BlackRock CEO Larry Fink: We're at the beginning of the tokenization of all assets

Key Concepts

• Diversified Growth: BlackRock's strategy of expanding across multiple business areas and regions.
• Systematic Equity: An AI-based equity investment approach.
• Digital Asset Platform: BlackRock's infrastructure for crypto and other digital investments.
• Private Markets Platform: Investments in non-publicly traded assets.
• Investment Technology: Overlay services for portfolio management and analytics.
• Tokenization of Assets: The process of converting real-world assets (like real estate, equities, bonds) into digital tokens on a blockchain.
• Digital Wallets: Electronic financial accounts used for storing and managing digital currencies and assets.
• ETF (Exchange Traded Fund): An investment fund traded on stock exchanges, similar to stocks.
• Biddle: BlackRock's tokenized cash money market fund.
• Bitcoin Ebit (IBIT): BlackRock's Bitcoin ETF.
• Compounding: The process of earning returns on both the initial investment and the accumulated interest from previous periods.
• Long-Term Investment Horizon: An investment strategy focused on holding assets for many years, often decades, to benefit from market growth and compounding.

BlackRock's Q3 Performance and Diversified Growth

Larry Fink, Chairman and CEO of BlackRock, highlighted the company's gratifying performance in the third quarter, characterized by over $200 billion in new client money. The growth was notably broad-based, not confined to a single product area or region, demonstrating a "completeness" in their strategy.

Key Growth Areas and Specifics:

• Cash: Strong performance in cash management.
• Systematic Equity: The AI-based equity team grew by $30 billion over the year, with $10 billion added in the third quarter alone.
• Crypto/Digital Asset Platform: Significant expansion in this emerging area.
• Private Markets Platform: Continued growth in private asset investments.
• Investment Technology: This segment experienced its fastest growth in many quarters.
• ETFs (Exchange Traded Funds): Achieved a record quarter.

Fink attributed this success to BlackRock's integrated portfolio approach, which evolved significantly since the acquisition of BGI in 2009. Initially, the idea of marrying passive and active investment strategies was unconventional. Now, BlackRock offers a comprehensive suite including passive, active, public, private, investment technology, and digital solutions, positioning it as a global leader.

The Future of Digital Assets and Tokenization

Larry Fink emphasized that BlackRock is "just at the beginning of the tokenization of all assets," ranging from real estate to equities and bonds. He sees this as the "next wave of opportunity for BlackRock over the next tens of years."

Specific Details and Examples:

• Globally, there is $4.1 trillion in digital wallets, much of it outside the United States.
• The vision is to tokenize and digitize ETFs, allowing investors who are new to markets (e.g., through crypto) to transition into more traditional, long-term retirement products within a digital ecosystem.
• BlackRock already has the largest tokenized cash money market fund, named Biddle.
• Their Bitcoin Ebit (IBIT) has grown to over $100 billion, a significant achievement considering it was at zero just two years prior.
• Fink acknowledged his personal evolution on crypto, stating, "I love it now. But I grow and learn," a sentiment he previously shared on 60 Minutes.

The Power of Long-Term Investing and Compounding

Larry Fink strongly advocated for long-term market participation, emphasizing that "it's not about if our market's going up or down... It's about being in the market throughout the cycle." He presented compelling historical data to support this argument:

Supporting Evidence and Statistics:

• An investment made on January 1st, 2000, despite enduring the dot-com crisis, the 2008 financial crisis, and the COVID-19 crisis, would have yielded an 8% compounded return over 25 years, significantly outperforming a 1% return from alternative savings.
• Historically, investing in the United States market from 1900, even through events like the Great Recession and the Depression, would have generated over 9% compounded return over 125 years.
• Fink encouraged young people to invest in equities rather than solely engaging in speculative activities like "Polymarket betting." He urged them to shift from short-term trading to long-term investment strategies, becoming owners of assets over their lifetime.
• He highlighted the profound impact of compounding: earning an extra half a percent (0.5%) return over a 30-year cycle can increase one's retirement pool by 15% more. He stated, "The virtue of compounding over 30 years, there's nothing more important."

Synthesis and Conclusion

BlackRock's Q3 performance underscores its successful strategy of diversified growth across traditional and emerging asset classes, driven by a comprehensive portfolio approach that integrates passive, active, public, private, and technological solutions. Larry Fink's vision for the future is heavily centered on the tokenization of all assets, aiming to bridge the gap between digital-native investors and traditional long-term investment products. Underlying this strategic evolution is a steadfast belief in the enduring power of long-term market participation and compounding, which he argues is crucial for individual wealth creation, regardless of short-term market fluctuations. The message is clear: consistent, long-horizon investment in the market is the most reliable path to financial well-being.