Kevin Duffy on the Dalbar effect

The dirty little secret of the asset management business is that the sophistication level of one’s clients is paramount.  If they constantly chase what’s hot and panic out of what’s not, all the hard work by the portfolio manager can be negated.  I refer to this pesky boat anchor as the “Dalbar effect,” after an annual study by Dalbar, Inc.  In it, they document how actual investor returns deviate significantly from published returns due to the poor timing of a firm’s clients.  

Aggressive marketing and client quality are inversely related, although Dalbar is unlikely to admit this to their institutional investor clientele.  BlackRock is no doubt an asset gathering machine, but where are the customers’ yachts?  According to my calculations, over the past ten years BLK’s all-important equity iShares franchise (32.5% of base fees in Q3) suffered a headwind (Dalbar effect) of 5.3% per year.  This effectively cut published returns in half.

~ Kevin Duffy, "Fade to Black," The Coffee Can Portfolio, p. 12, October 22, 2024

Larry Fink on stakeholder capitalism

Stakeholder capitalism is not about politics.  It is not a social or ideological agenda.  It is not ‘woke.’  It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper.

~ Larry Fink, 2021 BlackRock shareholder letter, "No need to be ‘woke,’ but BlackRock’s Fink says CEOs need to address societal issues," MarketWatch.com, January 18, 2022

ETF.com on new BlackRock climate ETF

On Thursday BlackRock issued the BlackRock Future Climate and Sustainable Economy ETF (BECO), an actively managed fund that invests in stocks of companies that seek to reduce carbon emissions in the broader economy. 

Notably, the fund is seeking to produce a net lower environmental impact than the MSCI ACWI Multiple Industries Select Index as measured through an assessment, rather than seeking to specifically beat that index’s returns. BECO has an expense ratio of 0.70%, and trades on the NYSE Arca.

~ Dan Mika, "ETF Odds & Ends: 2 Active ESG Funds Debut," ETF.com, August 6, 2021

Tony Despirito on the strongest economic recovery "literally in a generation"

Q: Are we adequately pricing in how big the economic surge will be in the United States?

A: It's going to be big.  We're living in an unprecedented economy.  That was true on the downside and it's going to be true on the upside.  This is going to be a recovery like something we haven't seen literally in a generation.

~ Tony Despirito, BlackRock CIO, U.S. Fundamental Equities, "BlackRock's Despirito Sees 'Blowout' U.S. GDP Rebound," Bloomberg TV, April 7, 2021

The Wall Street Journal on two BlackRock executives joining the Biden administration economic team

Wall Street bankers, and in particular those from Goldman Sachs Group Inc., have long held senior positions in the White House.  Under President-elect Joe Biden, such roles are going to executives of BlackRock Inc. 

A former Goldman executive held the Treasury secretary post in three of the last four administrations, but the firm is absent so far from the White House this time.  Instead, two executives who have worked at asset-management giant BlackRock will be the senior Wall Street representatives. 

Mr. Biden is expected this week to name BlackRock’s head of sustainable investing, Brian Deese, to run the National Economic Council, said people familiar with the matter.  Adewale “Wally” Adeyemo, a former chief of staff to BlackRock’s chief executive, was named Tuesday to be the No. 2 at the Treasury Department.

~ Dawn Lim and Gregory Zuckerman, "BlackRock Emerges as Wall Street Player in Biden Administration," The Wall Street Journal, December 1, 2020

Peter Atwater on brain drain into politics as contrary indicator

I think it's really interesting that you're seeing an influx of asset managers, a.k.a.  BlackRock employees into the Biden White House team.  It reminds me, if we go back to the '60s - you had [Robert] McNamara at Ford going into the political space at the top of [the Go-Go '60s].  You've had Gary Cohn and the [investment] banking folks, [Henry] Paulson, [Steve] Mnuchin from the private equity space.  I think it's like hosting the Olympics.  You only host the Olympics at the very top.  You only go into political life at the very top.

~ Peter Atwater, "Super Terrific Happy Hour Ep. 8 - Peter Atwater: Our Sentimental Friend," The Grant Williams Podcast, 56:00 mark, December 13, 2020

Mark Wiseman on climate change

I believe 100% that climate change is real, and that it’s human caused, or at the very least human-accelerated. Even if you think it’s malarkey, you’ve got to look at it in your investments for two reasons: a) Most of the world isn’t skeptical, and customers and other investors and probably your kids really care about it. It’s likely people won’t want to buy a product from a belching plant, and other investors will discount its value; b) Perception is reality in the value of a security.

~ Mark Wiseman, Global Head of Active Equities at BlackRock, "Staying Focused on the Long Term," Barron's, July 6, 2019

BlackRock strategist: bonds act as a shock absorber (2019)

Even with low yields, bonds play a really important role in providing a cushion against shocks in other parts of the market.

~ Mike Pyle, global chief investment strategist, BlackRock Investment Instiute, as quoted in Barron's, "The Trend Isn't a Friend: Bond funds are hot, but the yield-hungry should be wary," August 3, 2019

BlackRock strategist on negative yielding bonds

There's no chapter in your bond math book on this.

~ Scott Thiel, chief fixed-income strategist, BlackRock, as quoted in "The Bonds That Eat Your Money," Bloomberg Businessweek, July 29, 2019

Larry Fink on the Australian model of compulsory retirement accounts

Superannuation has been a huge success in supplementing the government pension scheme and taking the strain off it - an attractive prospect as we think about how to relieve the burden on Social Security in this country.  The current system is broken, and we need a comprehensive solution to retirement savings that includes some form of mandatory retirement savings.

~ Larry Fink, CEO of BlackRock, asset manager with nearly $4 trillion under management, from a lecture given to business school students at New York University in May, "Retirement Saving Done Right," Bloomberg BusinessWeek, June 3, 2013

BlackRock's Bob Doll says confidence begets confidence and the only way is up in 2011

We've been through a period of very low confidence: consumer confidence, CEO confidence. And there's nothing like a slightly better economy, a slightly better stock market to argue that confidence will beget more confidence. CEOs are never more confident than when their stock price is going up.

They will be more willing to do some positive things with the $2 trillion-plus in excess cash sitting on their balance sheets: raise their dividend; buy back their stock; engage in M&A; re-invest in their business; hire a worker or two; or maybe put up a new plant. I think that's what's in front of us.

~Bob Doll, chief equity strategist, BlackRock, "Experts agree: Get over your fear and get back into stocks", USA Today, December 17th, 2010