ASK conspiracy theorists who they think really runs the world, and
they will probably point to global banks, such as Citigroup, Bank of America and JPMorgan Chase. Oil
giants such as Exxon Mobil and Shell may also earn a mention. Or
perhaps they would focus on the consumer-goods firms that hold billions
in their thrall: Apple, McDonald’s or Nestlé.
One firm unlikely to feature on their list is BlackRock,
an investment manager whose name rings few bells outside financial
circles. Yet it is the single biggest shareholder in all the companies
listed above. It owns a stake in almost every listed company not just in
America but globally.
(Indeed, it is the biggest shareholder in Pearson, in turn the biggest
shareholder in The Economist.) Its reach extends further: to corporate
bonds, sovereign debt, commodities, hedge funds and beyond. It is easily
the biggest investor in the world, with $4.1 trillion of directly
controlled assets (almost as much as all private-equity and hedge funds
put together) and another $11 trillion it oversees through its trading
platform, Aladdin (see “BlackRock: The monolith and the markets”).
Established in 1988 by a group of Wall Streeters led by Larry Fink,
BlackRock succeeded in part by offering “passive” investment products,
such as exchange-traded funds, which aim to track indices such as the
S&P 500. These are cheap alternatives to traditional mutual funds,
which often do more to enrich money managers than clients (though
BlackRock offers plenty of those, too). The sector continues to grow
fast, and BlackRock, partly through its iShares brand, is the largest
competitor in an industry where scale brings benefits. Its clients,
ranging from Arab sovereign-wealth funds to mom-and-pop investors, save
billions in fees as a result.
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