The world’s largest asset manager has hit back at suggestions it might profit from government contracts amid the global market crisis.
In March, the New York Federal Reserve hired BlackRock’s Financial Markets Advisory (FMA) unit to manage its first-ever purchase of fixed income ETFs – a move that has drawn scrutiny given that BlackRock manages a significant proportion of the market.
But CEO Larry Fink said he finds suggestions that BlackRock might benefit from the deal “insulting” and objects to its framing as a “bailout”.
“All the issues around what we’re doing with governments are based on great practices,” Mr Fink said during a teleconference for the company’s Q1 results.
“There is never any question about supporting one market.”
It’s the first time that BlackRock has commented on scrutiny of the “rather large assignment” the FMA won with the New York Fed. The unit is separate from BlackRock’s asset management business and was chosen for the assignments due to its “operational and technological capabilities”.
The unit played a similar role during the GFC and has assignments with monetary authorities and central banks around the world, including advising the Bank of Canada on ESG issues.
“We did not build this with the idea [that’s] going to be needed during a crisis,” Mr Fink said of the FMA.
“We built it to help our clients during normal times and resiliency. But I don’t think, during a crisis, that there’s any firm in the world that’s better prepared to be working on these truly critical assignments of designing programs for assisting our clients… it’s something I’m very proud of.”
BlackRock saw $35 billion in net inflows in Q1 while its fixed-income ETFs saw outflows of $35 billion. While BlackRock’s net income fell 23 per cent, Mr Fink said the company was well positioned to weather the pandemic that has “transformed the world for all of us”.
“The strategic investments we’ve made over recent years in key areas for growth continue to deliver,” Mr Fink said, adding that its sustainable ETFs – a flagship initiative of the company’s greater focus on ESG – saw $10 billion in inflows.