The world is growing more connected — and more demanding, according to Larry Fink, CEO and chairman of BlackRock. Technological innovation and globalization are driving opportunities for change, he wrote in his annual shareholders letter in April.
Change is an “essential component of human history,” he wrote, and to be successful, we must prepare for change with education, innovation and infrastructure.
For its part, BlackRock is doubling down on technology. The firm fired over 30 active equity managers in March, Bloomberg reported, shifting its focus to quant funds.
Active management at BlackRock has struggled for years. Its iShares business brought in a record $140 billion in net inflows last year, according to Fink, “capturing the No. 1 share of flows globally.”
He told attendees at the Morningstar Investment Conference in Chicago in early May that within the next five years, BlackRock will take in more revenue from software and technology than traditional money management, ThinkAdvisor’s Emily Zulz reported.
“Using technology is critical,” Fink said during the closing keynote session at the conference. “It’s critical for us as investors, as we’re spending more time analyzing new sources of data, spending more time creating algorithms on the new sources of data. We’re using technology to simplify and streamline the operation. And we’re using technology to be more connected with our clients to help with financial literacy, to help all our clients navigate all our clients’ money.”
BlackRock’s total AUM reached $5.1 trillion last year. Index funds and iShares accounted for 63% of that, or $3.2 trillion, compared to 29% of assets that were actively managed.
“As a fiduciary for our clients, we must help them refocus on long-term investment outcomes and transform the use of technology in asset management to help them achieve those outcomes,” Fink wrote.
Fink founded BlackRock in 1988 with seven other partners. Before that he was managing director and on the management committee at The First Boston Corp.
He earned an MBA from the University of California, Los Angeles, with a concentration in real estate, as well as a bachelor’s in political science.
BlackRock is now the world’s largest money manager, with $98 billion in total net inflows in the fourth quarter last year, and $202 billion for the whole year, the strongest in the firm’s history, Fink said in a statement.
BlackRock’s Aladdin operating system pushed revenue up 13% last year. As of September last year, 25,000 investment managers were using the system, supported by over 1,000 developers pushing enhancements out to users. BlackRock has over 800 professionals managing data analysis and quality control on the platform.
“BlackRock has always focused on repositioning its investment platform and technology capabilities in anticipation of change, and BlackRock employees embrace their responsibility to help clients navigate this evolving, complex landscape,” Fink said. “As we head into 2017, we remain committed to investing for the future and developing our talent in order to fulfill our responsibility to both clients and shareholders.”
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