I Seldom Agree With Larry Fink

But This Time He Is Right

Happy holiday weekend everyone. I trust you’re enjoying everything from your family to March Madness as we look forward to the beginning of April which brings us The Masters from Augusta. I attended a few rounds there but I never had the pleasure of hitting the little white ball there. It’s still on the “bucket list” so who knows.

One thing for certain in my book was being against the “ESG” flurry brought to us by Larry Fink as he did a wonderful job putting BlackRock on our radar screens. It is not that I didn’t like him rather I didn’t see the value investing in his ESG portfolios that guaranteed a secondary rate of performance versus others.

Times have changed and Larry has changed his tune on ESG. He’s now talking about another “situation” faced in today’s society and this time I think he has a point. It’s a good one from my perspective so let’s take a look.

Larry Is Right

On Tuesday of last week, BlackRock CEO Larry Fink urged the government and the private sector to ensure Americans have enough money to retire and said the world's largest asset manager would launch a product next month to address the issue.

The "LifePath Paycheck" will hit in April, with 14 retirement plan sponsors aiming to make it available for 500,000 employees as defined contribution plans. "America needs an organized, high-level effort to ensure that future generations can live out their final years with dignity," Fink said in his annual letter to investors.

BlackRock had over $10 trillion in total assets under management at the end of last year and oversees the largest retirement funds in the U.S. Fink said data from the U.S. Census Bureau's survey of consumer finances in 2022 showed half of Americans aged 55 to 65 reported not having a single dollar saved in personal retirement accounts.

"Put simply, the shift from defined benefit to defined contribution has been, for most people, a shift from financial certainty to financial uncertainty," he added. Fink also addressed climate transition as a major economic trend with a real focus on "energy security". He said “net-zero” remains a top investment priority for BlackRock clients. If he’s looking at the 2035 period forward I’d agree but short term, like ESG, I think he and his clientele will be disappointed.

Not everyone agrees with Fink. Earlier this month, a Texas school fund terminated its contract with BlackRock to manage around $8.5 billion of state money, accusing them of boycotting fossil fuel energy producers. BlackRock tried their best and urged the fund's administrator to reconsider to no avail. It’s a “shot across the bow” he should listen to but it’s hard to argue the success BlackRock has demonstrated.

There are a few more securities that have hit my radar screen over the recent weeks. I talk about them briefly in the following paragraphs. I hope, as a paid Substack reader you take advantage and learn a little more about what I see.