BlackRock is the new king of Wall Street, banks are booming

BlackRock is the new king of Wall Street, banks are booming
Written by Ayhan

Black stone (BLK) Shares are up 1% this year. It may not look great, but it is worth noting in this environment. The Financial Select Sector SPDR Fund (XLF), An exchange-traded fund that owns large bank stocks, has fallen nearly 30% so far in 2020.

The US Federal Reserve recently announced that Blackrock plans to invest in so-called junk bond ETFs, raising eyebrows since Blackrock runs several large fixed-income funds that hold high-yield corporate bonds.

The slowdown in merger and early public offering activities Bad news too For the likes of Goldman Sachs (GS), JPMorgan Chase (JPM), Bank of America (BAC), Morgan Stanley (Kumari) And Citigroup (C). These five stocks fell between 20% and 45% this year.

Despite the market chaos, BlackRock is seeing huge demand for its iShares Family ETFs.

iShares ETFs are more popular than ever

Company Announced in April It reported a net inflow of $ 13.8 billion for iShares ETFs in the first quarter. IShares now has 85 1.85 trillion assets under management, nearly 30% of the company’s total assets of 47 6.47 trillion.

“The ETF business is strengthening and empowering the entire company,” said Mac Sykes, an analyst with Gabelli Funds, which owns a small stake in Blackrock.

And the Top Regional Bank though PNC (PNC)Recently announced plans to sell more than 20% of its stake in BlackRock, which is hunting for a PNC acquisition, and BlackRock is set to tackle the blow by repurchasing more than $ 1 billion of its own stock.

So BlackRock can emerge from this market pullback as a company that can report more earnings per share as it has fewer shares.

The recent market turmoil has helped BlackRock as well as other large property managers The Fed plans to buy junk bond ETFs As part of its many stimulus efforts.
Bloomberg As pointed out in a recent story BlackRock advises the New York Fed as it looks to invest in ETFs, but does not charge any fees for doing so.

Socially conscious investment is not a big deal

However, BlackRock can earn higher fees from ETFs offered to individual investors (especially socially responsible ETFs), and BlackRock CEO Larry Fink has been successful over the years.

The Institute for Pension Fund Integrity, which tracks state and local pension funds, said in a report this week iShares Global Clean Energy ETF (ICLN) The cost ratio is significantly higher than that iShares Core S&P 500 ETF (IVV).

Switching to ESG (environmental, social and corporate governance) funding may be more than just doing the right thing.

“BlackRock’s ESG shift is really about making more money for the company. Pensions should focus on revenue and Blackrock going this route reduces the low-cost benefit of indexing,” the Institute for Pension Fund Integrity said in a report.

“Over time, BlackRock looks like a low-fee, efficient index provider and a high-fee forecaster of economic and social trends, biased towards stocks and bonds that are in line with its new ESG bias,” the company said.

However, BlackRock is appealing to a trend that has attracted the minds of many socially conscious investors.

“Asset flows into ESG mutual funds and ETFs have remained stable over the past five years before taking to the air in 2019,” said Brian Price, head of investment at Commonwealth Financial Network.

“There is no watershed moment that has caused this surge, but it has brought the industry into perspective. ESG investments have evolved and have actually become a permanent fixture in the investment management landscape,” Price added.

So while investing in ESG is not just for philanthropic purposes, it is an undeniably smart move that benefits BlackRock.

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