Speaking at the NEPC investment conference in Boston on Tuesday, BlackRock Inc. Chief Executive Officer Larry Fink said some investors may be over-allocating to alternatives as liquidity shrinks. Bloomberg’s Peggy Collins discusses on “Bloomberg Daybreak: Americas.” (Source: Bloomberg)
BlackRock CEO Larry Fink Warns On Alternative Investments
Since the financial crisis, Warren Buffett's Berkshire Hathaway has had significant exposure to financial stocks in its portfolio. Q1 2021 hedge fund letters, conferences and more At the end of March this year, Bank of America accounted for nearly 15% of the conglomerate's vast equity portfolio. Until very recently, Wells Fargo was also a prominent Read More
To our next story and that's to do with Larry Fink. So in Boston how you stuck into any P.C. Investment Conference and he said that he's concerned about certain investments he says doesn't mean having more alternatives is bad and maybe be perfectly good. Let's be clear that with alternatives you're trading liquidity for more return. I loved. I love this quote from him.
Well it is interesting Alex because we know we're going back into unexpectedly for many a low return environment in terms of where the 10 year is and where rates are. And so I think one of the things that jumped out to me in terms of Fink's comments is I thought about pension funds right. So we're seeing a lot of big investors who normally would have relied on bonds as as their investment for a core part of their portfolio really having to stretch for yield and go to alternatives. Interesting as well because as you saw think is saying you know alternatives as themselves are not bad. And BlackRock is actually raising money for its own Long-Term private capital vehicle. But they are the biggest ETF provider in the world as well which are very liquid. So he's basically saying be make sure you understand when you're reaching for yield that you're giving up liquidity.
I'm glad you had a pension fund. It's not just pension funds it's retail and so that's not. Those aren't bad products to get into. But if you don't know it you don't have the real understanding is what you're trading off of then or trading without liquidity. That's when it becomes the real issue is it especially for like mom and pop guys. That's right.
And private equity as we saw this week with Warren Buffett is at his annual meeting this week and is coming under scrutiny and more fire because they've just been getting hundreds of billions of dollars of capital many of which much of which hasn't been deployed yet and there's more and more questions about the fees and what whether investors are getting the bang for the buck they're.