A reconstituted BlackRock is poised to crack open private markets for everyday investors in a transition that could see a 20 per cent allocation to alternative assets as standard, according to chief executive, Larry Fink.
Fink told investors in his annual letter last week that the firm had radically transformed from a regular stock-and-bond shop – albeit the world’s biggest – to a private asset powerhouse in a little over a year.
“BlackRock has always had a foot in private markets. But we’ve been—first and foremost—a traditional asset manager. That’s who we were at the start of 2024. But it’s not who we are anymore,” he says.
“In the past 14 months, we’ve announced the acquisition of two of the top firms in the fastest-growing areas of private markets: infrastructure and private credit. We bought another firm to get better data and analytics, so we can better measure risk, spot opportunities, and unlock access to private markets.”
BlackRock snapped up the US$150 billion Global Infrastructure Partners late in 2023, following up with the purchase of private asset data specialist, Prequin, and private credit manager, HPS Investment Management in 2024 – the latter deal yet to be finalised.
Armed with its new acquisitions, Fink says the US$11.6 trillion manager is looking to tear down the barriers between private and public assets in a blend akin to the marriage of active and index investing fast-tracked via the exchange-traded fund (ETF) market.
“With clearer, more timely data, it becomes possible to index private markets just like we do now with the S&P 500. Once that happens, private markets will be accessible, simple markets. Easy to buy. Easy to track,” he says. “And that means capital will flow more freely throughout the economy. The prosperity flywheel will spin faster, generating more growth—not just for the global economy or large institutional investors, but for investors of all sizes around the world.”
Ultimately, Fink says the standard 60/40 mix of shared and bonds could morph into a 50/30 split, topped up by a 20 per cent exposure to “private assets like real estate, infrastructure, and private credit”.
Opening up private assets to the broader population also could help restore the balance in many “inverted economies” where obscene wealth inequities have seen the return of protectionism and an “unspoken assumption” that capitalism is dead, he says.
But Fink says the “solution isn’t to abandon markets; it’s to expand them, to finish the market democratization that began 400 years ago and let more people own a meaningful stake in the growth happening around them”.
Furthermore, he says asset managers will play an increasing role as providers of capital as maxed-out governments and risk-constrained banks struggle to fill the gap between demand – especially for clean energy infrastructure – and supply.
“The money is already there. In fact, more capital is sitting idle today than at any point in my career. In the U.S. alone, roughly $25 trillion is parked in banks and money market funds.”
In a narrative ranging from the early 15th century birth of stock markets in the back streets of Amsterdam and London to the crypto-vendors of the 21st, Fink also touches on the looming global retirement income crisis, technological change and the potential collapse of the US dollar as a reserve currency.
“The U.S. has benefited from the dollar serving as the world’s reserve currency for decades. But that’s not guaranteed to last forever,” he says.
“… If the U.S. doesn’t get its debt under control, if deficits keep ballooning, America risks losing that position to digital assets like Bitcoin.”
Last year, BlackRock reported record net inflows of more than US$640 billion while markets lifted total annual growth US$1.5 trillion to leave the US-listed firm with US$11.6 trillion under management by the end of 2024.
The business has also seen “deepening ties” with some of the “world’s largest asset owners, pension plans, and corporates”, Fink says, via “scaled outsourcing mandates” that brought in US$120 billion last year alone.
BlackRock has an outsize influence in the NZ market, too, as the adviser and/or manager for three of the largest investment houses – AMP, ANZ and ASB – as well as other retail and institutional clients.