The world’s largest asset manager BlackRock reported a loss of $1.7 trillion in the first six months of this year alone.
BlackRock’s Worst Year
New York-based BlackRock has consistently been in the headlines. The American multinational investment management group was the first to disrupt $10 trillion in assets under management.
As updated in a Coincu News article, the biggest asset management in the world, has teamed up with cryptocurrency exchange Coinbase to provide institutional investors with direct access to bitcoin services.
Against the backdrop of unhealthy macro conditions, however, BlackRock set another record. In more than six months, it has lost the most significant amount of money for a single company. According to the report, BlackRock lost $1.7 trillion in customer funds in the first half of this year.
Chairman and Chief Executive Officer Larry Fink quickly tied the company’s turbulent status quo to the broader sluggishness. During the company’s earnings call, he highlighted,
“2022 ranks as the worst start in 50 years for both stocks and bonds.”
The firm is in a fix and hasn’t been doing much about it. Reportedly, at the end of June, only around one-fourth of its assets were actively managed to beat a benchmark. Notably, the same is down from 2009’s one-third, when BlackRock acquired Barclays Global Investors to become the leading player in ETFs.
Around $21 billion has flowed out of active equity in the past decade for BlackRock, with $730 billion flowing into indexed equity. Consequently, the firm’s passive equity holdings are ten times larger than the active ones.
Now, the collapse in bond markets this year has caused money to be left out of active fixed-income funds. BlackRock saw clients pull more than $20 billion during the year’s first half. On the other hand, the amount shaken off from the entire industry remained to be 10x more.
Even so, it is worth noting that this year, it has gained $39 billion of new money in ETFs and $25 billion in other indexed strategies. This means the shift toward passive that started in equity is now accelerating in fixed income. During the earnings call, Fink said,
“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.”
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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