Blackrock's Rise to Global Domination
From CNBC, October 12, 2021, this video reviews how Blackrock has become the World’s largest Investment Fund since its 1988 inception. They have risen to power by using and applying emerging technology, buying out competitors, relying on ETFs and charging cheaper fees. The US Exchange Traded Funds (ETFs) are 68.8% dominated by Blackrock, Vanguard and State Street (all mutually owned), with 80% of all US Financial Investments being made with one of these three funds. These three monolithic Investment companies collectively own the majority of the World’s Financial Markets.
Key Talking Points:
- In 1988 Larry Fink, the CEO, formed and launched Blackrock with seven other cofounders.
- They developed an algorithm-based software called Aladdin: which helped identify failing companies and opportunities for investments.
- Markets are now much more complex with higher volumes and more powerful technology and computers.
- Blackrock develops and uses technology to increase its financial value.
- Blackrock bought out its competitors: 2006 Merrill Lynch, and 2009 Barclays Global Investors (BGI).
- BGI owned the intellectual property of iShares.
- IShares tracks bond or stock market indexes using Exchange Traded Funds (ETFs).
- ETFs have become the backbone of Blackrock’s trading strategy.
- ETFs allow investors to diversify their financial portfolios.
- ETS act as a simplifying investment tool: in one investment basket they include numerous companies (stocks) based upon industry themes.
- Blackrock has low fees to manage these ETFs - $0.30 per $1000 of investments.
- The US ETF market is dominated by Blackrock with 36.9% ownership, the second largest is Vanguard with 19.4% and the last one is State Street Global Advisors with 12.5%: all three are mutually owned.
- Over 80% of US investments are held in one of these three Funds.
Key Data and Evidence Points:
- Blackrock is the World’s largest Asset Manager and has grown assets substantially since its inception in 1988.
- Blackrock owns 11% of Vanguard, the world's second-largest asset manager.
- Blackrock also owns 8% of Vanguard and also owns 12.6% of State Street Global Advisors Assets, which is the world's third-largest asset manager.
- Blackrock, Vanguard and State Street (all mutually owned) have many co-ownership interests that overlap.
- These three monolithic Investment companies control the majority of interest in the pharmaceutical, communications, technology and food industries.
Watch the full video here.
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