, which included the iShares ETF business of Barclays. Three years earlier, the company bought Merrill Lynch Investment Management.
FREQUENTLY ASKED QUESTIONS
What is special about BlackRock?
By assets under management (AUM), BlackRock is one of the world’s biggest investment management companies. The business is made up of only one division. Most of the company’s money comes from fees for investment advice and running the business. In response to Russia’s invasion of Ukraine, BlackRock said it will no longer buy Russian securities.
What makes BlackRock so successful?
BlackRock has grown from a start-up to a market leader by attracting clients and employees, and by acquiring several other asset management companies. BlackRock’s goal is to help its clients have a better financial future by becoming the world’s most respected investment and risk manager.
Who is the world’s largest asset manager?
BlackRock Inc. is the largest asset manager in the world. It is based in New York City and has over 80 offices around the world where it serves individual investors, companies, governments, and foundations. BlackRock is a private company that is traded on the stock market. As of June 1, 2022, its market capitalization was over $100 billion.