Chief executive of asset manager says technology has potential to bring down inflation
BlackRock founder Larry Fink has predicted that “transformative opportunities” in artificial intelligence could solve the productivity crisis he blames for persistently high inflation.
Speaking at BlackRock’s investor day, Fink said: “The collapse of productivity has been a central issue in the global economy. AI has the huge potential to increase productivity, and transform margins across sectors. It may be the technology that can bring down the inflation.”
Fink has repeatedly warned that high inflation could force the US Federal Reserve to resume raising interest rates later this year.
Noting that he is a fan of dystopian movies, Fink said that the $9tn money manager would bring a “healthy paranoia” and “healthy enthusiasm” to their investments in the technology.
Meanwhile, Fink said BlackRock, which is already the world’s largest money manager, continues to look for acquisitions that could extend its global footprint, expand its technology offering and broaden its presence in private markets.
“We are reimagining our business model,” Fink said. “BlackRock has never been afraid to make big bets. Our willingness to disrupt ourselves and the industry . . . created the foundation for what BlackRock is today and will drive our growth into the future.”
Fink and other executives made no mention of the sustained criticism BlackRock has received from “anti-woke” Republican politicians in the US, save for a reiteration of the financial opportunities it sees from investing in the energy transition.
The group promised to keep increasing revenue by 5 per cent annually with aggressive targets for its Aladdin technology business and its relatively small but high-margin private markets business.
The group announced a deal with Avaloq, a Swiss provider of banking software owned by Japan’s NEC Corporation. BlackRock will make a minority investment and link the technology to its Aladdin offering for wealth managers.
Executives also hope to capitalise on a trend that has seen insurance companies, endowments and pension funds cut down the number of managers they work with and even outsource their entire portfolio to a single company. BlackRock has won 20 such “mega-mandates” worth at least $5bn since 2019.
“Clients are doing more with fewer providers and doing more with us,” said chief operating officer Rob Goldstein.
The firm is aiming to double its revenue from private markets in five years from the current level of $1bn. To that end, it recently separated the leadership of private credit and multi-asset funds from traditional private equity. It has $320bn of alternative assets, including $156bn in private markets, with the rest in hedge funds and liquid credit.
Though critics complain about BlackRock’s size and influence, several speakers contended that the asset management industry remains relatively unconsolidated.
“People keep thinking we are big but we are not. If all this happens we will still only have 3.1 per cent [of the total market],” said Mark Wiedman, who heads the global client business.