According to Larry Fink, capitalism has failed too many people by being too exclusive, locking individuals out of wealth creation. His fix? Evolving capitalism itself – starting with greater access to private markets, a space BlackRock is now laser-focused on.
Fink’s latest chairman’s letter spells out BlackRock’s next challenge: solving the public-private market divide – something he said the firm is well equipped for.
“BlackRock has always had a foot in private markets. But we’ve been – first and foremost – a traditional asset manager. That’s who we were at the start of 2024. But it’s not who we are anymore,” Fink said.
Fink’s strategy hinges on three major acquisitions.
Namely, in October, BlackRock completed its purchase of Global Infrastructure Partners (GIP), which he said “connects BlackRock’s clients directly to the world’s $68 trillion infrastructure boom”. This was followed by the acquisition of Preqin, one of the world’s leading private market data firms, and the announced purchase of HPS Investment Partners.
While increasing investor participation is a key objective, Fink emphasised that there is also deeper, long-term strategic thinking at play.
Often referenced by the likes of ASIC chair Joe Longo for his concerns about private markets, Fink said: “Private markets don’t have to be as risky. Or opaque. Or out of reach. Not if the investment industry is willing to innovate – and that’s exactly what we’ve spent the past year doing at BlackRock.”
One of BlackRock’s most ambitious plans is the indexation of private markets, similar to how the S&P 500 operates for public equities.
“Once that happens, private markets will be accessible, simple markets. Easy to buy. Easy to track. And that means capital will flow more freely throughout the economy,” Fink said.
“The prosperity flywheel will spin faster, generating more growth – not just for the global economy or large institutional investors, but for investors of all sizes around the world.”
From 60/40 to 50/30/20
As the financial system continues to evolve, Fink argued the traditional 60/40 portfolio split between stocks and bonds is no longer an effective measure of diversification.
Instead, he said the future standard portfolio will look more like 50/30/20, with 50 per cent in stocks, 30 per cent in bonds, and 20 per cent allocated to private assets such as real estate, infrastructure, and private credit.
However, he acknowledged that the financial industry isn’t currently structured for a 50/30/20 world.
“It’s largely split between traditional asset managers focused strictly on the 50/30 (stocks and bonds) and specialised private market firms dominating the 20 (private assets),” he said.
And this is precisely the gap BlackRock is aiming to bridge.
Beyond portfolio diversification, Fink sees private markets as key to funding the massive global demand for infrastructure investment. As governments struggle with budget constraints, he believes private capital will be increasingly relied upon to fund critical projects, from transport networks to energy grids.
But Fink warns that simply providing investors with access to infrastructure investments won’t matter if the projects themselves never get built.
“Giving retirement investors access to infrastructure matters less if the infrastructure never gets built,” he said, noting that in many cases, it takes longer to secure permits for major infrastructure projects than it does to construct them.
His proposed solution, beyond streamlining permits, is what he calls “energy pragmatism”, with a particular focus on nuclear energy, arguing that even in the world’s wealthiest nations, prosperity is once again defined by the ability – and willingness – to produce and consume more energy.
For BlackRock, breaking down barriers in private markets isn’t just a business strategy – it’s about reshaping the financial system itself.
Fink is betting that by tearing down the walls of exclusivity, private markets will become more transparent, accessible, and ultimately, a driving force in global investing – just as Zillow transformed real estate pricing and Bloomberg brought clarity to stocks and bonds.
The idea being: if BlackRock succeeds, private markets could evolve from an elite, closed-door arena into a mainstream pillar of investing – open not just to institutions but to everyday investors worldwide.
