12/6/2023 0 Comments Larry fink 2022 letter![]() ![]() Thanks to the $10 trillion under management at BlackRock, when Larry Fink speaks, companies listen! Being the CEO of BlackRock, the world’s largest asset management firm, Larry Fink’s annual letter sets the tone each year for various stakeholders, including investors, companies, and employees. And from then on, transition to a net-zero world, decarbonisation of the global economy and ESG investing have become a focal point of Larry Fink’s annual open letter to the chief executives. There’s a risk now of a liquidity mismatch for these asset owners, especially those with leveraged portfolios.Two years ago, Larry Fink wrote that “ climate risk is investment risk” for the first time. Years of lower rates had the effect of driving some asset owners to increase their commitments to illiquid investments - trading lower liquidity for higher returns. “In addition to duration mismatches, we may now also see liquidity mismatches. How the voting ecosystem changes over the next decade can be a transformative force that reshapes corporate governance.”Ĭommenting on the markets, Fink raised the possibility - after the Fed’s rate hikes and recent bank failures - of a third “domino” falling. “Amid these shifts, companies will also need to find new ways to reach their shareholders who choose to direct their own votes, and robust disclosures and advances in the proxy ecosystem will become even more important. I certainly believe that the industry would benefit from more proxy advisors who can add diversity of views on shareholder issues,” Fink said. ![]() But if asset owners rely too much on a few proxy advisors, then their voice may fall short of its potential. “Proxy advisors can play an important role. ![]() For clients who choose, we’re connecting them with these investment opportunities,” Fink said.įink voiced his continued support of fund investors doing their own proxy voting, but he cautioned that “democracy only works when people are informed and engaged.” As more asset owners choose to direct their own votes, Fink said they need to make sure they are dedicating enough time and resources to make informed decisions on critical governance issues. Many of them will be sustainable, scalable innovators - startups that help the world decarbonize and make the energy transition affordable for all consumers. “I wrote last year that the next 1,000 unicorns won’t be search engines or social media companies. Some clients want to “invest in ways that seek to align with a particular transition path or to accelerate that transition” and some don’t, but BlackRock will continue to offer them a choice and manage their assets according to their guidelines, he said. The transition to a low-carbon economy is also on the minds of BlackRock’s clients, according to Fink. Over the long run, investors also need to consider how the energy transition, among other factors, will impact the economy, asset prices, and investment performance,” he wrote. “In the near term, monetary and fiscal policy will be the major driver of returns. Investing for the long-term requires a long-term view, Fink said, including one on demographics, government policy, technological advancements, and the transition to a low-carbon economy. Investing with sustainability in mind remains a focus at BlackRock. These clients are choosing BlackRock because of our scale, resources, and expertise to take on the challenges of the markets, and we expect this to continue into 2023,” Fink wrote. ![]() In the past two years, we are honored to have been entrusted to lead a number of outsourced mandates totaling over $300 billion in AUM, spanning existing and new clients and capabilities. “We’re seeing very strong demand from clients looking to partner with BlackRock for outsourced solutions. ![]()
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