According to the oft-quoted 1970s and 1980s commercials, when E.F. Hutton talks, people listen.
In 2015, people listen when BlackRock talks. Those people range from individual investors, to institutional market participants, to regulators and everyone in between.
To call BlackRock an investment giant may be an understatement. In a business where $10 billion under management is considered a decent size, BlackRock manages $4.65 trillion, which is more than the $3.6 trillion GDP of Germany.
As with any profit-seeking, publicly traded firm in a capitalist economy, BlackRock’s first responsibility is to its shareholders. But market participants and observers consistently say that BlackRock uses its massive influence in the interests of the broader good.
As an indication of BlackRock’s influence, consider a whitepaper the firm published in September 2014, entitled “Corporate Bond Market Structure: The Time for Reform is Now.” While most thought pieces produced by money managers draw little interest outside its own walls and are soon forgotten, BlackRock’s paper still resonates five months later.
BlackRock has more than 135 investment teams who manage more than 7,700 portfolios worldwide, The company has more than 11,000 employees, spread out over more than 70 offices in 30 countries. BlackRock is headed by Larry Fink, who regularly appears on CNBC and Bloomberg TV to discuss the economy and related global macro topics.
Speaking about Europe at the World Economic Forum’s annual meeting in Davos, Switzerland last month, Fink said “the market should not doubt (European Central Bank President) Mario (Draghi). He’s been able to pull this through…This monetary policy is going to keep the euro weak. And I think a weakened euro will allow European companies to improve. So I do think the European economies will be marginally better this year than last year.”
In 2014, BlackRock increased its assets under management by 8%, a significant number given the massive starting base. Much of the new business gains in the fourth quarter were in fixed income and exchange-traded funds. The firm has benefited as bond manager Pimco suffered outflows following the sudden resignation of its co-founder Bill Gross in September, but Fink said BlackRock’s strength runs deeper than a temporary boost from a struggling competitor.
Market participants who deal with BlackRock speak highly about the firm, on various levels. Pension chief investment officers say BlackRock acts as helpful partner in developing a long-term plan, and the firm isn’t always trying to sell something; sell-side broker-dealers say BlackRock’s institutional traders are as smart and savvy as they come; while others note than BlackRock acts as an effective industry representative in discussions with regulators.
“We work only for our clients — period,” BlackRock says on its website. “Our promise is to offer them the clearest thinking about what to do with their money and the products and services they need to secure a better financial future. That’s why investors of all kinds entrust us with trillions of dollars, and it’s why companies, institutions and global governments come to us for help meeting their biggest financial challenges.”