In this episode, Scott Becker continues his discussion on BlackRock CEO Larry Fink’s push for a new asset allocation model, shifting from the traditional 60/40 split to a 50/30/20 mix with increased alternative assets.
Chapter 1: Who is Larry Fink and what is his new asset allocation proposal?
this is scott becker with the becker private equity and business podcast this is take two on is larry fink slippery so so here's what we're going to talk about here recently larry fink the ceo of blackrock has been speaking on a change in the traditional allocation mix asset allocation mix from the traditional 60 40 you know, equities to bonds.
Chapter 2: What is the 50/30/20 asset allocation model proposed by Larry Fink?
Chapter 3: How does BlackRock compare to other asset management firms like Fidelity and Vanguard?
So something they are calling 50, 30, 20, with 20% being an alternative assets and 50 being in equities and 30 in bonds. Here, BlackRock, his firm, is the world's largest asset manager with more than 10 trillion under management. Fidelity and Vanguard also hold huge numbers of assets, but they are viewed for some of them as custodial, not management. So BlackRock has the crown.
Chapter 4: Why do firms focused on alternative assets have higher margins than BlackRock?
Chapter 5: What are the typical fees associated with public equities, bonds, and stocks?
But their margins and their total value based on assets under management are a lot lower than Blackstone, Apollo, and KKR. This is because those firms are focused on alternative assets with higher fees than public assets and public equities. Public equities, bonds, and stocks hover between 25 and 100 basis points for fees. They're lower with index fees and ETS.
Alternative assets like the types that Larry Fink is touting bring in 2% plus a piece of the profits, and often more for VC and special vehicles. Larry Fink and BlackRock are trying to push people towards this portfolio that includes a higher percentage of alternative assets. And this might be right, the right thing to do, but it also would greatly increase their margins.
It seems to me awfully convenient that it's at the same time that they're greatly expanding. They're talking on margins that they're also working on trying to prompt the markets towards this movement towards alternative assets.
he could at some point seem to explain the benefit of BlackRock as he talks about moving people to alternative assets, that they've also got a self-interest in this move in that direction. It's fascinating to watch. I mean, he seems like one of the most disingenuous leaders, but it is what it is. Fascinating to watch. Thank you for listening to the Becker Private Equity and Business Podcast.