BlackRock’s Larry Fink predicted that “transformative opportunities” for artificial intelligence would solve the productivity crisis, which he attributes to persistently high inflation.
Fink, speaking at BlackRock’s Investor Day, said: “The collapse in productivity has been an important issue for the global economy. AI has the potential to transform margins in all sectors and increase productivity. “It may be technology that will bring down inflation.”
Fink has warned that high inflation may force the US Federal Reserve, later in the year, to raise interest rates.
Fink, who is a fan dystopian films, said that the $9tn manager would bring “healthy paranoia”, “healthy excitement” and “healthy passion” to the investments they make in this technology.
Fink added that BlackRock – the world’s biggest money manager – continues to search for acquisitions which could expand its global footprint, its technology offering, and its presence in the private markets.
The chief executive stated, “We are reimagining the business model.” BlackRock has always been willing to take big risks. We are willing to disrupt the industry and ourselves. . . “BlackRock was founded on the principles that will continue to drive its growth in the future.”
Fink and the other executives did not mention the criticism that BlackRock has been receiving from the “anti-woken” Republican politicians of the US. They only reaffirmed the financial benefits they see from investing in energy transition.
The group committed to increasing its revenue by 5% annually, with aggressive targets set for its Aladdin Technology business and its relatively smaller but high-margin Private Markets business.
The group announced that it had signed a deal with Avaloq – a Swiss software provider owned by Japan’s NEC Corporation. BlackRock will invest a small amount and integrate the technology into its Aladdin wealth management offering.
Executives hope to take advantage of a trend where insurance companies, pension funds and endowments are cutting back on the number of managers that they employ and outsourcing their entire portfolios to one company. BlackRock has been awarded 20 “mega-mandates”, each worth at least $5bn, since 2019.
Rob Goldstein, chief operating officer of the company, said that clients are doing more work with fewer service providers.
The group aims to double the revenue it generates from private markets from its current $1bn in five years. In order to achieve this, the group recently separated its leadership in private credit and multiasset funds from private equity. It holds $320bn worth of alternative assets. This includes $156bn on private markets and the remainder in hedge funds, liquid credit, and other asset classes.
Despite the criticism of BlackRock’s size, many speakers argued that asset management remains unconsolidated.
“People think we’re big, but we’re not. Mark Wiedman who is the head of the global client business said that even if all these things happen, we will only have 3.1% [of the market].