Larry Fink wants you to keep calm and stay invested.
“When people invest their savings—over decades, not days—the capital markets put that money to work, financing companies, infrastructure, and jobs,” the BlackRock chief wrote in his letter to investors released on Monday. “At its best, long-term investing performs a kind of civic miracle.”
In last year’s missive, Fink made the case for merging public and private markets, arguing that opening up lucrative private market investing to everyday Americans would help build wealth and prosperity (see, “Make Asset Management Great Again: Larry Fink’s private path to economic populism”).
The asset management giant has spent the past few years acquiring private market managers and data providers, and pitching the traditionally exclusive investments to retail investors. BlackRock’s private equity counterparts, like Apollo Global, are eyeing the $14 trillion in employer-sponsored retirement accounts for fresh capital and exit opportunities.
Private credit
The call comes as the private credit market — held out as one of the most suitable private sectors for everyday investors given the steady returns and relative liquidity — has come under pressure as investors grow anxious about the quality of the underlying loans.
Earlier this month, BlackRock limited repurchase requests for its HPS Corporate Lending Fund to 5%, denying about half of the customer requests. The firm’s shares dropped by more than 8% on the news. Other private credit funds, including Blue Owl, Blackstone, Ares and Apollo, have also limited redemptions, further spooking investors.
Fink said BlackRock is looking to raise $400 billion for its private market funds by 2030, particularly for infrastructure and private credit.
“We’re executing on a growing opportunity to bring the benefits of private markets investments to more investors, including insurance and wealth clients, and individuals saving for retirement.”
Wealth-building solutions
Fink offered up emerging models that could help bring more people into the markets and build wealth. In the US, he pointed to policies enabling emergency saving plans and wealth-building accounts, such as the so-called Trump Accounts that set up tax-advantaged retirement accounts seeded with $1,000 from the government.
He also took on Social Security, which uses payroll taxes to pay current retirees while the Social Security trust fund is invested primarily in US Treasury bonds. Under current projects, the trust fund may not be able to pay full benefits by 2033.
“As a social insurance program, Social Security emphasizes stability and predictability. What it doesn’t do is let people grow their benefits along with the broader economy,” wrote Fink. “The question is whether the Social Security system could allow both.”
A potential fix, he said, is a proposal floated by Sen. Bill Cassidy (R-LA) and Sen. Tim Kaine (D-VA) that would create a new investment fund to supplement the straining Social Security trust fund. The fund would take $1.5 trillion and invest in a mix of stocks and bonds over 75 years, at which point it would “pay the Treasury back and supplement payroll taxes going forward, helping close the gap between what the system takes in and what it pays out,” explained Fink.
That would be a civic miracle.
