But Fink thinks avoiding stocks of companies with strong balance sheets and growing dividends is a mistake. High-yield corporate bonds are attractive, although not without volatility. As coverage of European and American financial woes have the masses running from equities, he says, “long-term investors who are billionaires tell me they are having an easier time today than ever before in their lifetimes because nobody is a long-term investor anymore.” According to BlackRock’s equity team, an annual return in the “mid to high single digits” is not an unreasonable target in the current environment. Low interest rates, Fink says, are “a tax that’s killing insurance companies, old ladies, everybody.” But they are going to be around for the near term at least, so investors need to be realistic about the need to take some risk. “We have lost our bearings,” he says, adding that good companies are still a solid investment over a long cycle. Asia and Latin America are not risk-free, but “there seems to be sense in buying equities in these regions on similar or lower valuations than their counterparts in the developed world given that dividend growth is likely to be superior, given higher economic growth potential.” Emerging markets still stand out as areas of superior economic growth and deepening financial systems. In particular, “agricultural commodities are supported by the dynamics of water shortages in Asia and the Western United States, the declining payback from the green revolution in terms of improving crop yields and the increasing demand from Asia for a diet based more on grains and meat as the population becomes wealthier,” the group responded by e-mail. And so that may be a good thing for the alpha guys.” When asked where to invest, Fink turned the question over to BlackRock’s equity team, which believes commodities will play an important part in client portfolios in the future. “As more and more money goes into beta”-that is, seeking average market returns-he says, “investing becomes easier for alpha traders because of less competition.” Furthermore, if more and more money goes into index funds, then initial public offerings “are going to become pretty darn cheap. But Fink thinks investing directly in companies is still a solid strategy. Thanks to exchange-traded funds, you don’t have to be a stock picker to tactically allocate portfolios across sectors and regions. The good news is that the world’s most influential asset manager says long-term investors have nothing to fear but fear itself.Īccording to BlackRock’s CEO, the opportunities to invest globally have never been better. The bad news is that he sees challenging times ahead, especially for conservative investors who can’t stomach risk. He sat down with Canadian Business to discuss topics ranging from the Occupy movement to the outlook for equity and bond markets. Treasury secretary chief of staff, recently told Barron’s.įink was in Toronto recently to update clients on the state of the world economy. “With Larry, you get two important things: candor, and he doesn’t just talk his own book,” Jim Wilkinson, a former U.S. On Main Street, the BlackRock CEO’s words carry weight too, because the son of a shoe-store-owner dad and college professor mom speaks like a regular guy. Today, his clients include pension funds, foreign governments, sovereign wealth funds and the U.S. After dusting off the fallout from that fiasco, which reportedly cost his former employer about US$100 million, Fink founded BlackRock’s predecessor firm as a money manager focused on risk management. But a disastrous bet on interest rates in 1986 crashed his career. After studying politics and business at UCLA, he joined investment bank First Boston and quickly became a rising star in the world of mortgage trading. And that gives him a unique insider’s take on financial markets.įink, who earned US$23.6 million last year, grew up middle-class in Los Angeles. As the globe-trotting head of New York–based BlackRock Inc., he is responsible for US$3.7 trillion, more than any other asset manager on the planet. Whenever Laurence Fink speaks his mind, which is often, people of all stripes tend to listen.
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