Is Larry Fink slippery? Recently he had been speaking on a change in the traditional asset allocation mix from the traditional 60/40 allocation to something they are calling 50/30/20 with 20% in alternative assets. Here BlackRock, his firm, is the worlds largest asset manager with more than $10 trillion under management. Fidelity and Vnaguard hold huge numbers of assets but they are viewed for some of them as custodial not management. Thus BlackRock has the crowd.
But their margins and total value compared based on assets under management pales compared to the big private equity funds Blackstone, Apollo Global Management, Inc. and KKR. This is because those firms are focused on alternative assets with higher fees than public assets. Public equities, bonds and stocks, hover between 25 and 100 basis points for fees. Lower with index funds and ETFS. Alternative assets are typically paid 2% plus a piece of the profits. And often more for VC and many special vehicles. Larry Fink and BlackRock are trying to push their portfolios under management to a higher percentage to alternative assets. This would greatly increase their margins. It seems convenient that it’s the same time that he is greatly expanding his talking on a new portfolio allocation that would also greatly help the profits at his firm. He could perhaps explain the benefit to BlackRock as he talks new allocations.