Bad for the conscience – good for the investment?

WIf you look at the shareholders of the most important German companies, you will find one name particularly often – Blackrock. In this country, the American asset manager not only gained notoriety because he is involved in all 40 Dax companies, but also because the current CDU boss Friedrich Merz was the head of the supervisory board of Blackrock’s Germany representation for a long time.

However, the New York-based group is not only in the spotlight around the world because of its proximity to some politicians. The wealth manager is one of the most powerful players in the financial world. Blackrock manages money from sovereign wealth funds, insurers, foundations, pension funds or banks. Private investors also come into contact with it – for example via the Blackrock ETF arm iShares or the Blackrock share itself. Many voices critical of the financial market often see Blackrock as a giant octopus, which due to its size and the potential upheavals that may result from it the markets, could be dangerous for the system. For critics, the numbers are an argument for the power of the asset manager:

$10 trillion in customer money

At the end of Q3 2022, Blackrock had $7.96 trillion in assets under management. This is an incredible number and makes Blackrock the largest money manager in the world. By the end of 2021, investment bankers had even broken the $10 trillion mark at times, setting a new record.

It is precisely this sheer size of companies like Blackrock and the general trend towards exchange-traded funds that Exchange Traded Funds (ETF) are causing headaches for some financial market participants and politicians. With their holdings, the companies control large parts of important companies. No one can be sure how that power will ultimately be exercised. At the same time, Blackrock and ETF create huge market movements with their buying and selling of stocks. In view of their size, they can have a trend-reinforcing effect, which can become an enormous problem for the entire global economy, especially in times of crisis.

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