Paper, Scissors, BlackRock Wins?

Paper, Scissors, BlackRock Wins?

about 1 year ago2 mins

Mentioned in story

Game over, Vanguard: BlackRock looks set to pull in more funds than its biggest rival for the first time since 2007, according to a Morningstar report out late last week.

What does this mean?

This year’s recessionary funk has been a far cry from the post-Covid celebrations we were hoping for. In fact, the investing scene’s been so bleak that panic-stricken investors have pulled $138 billion out of asset management firms so far, according to Morningstar. So it’s even more impressive, then, that BlackRock pulled off a showstopper of a year. iShares – the firm’s exchange-traded fund segment – raked in $152 billion in investors’ assets before the end of November, enough to dwarf any withdrawals from its active asset management business. And with Morningstar estimating that BlackRock’s biggest rival Vanguard lagged behind over the same period, you can guess who’ll be popping the expensive bottles this festive season.

Vanguard vs iShares

Why should I care?

For markets: Nothing’s greener in Texas.

Still, BlackRock’s bonzer year wasn’t all smooth sailing. See, when investors pile into index funds, asset management firms like BlackRock end up as major shareholders in a bunch of businesses. (Case in point: Investors Business Daily believes Vanguard is the biggest shareholder in 330 S&P 500 companies.) And that can send them up the creek: Texas lawmakers dragged BlackRock over hot coals just last week, after the firm voted to replace three of ExxonMobil’s board members with eco-friendly candidates. So despite the good intentions, BlackRock and its rivals will need to learn how to avoid making political enemies – stat.

SP 500 companies Vanguard owns the most of

For you personally: People power.

BlackRock has one bright idea, mind you: pass the responsibility buck onto its investors by letting them vote on company issues. BlackRock’s CEO said the move could usher in a new era of “shareholder democracy” in a recent letter, with retail investors finally getting the chance to shape the boardroom decisions for some of the world’s biggest firms.



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