Larry Fink Says BlackRock Plans to Be a Leading China Asset Manager

(Bloomberg) -- BlackRock Inc. Chief Executive Officer Larry Fink said he’s seeking to make the firm one of China’s leading asset managers as it expands outside the U.S.

“In China, which is one of the largest future growth opportunities for BlackRock, we are focused on building an onshore presence,” Fink said Monday in his annual letter to shareholders.

The CEO said Asia is expected to drive 50 percent of the organic growth in assets under management for the industry over the next five years, largely driven by China.

BlackRock, the world’s largest asset manager, is zeroing in on ways to broaden its global reach as firms are under pressure to find growth. Last year was a punishing one for money manager stocks, as fears of a recession seized investors and competition over fees for indexed products escalated.

Fink focused in the letter on how his firm, which oversees about $6 trillion, is becoming increasingly local and investing in high-growth markets around the world.

That push echoes an announcement by the New York-based company last week that it’s making leadership changes, including shifting more responsibility to region-specific leaders.

BlackRock has stepped up its move into China’s fast-growing fund industry in recent years. The firm was granted a private-funds license in 2017 and last year, launched its first onshore China fund to qualified institutions and high net worth individuals.

Read more about BlackRock’s China expansion here.

His letter touched on how political uncertainty around the world last year -- from Brexit to trade disputes -- has rattled clients.

“Against this backdrop of financial and geopolitical uncertainty, I believe that people are frustrated with the culture of investing and the structure of financial markets,” Fink wrote. “There is a focus on speed and a lack of substance.”

As BlackRock has grown in size and become one of the largest shareholders in a range of companies, certain activist investors have increased pressure on the firm to vote with them on a cause, which Fink addresses in the letter.

“In many cases, I or other senior managers might agree with that same cause -- or we might strongly disagree -- but our personal views on environmental or social issues don’t matter here,” Fink wrote. “Our decisions are driven solely by our fiduciary duty to our clients.”

Fink pointed to BlackRock’s investment stewardship team, which advocates for sound corporate governance, and noted that the company offers more than $50 billion in sustainable investment products including green bonds and environmentally-focused exchanged-traded products.

Other Highlights

• BlackRock is looking to stay on top of client needs in portfolio construction and technology, rather than investment products alone, Fink wrote.
• The industry needs to focus more on clients’ long-term goals: “For far too long, asset managers have focused on selling products without placing them in a broader context.”
• BlackRock is also expanding its business in Latin America as it sees long-term growth potential in the region. To that end, the firm recently hired its first head of Brazil.
• Sir Deryck Maughan, a long-time director at BlackRock, will be retiring from the board.

--With assistance from Vincent Bielski and Katherine Burton.

To contact the reporter on this story: Annie Massa in New York at amassa12@bloomberg.net

To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Alan Mirabella

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