Larry Fink’s Post

This week, I visited Saudi Arabia along with many of our clients who are interested in learning more about the country's future and investment opportunities. The Kingdom is undergoing a rapid transformation, changing from an oil-and-gas nation to a modern diversified economy – a country with strong technology, manufacturing, tourism and renewable energy sectors. According to Saudi Arabia’s National Investment Strategy, this transformation is going to take an estimated $3.3 trillion dollars by the end of the decade, which makes Saudi Arabia’s “Vision 2030” one of the largest economic development efforts in history. To transform the economy, Saudi Arabia will need to draw in outside financing, which creates significant investment opportunities. So, together with the Ministry of Finance of Saudi Arabia, we convened a summit for the CEOs and CIOs of some of our largest clients around the world to deepen their knowledge of the investment landscape in the country. These investments will broaden the Saudi equity and fixed income markets, and drive economic diversification in mining, manufacturing, and tourism. We all found the discussions rewarding and insightful. A few other things happened in Saudi Arabia this week. We announced the formation of BlackRock Riyadh Investment Management, a new project with Public Investment Fund (PIF). It’s a multi-asset class investment platform that will be managed by a Riyadh-based portfolio management team and supported by BlackRock’s global distribution and research capabilities. And on Monday, the Kingdom put on an impressive display of convening power by hosting the World Economic Forum #specialmeeting24, at which I participated in an interesting panel about investing in turbulent times and the shifting geopolitical landscape’s impact on the world economy.

Today, BlackRock posted strong first quarter results demonstrating both continued growth in our business and accelerating client momentum in the strongest pipeline we have ever seen for whole portfolio mandates and technology.   Delivering sustained growth requires that we innovate constantly, invest strategically in our business, and anticipate our clients’ needs. We have invested ahead of the themes we believe will define the next decade of asset management, including ETFs, infrastructure, technology, and whole portfolio capabilities.   We began 2024 with strength, and I am incredibly optimistic about the rest of the year and beyond.

The past few weeks, a lot of my focus has been on Japan. The country’s economy is in the middle of a dramatic resurgence with the NIKKEI surging past 40,000 for the first time ever and the central bank raising rates for the first time in 17 years. And this rush of economic good news is coming at a time when a lot of my colleagues at BlackRock are thinking back about our history with Japan.   Last month marked 25 years since we opened our doors in the country. We held an anniversary celebration in Tokyo. There were hundreds of BlackRock alumni and clients there, and we were talking about how BlackRock probably wouldn’t exist without the trust of our Japanese clients. Back in 1988, my partners and I wanted to start an asset manager, but we didn’t have any assets to manage – not until we traveled to Tokyo and won our first bit of business from one of the country’s leading financial firms.   Over the years, Japan has given so much to our company – far more than just money to manage. So, to mark our quarter century in Japan, we wanted to do something special.   Earlier today ahead of the state dinner honoring Japan’s Prime Minister, the U.S. State Department unveiled a new student exchange program between our two countries. The initiative is called the Mineta Ambassadors Program after Norm Mineta, the first Japanese American to serve in a presidential cabinet. (In fact, he served in two of them).   I’m very proud to share that the BlackRock Foundation will support this program. We’re doing so to honor the work of all our Japanese colleagues past and present. From when we started BlackRock Japan 25 years ago to today, they have always found ways to build bridges between companies and cultures and represent the trust BlackRock was built on.

This morning, I published my annual letter to investors. It’s the result of months of thinking about a few big, macroeconomic issues – but one big one in particular: retirement.    Despite all the world’s challenges, it seems to me we’re living through a remarkable moment for human health. The average life expectancy has increased more in my lifetime than in all previous recorded history, and researchers continue to invent a rush of new life-extending drugs, from Ozempic to breakthrough Alzheimer’s pharmaceuticals.   Beneath this progress, though, is a frustrating irony: While science has gotten remarkably good at extending people’s lives, our economic and political systems haven’t done nearly enough to help people afford them. In the United States, 4-in-10 Americans don’t have a spare $400 for an emergency like repairing their car – let alone to invest in retirement.   At the same time, younger generations – Millennials and Gen Z – are experiencing a really profound amount of anxiety about their economic futures. As I was finishing the letter, The Wall Street Journal published an article, showing that four-in-ten American high school seniors say it’s “hard to find hope for the world.” Many young people believe that my generation – the Baby Boomers – have focused on their own financial well-being to the detriment of who comes next. And I think they have a point.   Obviously, young people have to figure out how to afford a number of things – homes, kids, student loans – before they face the prospect of retirement. But the nature of investing for retirement is such that if you don’t start in your 20s or 30s, it’s almost impossible to catch up by the time your 65.     That’s why I titled this year’s letter, “Time to Rethink Retirement.”   Rethink it how? Retirement is BlackRock’s core business. We don’t have all the public policy answers, but we can contribute some data and insights about where to find them. The location is often the capital markets.   For countless people, the ability to invest has been the difference between an anxious retirement and a comfortable one, including for my parents. My dad owned a shoe store. My mom taught English. They died in their 80s but could’ve lived beyond 100 and still afforded it because of their investments.   One message I want to get across in this letter is: The same markets that helped them in their time can help us in ours – and not just for retirement. The power of capital markets can be unleashed to help us afford infrastructure at a time when nations are facing historically high debt burdens but need to make huge investments in roads, airports, and power generation.   I hope you find the letter interesting, and, as always, I appreciate the feedback. https://1blk.co/3PBM7ry

I am in Mexico this week, where BlackRock has been working for decades, and today our local team partners with our Mexican clients to help them meet their investment objectives. I look forward to meeting with some of them soon.   I am proud of our long-term commitment to Mexico and how our Mexican team invests to help improve the financial futures of millions of Mexican citizens. In keeping with tradition, and in addition to meeting with clients and the business community, I will be meeting with President Andrés Manuel López Obrador. I also know 2024 is a critical year for Mexico. Like the United States, India, and dozens of other nations, Mexico is holding federal elections this year. I’m looking forward to meeting key political and business leaders to grow our understanding of Mexico’s future, thus allowing us to continue helping Mexicans achieve a better financial future.

Earlier this week, I took a two-day trip to Texas.   BlackRock has been investing in the state since we opened our doors back in the late ‘80s. We have about $289 billion invested in Texas’ publicly traded companies on behalf of our clients, including $125 billion in public energy companies. But the most exciting work in the state is just getting started.    On Monday morning, for example, I flew to Midland then drove out to a remote area of the Permian Basin where Occidental Petroleum is building the world’s largest direct air capture facility – a series of complex machines that will vacuum carbon dioxide out of the air and store it underground. The project itself is obviously innovative. But so is the way it’s financed, with BlackRock investing about half-a-billion dollars alongside Occidental.   Last month, we announced that BlackRock is going to acquire Global Infrastructure Partners, precisely because we want to tackle more projects like this. I believe the future of infrastructure investment is co-investment. That could mean two companies partnering together, like what’s happening with Occidental, or it could look like what I saw the next day in Houston.   On Day 2 of the trip, BlackRock was fortunate enough to participate in a summit about the state’s power grid. I’m incredibly grateful to Texas’ Lieutenant Governor, Dan Patrick, for inviting us.   Texas needs to find about $10 billion for “dispatchable power generation,” and the state’s leaders don’t want taxpayers to have to foot the entire bill. They know private sector dollars will come off the sidelines for the right opportunities, which is why BlackRock helped bring together more than 100 investors, representing about $2.2 trillion in AUM – to figure out what those opportunities might be.   I’m optimistic that Texas will find the money to harden its power grid. But what makes me even more hopeful is that the public-private financing models we explored can help build infrastructure anywhere, not just in Texas.   For BlackRock’s clients, that means more investment opportunities.   For governments, that means greater energy security.   For all of us, it means better airports, faster broadband access, and more reliable electricity.

Today marks the launch of Saudi Arabia’s National Infrastructure Fund (INFRA). INFRA is deploying public investment alongside private capital into vital infrastructure projects in the country, such as renewable power, water, transportation, and social infrastructure like schools and hospitals to help achieve the goals of Vision 2030.   BlackRock Financial Markets Advisory is proud to have been advising Saudi Arabia’s National Development Fund on the design and operation of INFRA over the last two years. I congratulate them on this milestone, and applaud their vision and initiative.   Infrastructure is a cornerstone of the prosperity of a country and its people. BlackRock is committed to delivering our global reach and expertise to help our clients invest in infrastructure projects around the world, and INFRA can serve as a model for public and private capital working together to scale the benefits of infrastructure investment in developed and emerging economies alike.

BlackRock delivered differentiated organic growth and operating margin through historically challenging market and industry conditions in 2022 and 2023. As we’ve seen before, when investors were ready to put money back to work, they did it with BlackRock. Clients entrusted us with $289 billion of net inflows in 2023, including $96 billion in the fourth quarter. We enter 2024 with strong momentum – $10 trillion in AUM, accelerating flows, and an organization positioned for the future. Today, we are announcing two transformational changes in anticipation of the evolution we see ahead for asset management and the capital markets. The strategic re-architecture of our organization will simplify and improve how we work and deliver for clients. And our acquisition of Global Infrastructure Partners (GIP) will propel our leadership in the fast-growing market for hard-asset infrastructure. Our clients’ needs have been our compass. Listening to them and applying that to our vision for the future of our industry drove our innovation in Aladdin, and how we led a revolution that made iShares ETFs ubiquitous. We always viewed ETFs as a technology, a technology that facilitated investing. And just as our Aladdin technology has become core to asset management, so too have ETFs. That’s why we believe embedding our ETF and Index business across the entire firm will accelerate the growth of iShares and every investment strategy at BlackRock. The combination of BlackRock infrastructure with GIP will make us the second largest private markets infrastructure manager with over $150 billion in total AUM, providing clients – especially those saving for retirement – with the high-coupon, inflation-protected, long-duration investments they need. We are incredibly excited about this next chapter in BlackRock’s history. This ambitious transformation of our firm positions us better than ever. Our clients, shareholders, and employees will be its biggest beneficiaries.

As the work year winds down – and the holidays ramp up – I wanted to say a profound “thank you” to everybody at BlackRock. When we founded this company 35 years ago, we hoped that someday we might be able to recruit the best minds in the financial sector to join us. I’m proud to say that those brilliant minds also belong to the genuinely kind, thoughtful, and inspiring human beings I get to work with each and every day.   After four decades at BlackRock, the people are the reason I still love coming to work. To all my BlackRock colleagues, I’m so grateful for you.   And to BlackRock’s clients: Thank you for your trust. We know choosing somebody to manage your money is a sacred thing, and we don’t take it for granted. Serving you is a real privilege.   I look forward to seeing everybody in 2024 – but before then, I hope everyone takes the opportunity to close their laptops, ignore their phones, and recharge with their families.   Happy Holidays, Larry

Pictured below was my favorite moment from last week. For the first time, I was able to visit BlackRock’s office in Atlanta.    As globalized as the world has become, asset management is still a very local business. What our clients need often varies region-by-region, and so do the opportunities. That’s why we opened our doors in Atlanta. Because now we’re better able to serve our clients in America’s Southeast. And we’re also better positioned to spot investment opportunities in the region – and bring them to our clients across the wider world.    I’m very grateful to Chanel H. Frazier and the entire team in Atlanta. Thank you for what you’re building.