The United States stock market is home to a wide range of different companies engaged in a multitude of sectors, from banking and financial services to manufacturing and retail. Traders can buy and sell shares of thousands of publicly listed companies.
However, one such company has become a target of scrutiny, media interest, conspiracies, and overall public interest – BlackRock.
The once humble investment company founded by Larry Fink in 1988 has since become an industry giant and the largest asset management firm in the world, with assets under management exceeding $10 trillion as of this writing.
It is no wonder that such meteoric rise has become a topic of scrutiny and debate among the general public and financial professionals alike, an interest that also includes criticisms regarding how the company manages its investments, as well as its involvement in virtually every sector of the United States economy and an aggressive push into emerging markets.
How Did BlackRock Asset Manager Become So Powerful in Global Finance?
A Brief History of BlackRock
While BlackRock is associated with grandeur and vast sums in AUM, many do not know that the firm was founded by employees of another major asset management firm based in the United States – Blackstone Group.
Larry Fink and seven other associates founded BlackRock in 1988, with the goal of offering risk management and fixed income institutional asset management services.
The firm’s initial focus was on providing institutional clients with risk-averse investment strategies using proprietary analytics. In 1992, BlackRock separated from Blackstone and became an independent company.
BlackRock went public in 1999, listing on the New York Stock Exchange, under the ticker BLK.
An important part of BlackRock’s history started in 2009, when the company acquired Barclays Global Investors for $13.5 billion, which made BlackRock the world’s largest asset manager and brought the iShares ETF business under its umbrella, significantly boosting its presence in passive investing.
The firm has been growing steadily ever since and now manages over $10 trillion in clients’ assets, offering ETFs and mutual funds to millions of investors all over the world.
The Influence of BlackRock on the Global Economy
BlackRock has emerged as one of the most important players on the United States stock market, as the firm provides a wide range of ETFs and mutual funds that attract investments from all over the world.
Pension funds, investment firms, family offices and trusts, are only a handful of the list of clients that choose to invest with BlackRock.
Furthermore, developed economies and private investors actively invest in BlackRock’s emerging markets ETFs, which in turn invest in the fixed-income securities and stocks issued on the exchanges of developing countries, as they have the potential for explosive economic growth in the long run.
The $10 trillion AUM figure further solidifies the importance of BlackRock’s services and the risks that are associated with the company ever incurring major financial losses.
It is also worth noting that BlackRock, while the largest and the most influential, is far from the only major asset management firms in the world, with the likes of Fidelity Investments and Vanguard also managing trillions of dollars in their portfolios.
Controversies and Conspiracies Surrounding BlackRock
Due to the influence and dominance of BlackRock, the company has repeatedly come under fire and become a target of conspiracy theories among the general public.
The involvement of BlackRock in the 2008 financial crisis has been one of the most hotly-debated moments from the company’s history, as the crisis was a major economic turning point for millions of ordinary people, while BlackRock took the opportunity to make strategic acquisitions for long-term profits and influence.
Furthermore, BlackRock is known for its Environmental, Social, and Governance, or ESG metrics, which measure the impacts of company operations on the social, economic, and environmental wellbeing of the global population.
ESG scores are assigned to companies based on their efforts, which has caused many controversies, including fraudulent guidance reports from companies to artificially boost their ESG scores and present a more appealing picture to investors.
Greenwashing and the pushing of political agendas have been touted as major concerns with regards to BlackRock’s investment policy, with ETFs specifically addressing ESG investing going public.
While many of these claims may be exaggerated, BlackRock’s opaque operations warrant some concerns from the public and investors alike, especially considering the sheer scale of the firm.
Conclusion
BlackRock is the largest asset management firm in the world, known for its iShares brand of ETFs, which cover a wide range of sectors and geographic areas of investment.
The company has grown to manage over $10 trillion in assets, as numerous global pension funds, family trusts, corporations and investment firms delegate their funds to BlackRock.
The firm’s history is also mired with controversy, including its ESG ratings programs and investments made during the 2008 global financial crisis, which has made BlackRock the target of numerous conspiracy theories and controversies over the years.
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