Larry Fink shows his momentum-trade stripes
BlackRock can make a reasonable claim to represent the market, but boss Larry Fink is giving indications that the colossal money manager is chasing it. His latest annual letter to investors omits references to previously championed causes for the next big things. Like a harried momentum trader, the strategy is vulnerable to dangerously wild swings.Making passive investing available to the masses helped BlackRock become the world’s largest investor, with some $12 trillion of client funds. Fink says bluntly in his missive published on Monday that it’s “not who we are anymore.”To emphasize the point, he spotlights a trio of acquisitions last year to expand BlackRock in infrastructure, business lending and data collection, with an aim to bundle such harder-to-trade assets for broader public consumption. In so doing, Fink says the standard portfolio of 60% stocks and 40% bonds may give way to a 20% slug for private markets.BlackRock is just going with the flow. Other investment firms, such as Apollo Global Management and Ares Management , have been increasingly encroaching on the territory. Fink’s earlier deals in such so-called alternative assets fizzled.His new message contrasts with recent ones devoted to stakeholder capitalism and climate-conscious finance. With President Donald Trump’s Republican Party vehemently rallying against such environmental, social and governance initiatives, Fink is dialing down the volume on them.The word “stakeholder” is nowhere to be found in this year’s letter and “clean energy” is mentioned exclusively as a race with China. Under a now-crypto-friendly administration, bitcoin gets a shout-out, even posed as a potential threat to U.S. dollar dominance, alongside advocacy for digital tokens to improve markets.These financial fashions are treated as a natural progression. Just as BlackRock’s $9 billion acquisition of Barclays Global Investors in 2009 married passive and active investing, Fink says recent deals for Global Infrastructure Partners, HPS Investment Partners and Preqin weld private and public investing. Unique relationships with governments worldwide make it all possible, including the provisional plan to pay $23 billion for CK Hutchison’s ports along the Panama Canal and beyond.The shift to private markets will continue apace, and BlackRock has been eyeing the area for a while. Its heavier reliance on how the political winds blow, however, is a more difficult approach from an otherwise neutral market broker. The strategically significant shipping sites already are caught in trade war crossfire, with Chinese regulatory scrutiny delaying the deal. It may even force Fink to change his emphasis yet again next year.Follow @JMAGuilford on XCONTEXT NEWSIn his annual letter to shareholders, BlackRock CEO Larry Fink said on March 31 that although the firm has "been – first and foremost – a traditional asset manager,” that is “not who we are anymore."Fink posits that the standard investing portfolio may transition from 60% stocks and 40% bonds to 50% stocks, 30% bonds and 20% private assets such as real estate and infrastructure. He also advocates for greater use of digital tokens in finance and faster permitting to build power providers and other fixed assets.