BlackRock founder Larry Fink has predicted that “transformative opportunities” in artificial intelligence could solve the productivity crisis he blames for continued high inflation.
Speaking at BlackRock’s investor day, Fink said, “The collapse in productivity has been a central issue in the global economy. AI has the enormous potential to increase productivity and transform margins across all industries. It may be the technology that can reduce inflation.”
Fink has repeatedly warned that high inflation could force the US Federal Reserve to resume interest rates later this year.
Noting that he is a fan of dystopian movies, Fink said the $9 trillion 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 asset manager, continues to look for acquisitions that can increase its global footprint, expand its technology offerings and broaden its presence in private markets.
“We are reviewing our business model,” Fink said. “BlackRock has never been afraid to make big bets. Our willingness to disrupt ourselves and the industry. . . has laid the foundation for what BlackRock is today and will drive our growth into the future.”
Fink and other executives made no mention of the continued criticism BlackRock has received from “anti-woke” Republican politicians in the US, beyond a reiteration of the financial opportunity it sees in investing in the energy transition.
The group pledged to continue growing sales at a 5 percent annual rate with aggressive targets for its Aladdin technology business and its relatively small but high margins for private markets.
The group announced a deal with Avaloq, a Swiss banking software provider owned by Japan’s NEC Corporation. BlackRock will make a minority investment and tie the technology into its Aladdin offering for asset managers.
Executives also hope to capitalize on a trend where insurance companies, funds and pension funds have reduced the number of managers they work with and even outsourced their entire portfolios to one company. BlackRock has won 20 such “mega mandates” worth at least $5 billion since 2019.
“Customers are doing more with fewer providers and doing more with us,” said chief operating officer Rob Goldstein.
The company aims to double its private market revenue in five years from its current $1 billion level. To that end, it recently separated the leadership of private credit and multi-asset funds from traditional private equity. It has $320 billion in alternative assets, including $156 billion in private markets, and the rest in hedge funds and liquid credit.
While critics lament BlackRock’s size and clout, several speakers have argued that the asset management industry remains relatively unconsolidated.
“People keep thinking we’re big, but we’re not. If all this happens, we still only have 3.1 percent (of the total market),” said Mark Wiedman, head of global customer operations.