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Is BlackRock Too Big?

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BlackRock NY

With continued loose monetary policy and relatively less regulatory hurdles than banks and brokers, gargantuan U.S. asset management firms have financially prospered over the past years. According to an SEC filing, as of December 31, 2014, BlackRock reached US$ 4.652 trillion in assets under management. This monumental figure is an 8% increase from last year’s number. In 2006, BlackRock’s assets under management crossed the US$ 1 trillion threshold. To put things into perspective, the U.S. retirement market in 2013 was worth US$ 23 trillion, according to the Investment Company Institute (ICI). Using BlackRock’s assets under management figure for December 2013 of US$ 4.324 trillion, the asset manager stacks up, as being almost a fifth the size of the whole U.S. retirement market. BlackRock’s AUM is majority made up of institutional investors at 65% – a key revenue generator. The asset manager counts sovereign wealth funds, central banks, pensions, life insurance companies and endowments as major clients.

BlackRock’s Assets Under Management


Data: Trillions USD – December End Dates

We Are the Good Guys

In the post-global financial crisis years, DC policymakers are identifying potential systemic threats to the global financial system. The easy culprits were the over-leveraged banks and insurance companies. Traditional asset managers have faced far less scrutiny compared to hedge funds, investment banks and insurance companies.

However, the concentration of assets in large asset managers has steadily grown over the years.

Asset managers contend, due to their very nature of managing other people’s money, they are not taking specific risk on their own balance sheets. Thus, investment managers believe they are less susceptible to financial distress versus banks, brokers and insurers. Brand name managers such as PIMCO, BlackRock and Fidelity Investments have further debated that asset managers like them, should not be designated systemically important financial institutions (SIFI). BlackRock is using its financial muscle to lobby on Capitol Hill. According to the Center for Responsive Politics, since 2010, BlackRock has spent over US$ 1 million in annual lobbying.

In late 2014, the debate between the FSB and the SEC has shifted toward analyzing an asset manager’s products and services versus an individual asset manager.

Potential Criteria For Asset Managers

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ADIA Seeks to Sell KIC Headquarters

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The Abu Dhabi Investment Authority (ADIA) is seeking to sell the building that houses the headquarters of the Korea Investment Corporation (KIC). [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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BMO and OTPP Test Blockchain Canadian Dollar Debt Deal

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The Bank of Montreal (BMO) and the Ontario Teachers’ Pension Plan (OTPP) participated in a landmark blockchain Canadian-dollar debt transaction. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Just Group Acquires Corinthian Pension Consulting

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Just Group plc acquired a 75% ownership stake in the holding company of Corinthian Pension Consulting Limited (Corinthian Pension Consulting). Operating in the institutional world for over 12 years, Corinthian Pension Consulting provides advisory services to defined-benefit pension scheme trustees and scheme sponsors undertaking bulk scheme exercises. The remaining 25% will be retained by current shareholders of Corinthian Pension Consulting. Robert MacGregor will continue to lead Corinthian Pension Consulting, as its Chief Executive Officer. Furthermore, Corinthian Benefits Consulting Limited and Corinthian Affinity Solutions Limited will continue to operate as before, becoming part of a newly formed holding company, Corinthian Group Holdings Limited.

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