BlackRock launched on Wednesday what it calls a “multi-faceted global initiative”, designed to help investors deal with low yields and volatile markets. The platform, called “Investing for a New World” includes a range of ongoing communications for retail and institutional investors and financial advisors, as well as investor education and advertising in a variety of digital, print and social media around the world.
“We believe leadership is needed in these uncertain times and that no one is better positioned to provide financial leadership than BlackRock,” said Frank Porcelli, head of the firm’s U.S. retail business.
The initiative outlines five practical actions to help investors take advantage of a broader array of assets, strategies and investment styles. They include:
- Rethinking the cost of holding cash and how even low rates of inflation erode its purchasing power over time;
- Seeking new sources of income with the potential to provide for current financial needs as well as build wealth over the long term;
- Considering the potential of alternative investment vehicles to provide above average returns and manage risk as they are less likely to move in tandem with stocks and bonds;
- Actively employing index-based products, such as ETFs, to access a wider range of markets efficiently and effectively;
- Taking advantage of increasing longevity by re-evaluating risk tolerances and asset allocations in light of longer investment horizons.
In a speech to the Council on Foreign Relations in New York today, BlackRock Chairman and CEO Larry Fink urged others in the asset management industry to work together to help reignite investment and growth through a focus on the long term.
“In this new world, we can help rebuild confidence, get markets moving again and restore growth by turning short-term savers into long-term investors,” Fink told the audience. “It’s our responsibility as leaders of business, finance and government. All of us must answer the call.”
Fink added: “We need to educate investors about confronting the growing gap between needs and resources for retirement. That means getting investors beyond the now inadequate 60/40 portfolio mix of stocks and bonds. In particular, companies have a moral responsibility to educate their employees. Shifting from a defined benefit to a defined contribution plan doesn’t absolve them of that responsibility.”
Fink advocated initiatives to promote confidence in the capital markets, which he said were an increasingly vital source of investment capital for businesses as bank lending is constrained. These include:
- Regulation to protect collateral clients post when centrally clearing derivatives.
- A capital gains tax regime that rewards investment over multiple years by extending the holding period for an investment to qualify to at least three years and imposing a rate schedule that declines over longer holding periods;
- Long-term government investment in infrastructure, research and education to maintain competitive workforces and growing economies.
“The transformational challenges–and the resulting crisis of confidence–that we face as a global society are daunting, but we are better equipped than at any time in human history to respond,” Fink said.