BlackRock has over $8 trillion (trillion, with a "t") under management or advisement which makes it bigger than any sovereign wealth fund, private-equity firm, bank or insurance company on the planet.
According to The Economist, if you take all the world's private-equity and hedge funds and combined their assets they'd be about the same size as the total assets (primarily in the form of equities) controlled by BlackRock. Makes sense when one realizes that it's the biggest shareholder of 15 of the world's 30 largest companies, including Apple (AAPL), Exxon Mobil (XOM) and General Electric (GE).
Since it acquired a nice chunk of Barclays (BCS) investment products division, BlackRock has become a tour-de-force in exchange-traded funds and other passive investment products. The Economist pointed out that these products now account for about 64% of BLK's assets under management.
What's more, BlackRock's colossal Aladdin risk-management data center has some form of influence over 170 pension funds, insurance companies, banks, endowments and the like. BlackRock also (for a fee or entry price) lets money managers who oversee an additional $11 trillion use this mindboggling risk management platform.
So the good news for BlackRock and its shareholders is that, according to the firm, a meaningful percentage of "companies, organizations, and global governments come to BlackRock for unbiased advice on complex capital market exposures, help developing investment strategies and comprehensive investment management technology, all anchored by [their] core expertise in understanding and managing risk [Aladdin-style]."
The scary news for all investors is that if about 7% of the world's $225 trillion of financial instruments is impacted by folks who manage multiple risks using the same risk management information system, what if Aladdin doesn't end up being accurate on one of more of the big risks criteria. Would this be a recipe for yet another worldwide financial fiasco?
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