BlackRock Housecleaning Spikes Anxiety Among Fund Managers

January 17, 2023

They are a mammoth fund management company, and benefited drastically from the stimulus-fuelled bull market of the past decade but now BlackRock has shown it is not bullet-proof, announcing cuts and warning of more of the same.

Chair and CEO Larry Fink has warned that “negative markets had a substantial impact” on the world’s largest fund manager last year, with assets down $1.4tn on the year and Q4 revenues down 15 per cent, reports the FT’s Emma Dunkley.

Fink followed this up by saying that the environment is: “is unlike anything we’ve seen in decades”.

BlackRock’s had a comparatively bad quarter as the Financial Times reported that the group plans to cut 500 employees from its global workforce.

As per the Times: “The cuts equate to a reduction of about 2.5 per cent of its total workforce of almost 20,000 people. Headcount had risen significantly since the start of the coronavirus pandemic — numbers rose roughly 23 per cent from the end of 2019 to the third quarter of last year — so reducing numbers in a bear market is hardly surprising. BlackRock had already said in October it would pause discretionary hiring.

Fink also said that he did not expect central banks to lower interest rates in the near future, adding to overall sense of concern. The US Federal Reserve has yet to announce its new rates. While many would see a cut in rates as relief, it appears that Fink is not off the mark in his thinking in respect to how most central banks are reacting to the situation.

It appears that as inflation rises, central banks believe that to get a handle on inflation, cuts to interest rates are not the way out.