Leading financial giant has control over greater financial assets than at any point in its history
In a time of growing uncertainty and fear about the future of markets and the economy, BlackRock, the world's largest asset manager, has reported a significant growth in managed assets. According to CEO Larry Fink, client conversations are dominated by these concerns.
Despite the record-breaking $11.58 trillion in managed assets, BlackRock recently announced a drop in net income, with a 4 percent decrease to $1.51 billion (€1.4 billion) in the first quarter. This decline is attributed to market fluctuations caused by various factors, including former US President Donald Trump's trade plans.
The growth in BlackRock's managed assets can be traced back to two significant periods: the aftermath of the 2008 financial crisis and the COVID-19 pandemic.
Post-Financial Crisis Growth
Following the crisis, investors sought stable and diversified investment options, leading to an increase in assets managed by large asset managers like BlackRock. The company's iShares ETF platform gained substantial inflows as investors favored low-cost, transparent, and liquid funds amid uncertain markets.
BlackRock also expanded its footprint in private markets, infrastructure, and private credit, diversifying beyond traditional stock and bond funds to capture more clients and higher fees. Strategic acquisitions, such as Global Infrastructure Partners and private markets data firms, further boosted its assets under management (AUM).
Post-COVID Growth Drivers
Amid pandemic-related market swings, BlackRock pulled in tens of billions of dollars in net inflows, driven by investor demand for diversified ETFs and equities. The company added nearly $10 billion in alternatives in a recent quarter, reflecting increased investor interest in private credit, infrastructure, and other illiquid assets.
BlackRock hit a new record of $12.5 trillion AUM recently, fueled by $46 billion net inflows amid geopolitical uncertainty and tariff-related market disruption. Its $12 billion purchase of HPS Investment Partners and other recent deals are part of a $28 billion buying spree to build a $600 billion alternative investment portfolio, aiming to raise another $400 billion in private assets by 2030.
The focus on private assets, as outlined by CEO Larry Fink, is a strategic shift away from a traditional asset manager model, with the aim of bringing private assets to a broader investor base, enhancing long-term growth prospects.
While BlackRock has experienced growth spurts after major structural changes in politics and markets, a survey of 1,000 Austrian SMEs predicts a disappointing outlook for 2024, with the majority expecting to make a loss.
Elsewhere, a planned private tunnel to Wolfgang Porsche's villa in Salzburg is causing a stir, with opponents mobilizing against the project.
References: [1] BlackRock Q1 2022 Earnings Release [2] BlackRock Annual Report 2021 [3] BlackRock Investor Day 2021 Presentation [4] BlackRock Q4 2021 Earnings Release
In light of the growth in managed assets, BlackRock's focus is now shifting towards private assets, which includes private credit, infrastructure, and other illiquid assets, as a strategic move to bring these assets to a broader investor base. This decision, as outlined by CEO Larry Fink, aims to enhance long-term growth prospects for the company.
Despite the significant growth in assets managed by BlackRock, a survey of 1,000 Austrian SMEs predicts a disappointing outlook for 2024, with the majority expecting to make a loss, suggesting a contrary trend in the finance business for small and medium-sized enterprises.
