BlackRock, the world’s largest investment management firm with about $8.49 trillion in assets, recorded a $1.7 trillion loss in the first half of 2022, according to a new report.
According to Marc Rubenstein, a Bloomberg analyst, this was the biggest sum of money ever lost by a single company in a 6-month span.
In the company’s second-quarter earnings report, BlackRock CEO Larry Fink attributed the immense decline to the collapse in the financial markets, blaming an environment of rampant price inflation, rising interest rates, and market carnage.
“The first half of 2022 brought an investment environment that we have not seen in decades,” Fink stated in an earnings call with analysts last week. “Investors are simultaneously navigating high inflation, rising rates, and the worst start to the year for both stocks and bonds in half a century, with global equity and fixed-income indexes down 20% and 10%, respectively.”
Rubenstein purported that the investment titan had also focused too much on passive investing, writing that only one-quarter of BlackRock’s assets were actively managed “to beat a benchmark” by the end of the April-to-June period. In total, the company’s passive equity holdings are 10 times larger than its active strategy, “although it does operate some active multi-asset and alternatives strategies that narrow the gap,” Rubenstein noted.
The earnings report also highlighted slower inflows into the New York-based firm’s core investment funds, totaling $69 billion in the three months ended June 30. This is $40 billion less than what analysts had forecast and down from the $114 billion in the previous quarter.
Today, BlackRock’s largest holdings are concentrated in technology, with positions in Apple, Amazon, Microsoft, and Tesla Motors.
BlackRock’s adjusted profit clocked in at $1.12 billion, or $7.36 per share. This is down from $1.61 billion, or $10.45 per share, from the same time a year ago. It also fell short of the average analyst estimate of $7.90 a share.
Morningstar analysts are still long on BlackRock.
By Andrew Moran
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