Well, BlackRock used to break records, is the world’s largest money manager, and the first company to reach $10 trillion in assets under management, but this year the Larry Fink-led Wall Street giant has lost the largest amount of clients’ money – in just six months.
BlackRock Inc. confirmed it suffered a loss of $1.7 trillion in the first half of 2022.
And while it was quick to blame poor market conditions in 2022, there’s a lot on the scene that doesn’t bode well for investors.
While few companies are able to escape the market influences, and some are at least trying to beat them, BlackRock is increasingly sagging. At the end of June, only about a quarter of its assets remained intact in it, and it seamlessly adapts to passive strategies put in place for it, and less than a third when the company acquired Barclays Global Investors in 2009 to become the key exchange-traded fund player.
BlackRock reported that its assets under management have fallen 11% in 2022. According to the asset management firm, it has lost $1.7 trillion and now manages $8.49 trillion.
Among BlackRock’s largest holdings are technology companies such as Apple, Microsoft, Amazon, and Tesla, according to filings with the Securities and Exchange Commission (SEC), even though technology firms were the first to lay off large portions of their staff as the stock market entered its months-long tailspin.
Here’s what BlackRock CEO Larry Fink said in the company’s second-quarter earnings report:
“The first half of 2022 brought an investment environment that we have not seen in decades. Investors are simultaneously navigating high inflation, rising rates and the worst start to the year for both stocks and bonds in half a century, with global equity and fixed income indexes down 20% and 10%, respectively.”
While BlackRock stems the bad tides, as the market turmoil continues, it still has an inflow investment of just under $90 billion from its clients.
BlackRock is picking up more than its fair share of ETFs, according to a Bloomberg report. When bond markets froze owing to the COVID-19 pandemic, ETFs performed efficiently.
On his earnings call, Fink explained the benefits, observing 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.
According to the Bloomberg report, 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 (Assets under management) at the end of the decade,’ Fink added.
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