Topic: BlackRock suffers $1.7 trillion loss in 6 months (Read 131 times)
You mean Blackrock or Blackrock clients? Big difference there.
This appears to indicate ETFs performing better than stocks and bonds 2020 to 2022.
Interesting statistic cited here:
Is it accurate and safe to say US stocks and bonds are taking as much of a beating as bitcoin has in 2022?
Interesting statistic cited here:
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BlackRock management was quick to invoke the first-half market carnage when revealing the investment performance last week. “2022 ranks as the worst start in 50 years for both stocks and bonds,” Chairman and Chief Executive Officer Larry Fink said on his earnings call.
Is it accurate and safe to say US stocks and bonds are taking as much of a beating as bitcoin has in 2022?
Not as much beating as bitcoin...
Let's see two big ETF from blackrock.
IVV (SP500 index) is now -17% in 2022:
And bitcoin, -53% in 2022.
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If ETFs are doing marginally better. Perhaps this strengthens a case for crypto ETFs receiving a greenlight?
No. A crypto ETF will perform worse than bitcoin, because of management fees.
We have a 100% Bitcoin ETF in Brazil. Let's see its performance in 2022 (-55%)
This is QBTC11, 100% bitcoin ETF.
Global market is taking a big hit due to number of reasons. There's no way for a stock/bond based investment management company to avoid it for the foreseeable future. Blackrock is big so their losses are mounting up to trillions.
No! Crypto market is doing equally bad so even if traditional ETFs are doing slightly better, that doesn't make a strong use case for the crypto ETFs to get a green light. My personal opinion is, it is always better for bitcoin not to link with the traditional economy.
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If ETFs are doing marginally better. Perhaps this strengthens a case for crypto ETFs receiving a greenlight?
No! Crypto market is doing equally bad so even if traditional ETFs are doing slightly better, that doesn't make a strong use case for the crypto ETFs to get a green light. My personal opinion is, it is always better for bitcoin not to link with the traditional economy.
Bonds doing badly looks generally weird and problematic. It might be due to investors being threatened by countries having more incentives for things like war declarations or for the fact that the 2020 stock market crash saw stocks falling to January 2020 price levels in March (you got no discount for waiting a bit on the sidelines).
A price falls due to a weak order book (in most cases it's supply and demand only and free cash flows/assets have nothing to do with it).
ETF managers often have discretion to lend out the fund to let people leverage with it too (either for or against) - I'm not sure whether this interest is held by the fund management or redistributed to the fund holders though.
A price falls due to a weak order book (in most cases it's supply and demand only and free cash flows/assets have nothing to do with it).
ETF managers often have discretion to lend out the fund to let people leverage with it too (either for or against) - I'm not sure whether this interest is held by the fund management or redistributed to the fund holders though.
Is it accurate and safe to say US stocks and bonds are taking as much of a beating as bitcoin has in 2022?
In general, yes kinda, but US stocks is just a huge category that it depends what stocks specifically we are talking about.If ETFs are doing marginally better. Perhaps this strengthens a case for crypto ETFs receiving a greenlight?
ETFs in general and crypto ETFs are in quite a different category, so I'd say not at all. I'm pretty sure the reason why we don't have crypto ETFs yet isn't necessarily due to performance in the first place.
That’s shocking news. That is unimaginable money which they lost in such short period of time. I hope they have kept the management funds in the foreground to overcome the losses as they will be obligated to recover the firms image no matter what. We not talking about millions here but trillion dollars gone in to thin air man.
I think if they had put more share into stocks and bonds, they could at least secured the money as the companies recover in the market.
They have around 900+ billion in funds and only 300 billion in stocks. That sucks. How they were trading the money of their clients?
I think if they had put more share into stocks and bonds, they could at least secured the money as the companies recover in the market.
They have around 900+ billion in funds and only 300 billion in stocks. That sucks. How they were trading the money of their clients?
This is proof that there is way too much leverage out there. The stock indices maybe dipped 25% from ATH and you got funds which are going bankrupt or have huge losses like this.
Bitcoin is another example, it broke $30K and look at all the lending platforms and capital firms like 3AC that went under.
Imagine what happens if stock market indices dip further and so does crypto. It will be carnage everywhere pretty much. Hence why I am assuming fed will start to cut rates next year.
Bitcoin is another example, it broke $30K and look at all the lending platforms and capital firms like 3AC that went under.
Imagine what happens if stock market indices dip further and so does crypto. It will be carnage everywhere pretty much. Hence why I am assuming fed will start to cut rates next year.
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BlackRock management was quick to invoke the first-half market carnage when revealing the investment performance last week.
BlackRock Inc is used to breaking records. The world’s largest asset manager was the first firm to break through $10 trillion of assets under management. But the bigger they are, the harder they fall. This year BlackRock chalked up another record: the largest amount of money lost by a single firm over a six-month period. In the first half of this year, it lost $1.7 trillion of clients’ money.
BlackRock management was quick to invoke the first-half market carnage when revealing the investment performance last week. “2022 ranks as the worst start in 50 years for both stocks and bonds,” Chairman and Chief Executive Officer Larry Fink said on his earnings call.
While few firms are able to avoid what the market throws at them, some at least try to overcome it. BlackRock is increasingly giving up: At the end of June, only about a quarter of its assets were actively managed to beat a benchmark — rather than track it seamlessly as passive strategies are designed to do. That’s down from a third when BlackRock acquired Barclays Global Investors in 2009 to become the leading player in exchange-traded funds.
Within the equities business, the divergence is especially pronounced. Across the industry, assets have leached away from active strategies and into passive. In BlackRock’s case, around $21 billion has flowed out of active equity in the past decade, with $730 billion flowing into indexed equity. The firm’s passive equity holdings are now 10 times larger than its active business, although it does operate some active multi-asset and alternatives strategies that narrow the gap.
For portfolio managers on the fixed-income side, the evolution of the business portends an ominous future.
BlackRock’s roots lie in active fixed income. Fink founded the company in 1988 around strategies that “emphasize value creation through security selection…and are implemented by a team of highly qualified portfolio managers employing a strictly disciplined investment process,” according to the 1999 listing prospectus.
Although the firm also launched the first US-domiciled bond ETF in December 2002, it didn’t catch on the way stock ETFs did. In BlackRock’s case, $280 billion has continued to flow into active fixed income in the past 10 years. Fixed income is the biggest slug of what’s left of the firm’s active-management businesses — it had $954 billion of actively managed bond funds as of June 30, compared to $393 billion of actively managed stocks. Passive has grown, but it’s only 1.5 times bigger than active in fixed income – a much smaller gap than in equity.
All that may be about to change. The collapse in bond markets this year has shaken money out of active fixed-income funds. BlackRock saw clients pull more than $20 billion during the first half of the year in a rout that has seen over $200 billion leave the industry. Some of that is rolling into passive funds, in particular ETFs, where BlackRock is picking up more than its fair share. So far this year, it has gained $39 billion of new money in ETFs and $25 billion in other indexed strategies. The shift toward passive that started in equity is now accelerating in fixed income.
Until recently, bond ETFs were viewed with suspicion. Back in 2015, investor Carl Icahn, sitting alongside Fink on TV, called BlackRock “an extremely dangerous company.” His rationale was that the firm’s ETFs embed illiquid bonds in unsuitably liquid wrappers. “They are going to hit a black rock,” he said.
Yet during the panic of March 2020, when bond markets froze, ETFs performed efficiently. They moved to a discount to the value of the underlying bonds, but that didn’t lead to a fire sale of the securities. Rather than transmitting stress, bond ETFs absorbed it while providing investors with much-needed liquidity. This real-life stress test validated the structure, and now that bonds are sagging, money is flooding across.
On his earnings call, Fink explained the benefits. He observed that investors are using ETFs to quickly and efficiently gain exposure to thousands of global bonds and recalibrate their portfolios. “The challenges associated with high inflation to rising interest rates are attracting more first-time bond ETF users and prompting existing investors to find new ways to use ETFs in their portfolios,” he said.
For now, BlackRock’s fixed-income portfolio managers are mounting a solid defence. Unlike their colleagues in equities, their performance has been relatively strong. In the first six months of 2022, the funds they oversaw declined by 10.6 percent, marginally better than the firm’s fixed-income ETFs. According to the company, about half of taxable fixed-income assets are performing above their benchmark on a one-year view, compared with about a third of traditionally managed equity assets.
But if fixed-income follows the path of equities, the divergence between passive flows and active flows will only grow. “This is the early days of a major transformation of how people invest in fixed income,” said Fink last week. “We expect the bond ETF industry will nearly triple and reach $5 trillion in AUM at the end of the decade.”
By then, BlackRock could be a lot larger, but its fortunes will remain firmly tied to the markets.
https://www.moneycontrol.com/news/business/how-blackrock-lost-1-7-trillion-in-six-months-8858251.html
BlackRock Inc is used to breaking records. The world’s largest asset manager was the first firm to break through $10 trillion of assets under management. But the bigger they are, the harder they fall. This year BlackRock chalked up another record: the largest amount of money lost by a single firm over a six-month period. In the first half of this year, it lost $1.7 trillion of clients’ money.
BlackRock management was quick to invoke the first-half market carnage when revealing the investment performance last week. “2022 ranks as the worst start in 50 years for both stocks and bonds,” Chairman and Chief Executive Officer Larry Fink said on his earnings call.
While few firms are able to avoid what the market throws at them, some at least try to overcome it. BlackRock is increasingly giving up: At the end of June, only about a quarter of its assets were actively managed to beat a benchmark — rather than track it seamlessly as passive strategies are designed to do. That’s down from a third when BlackRock acquired Barclays Global Investors in 2009 to become the leading player in exchange-traded funds.
Within the equities business, the divergence is especially pronounced. Across the industry, assets have leached away from active strategies and into passive. In BlackRock’s case, around $21 billion has flowed out of active equity in the past decade, with $730 billion flowing into indexed equity. The firm’s passive equity holdings are now 10 times larger than its active business, although it does operate some active multi-asset and alternatives strategies that narrow the gap.
For portfolio managers on the fixed-income side, the evolution of the business portends an ominous future.
BlackRock’s roots lie in active fixed income. Fink founded the company in 1988 around strategies that “emphasize value creation through security selection…and are implemented by a team of highly qualified portfolio managers employing a strictly disciplined investment process,” according to the 1999 listing prospectus.
Although the firm also launched the first US-domiciled bond ETF in December 2002, it didn’t catch on the way stock ETFs did. In BlackRock’s case, $280 billion has continued to flow into active fixed income in the past 10 years. Fixed income is the biggest slug of what’s left of the firm’s active-management businesses — it had $954 billion of actively managed bond funds as of June 30, compared to $393 billion of actively managed stocks. Passive has grown, but it’s only 1.5 times bigger than active in fixed income – a much smaller gap than in equity.
All that may be about to change. The collapse in bond markets this year has shaken money out of active fixed-income funds. BlackRock saw clients pull more than $20 billion during the first half of the year in a rout that has seen over $200 billion leave the industry. Some of that is rolling into passive funds, in particular ETFs, where BlackRock is picking up more than its fair share. So far this year, it has gained $39 billion of new money in ETFs and $25 billion in other indexed strategies. The shift toward passive that started in equity is now accelerating in fixed income.
Until recently, bond ETFs were viewed with suspicion. Back in 2015, investor Carl Icahn, sitting alongside Fink on TV, called BlackRock “an extremely dangerous company.” His rationale was that the firm’s ETFs embed illiquid bonds in unsuitably liquid wrappers. “They are going to hit a black rock,” he said.
Yet during the panic of March 2020, when bond markets froze, ETFs performed efficiently. They moved to a discount to the value of the underlying bonds, but that didn’t lead to a fire sale of the securities. Rather than transmitting stress, bond ETFs absorbed it while providing investors with much-needed liquidity. This real-life stress test validated the structure, and now that bonds are sagging, money is flooding across.
On his earnings call, Fink explained the benefits. He observed that investors are using ETFs to quickly and efficiently gain exposure to thousands of global bonds and recalibrate their portfolios. “The challenges associated with high inflation to rising interest rates are attracting more first-time bond ETF users and prompting existing investors to find new ways to use ETFs in their portfolios,” he said.
For now, BlackRock’s fixed-income portfolio managers are mounting a solid defence. Unlike their colleagues in equities, their performance has been relatively strong. In the first six months of 2022, the funds they oversaw declined by 10.6 percent, marginally better than the firm’s fixed-income ETFs. According to the company, about half of taxable fixed-income assets are performing above their benchmark on a one-year view, compared with about a third of traditionally managed equity assets.
But if fixed-income follows the path of equities, the divergence between passive flows and active flows will only grow. “This is the early days of a major transformation of how people invest in fixed income,” said Fink last week. “We expect the bond ETF industry will nearly triple and reach $5 trillion in AUM at the end of the decade.”
By then, BlackRock could be a lot larger, but its fortunes will remain firmly tied to the markets.
https://www.moneycontrol.com/news/business/how-blackrock-lost-1-7-trillion-in-six-months-8858251.html
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This appears to indicate ETFs performing better than stocks and bonds 2020 to 2022.
Interesting statistic cited here:
Quote
BlackRock management was quick to invoke the first-half market carnage when revealing the investment performance last week. “2022 ranks as the worst start in 50 years for both stocks and bonds,” Chairman and Chief Executive Officer Larry Fink said on his earnings call.
Is it accurate and safe to say US stocks and bonds are taking as much of a beating as bitcoin has in 2022?
If ETFs are doing marginally better. Perhaps this strengthens a case for crypto ETFs receiving a greenlight?
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