- BlackRock CEO Larry Fink said he’s “excited” about expanding private-market offerings to clients, and said the asset manager is building out teams to support growing appetite for those investments.
- “We are seeing increased demand for private market strategies,” he said Friday morning on a call to discuss quarterly earnings.
- He’s also “quite excited about the opportunity” around the US government’s move to allow private equity into retirement funds, though cautioned it remained to be seen how it would be implemented.
- The firm’s portfolio management platform Aladdin could play an integral role as more investors move into opaque alternative asset classes like private equity, he said.
- BlackRock last month added a newly created position to its private capital markets group in New York focused on originating private and illiquid investments for the firm’s alternative investors.
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BlackRock is setting itself up to better cater to growing demand in the world of alternative investments as clients crowd in for non-public assets like private equity and private credit often reserved for the most sophisticated investors.
“We are seeing increased demand for private-market strategies,” Larry Fink, the New York-based asset manager’s chief executive, said Friday morning on a call to discuss second-quarter earnings with analysts.
“Five years ago, we were not as recognized as being a participant in the illiquid alternative base, and today, we are. We are in the top five in terms of asset growth, and we continue to be driving even more accelerated growth in these areas,” he said. BlackRock reported some $76.6 billion in illiquid alternative assets as of June 30, a jump from $75 billion last quarter.
Fink, who heads up the largest asset manager in the world with some $7.3 trillion in assets under management through June 30, is jazzed about these markets growing in popularity as investors look to diversify their portfolios in volatile times. These areas like private equity also gaining favor with US officials under the Trump administration.
Twice Fink told analysts that he’s “excited” about the opportunity for BlackRock to capitalize on the US government’s recent move to allow private equity into retirement funds, though cautioned it remained to be seen how exactly the new guidance would play out.
Last month, the US Department of Labor issued a letter detailing guidance that would allow some professional managers to add private equity investments as a component of some employer-provided retirement plans, like 401(k)’s.
Critics of the move point to the lack of transparency into those investments relative to traditional assets like stocks or mutual funds, where anyone can monitor performance and measure that against benchmark indices. They also bemoan the illiquid nature of the assets and relatively higher fees.
“I’m quite excited about this opportunity,” Fink said, according to a transcript on the investment research platform Sentieo.
He added that BlackRock was “very well-positioned” given the firm’s $260 billion of assets managed in its LifePath target-date fund series. Target-date funds, which diversify funds based on your age and the year you expect to retire, are a popular option in many workplace pension plans.
“But we need to wait and see in how this is going to be implemented, the type of disclosures we need to do,” he added. “We need to make sure that the investors know what they’re investing, and they know the associated risk in it. We’re talking about retirement assets.”
As a mammoth asset manager that already has a giant foothold in the risk analysis game with its Aladdin portfolio management software for firms, Fink thinks BlackRock can help.
As investors move their retirement money into different asset classes, there is a “great need for risk analytics,” he said.
“This is only going to mean more opportunity for eFront and Aladdin as more and more clients are starting to look at illiquids,” he said, referring in the former to the alternative investment management software provider BlackRock acquired last year for $1.3 billion.
BlackRock is “building out” some teams to find opportunities in areas like infrastructure and other private-market areas, Fink said.
He nodded to infrastructure investments as one key driver of illiquid alternative inflows, and said the firm has “purposely built a diversified infrastructure investment team” now managing $28 billion in client assets.
Last month, the firm added a newly created position to its private capital markets group in New York focused on originating private and illiquid investments for the firm’s alternative investors, Pensions & Investments reported.
BlackRock nabbed Michael Lawton, a managing director from Swiss bank and wealth manager UBS, where he worked in the leveraged capital markets unit, for the role.
During the second quarter, BlackRock generated more than $3 billion in illiquid alternative inflows and commitments driven by infrastructure and private equity solutions, Fink said.
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