By Iain Withers and Ross Kerber
LONDON/BOSTON (Reuters) -BlackRock Chief Executive and Chairman Larry Fink on Monday said “protectionism has returned with force,” a development he said stemmed from a wealth divide that could be countered by offering more investors access to private markets.
Fink wrote in his annual chairman’s letter that too many people are currently missing out on prosperity in twin-speed economies, where the wealthy build more wealth and others face deeper hardship.
The comments come just days before U.S. President Donald Trump has promised to unveil a massive tariff plan on Wednesday, which he has dubbed “Liberation Day.” He has already imposed tariffs on aluminum, steel and autos, along with increased tariffs on all goods from China.
“Capitalism did work — just for too few people,” Fink wrote in his letter published on Monday, adding the divide had helped fuel a rise in protectionist policies.
Fink did not mention Trump by name in the letter, which ran to some 10,000 words. He did however nod to a Panama Canal ports deal BlackRock struck earlier this month with Hong Kong’s CK Hutchinson.
While the agreement still faces challenges amid international trade tensions it drew praise from Trump and shows how Fink’s company in some cases may be able to benefit from the president’s protectionist instincts.
But Fink was clear he saw protectionism as a problem, and that with its rise, “The unspoken assumption is that capitalism didn’t work and it’s time to try something new.”
The BlackRock boss’ main argument to resolve these problems was to further “democratize” markets, partly by helping a greater number of consumers access potentially higher returns in private markets such as infrastructure and private credit – investment areas into which BlackRock has expanded heavily recently as it tries to diversify its business.
BlackRock became the world’s biggest money manager thanks mainly to the popularity of low-cost passive index-tracking funds and had $11.6 trillion in assets under management as of December 31. It went on a buying spree last year to add infrastructure specialist Global Infrastructure Partners, private credit provider HPS and private data firm Preqin.
Private assets, unlike publicly traded stocks and bonds, are typically not listed, are traded less frequently and their pricing can be opaque, raising potential risks for retail investors.
Fink even suggested the private assets could reshape the standard investment portfolio from 60% stocks and 40% bonds to one that would be 50% stocks, 30% bonds and 20% private assets.
