BlackRock is a giant financial firm founded by Larry Fink, A company that has an effect on all our lives.
Little of history
1988 was the birth of BlackRock, an American investment management corporation based in New York City that invests on behalf of 100 of million people, public and private companies around the globe. Over the years, BlackRock happens to manage over $10 Trillion in assets thanks to its multiple acquisitions and shares interest in nearly every company you could think of.
If we take the banks that keep the financial market running, such as Goldman Sachs, J.P.Morgan, Bank of America, and Citibank. BlackRock is a key stakeholder holding the position of one of the top three shareholders of those banks.
In the media sector, BlackRock is there too. It has a large stake in Google, Apple, and Twitter. How about food? Yes, BlackRock holds stakes in Macdonalds, Chipotle, and others.
BlackRock forms a trio along with Vanguard, and StateStreet to be the largest shareholders of the vast majority of the publicly traded companies in America.
Exchange-Traded funds or ETFs
After acquiring Barclays iShares in 2006, BlackRock moves from a bond management company to an index funds provider. But what are funds providers or ETFs?
S&P500/ Nasdaq/ The Dow
You heard the news reporter saying, Nasdaq is up with 100 points. or the Dow is down by 10 points. What does that mean?
Well, in 1896. Charles Dow came up with the idea to add the closing price of 12 of the largest stocks at that time and divided the total by 12 to get the average. By collecting these stocks collectively. Charles Dow came up with what we call a stock market index that can measure the performance of a collection of stocks and therefore the overall market performance.
The Dow, Nasdaq, and S&P 500 are examples of stock market indices. Today, the S&P 500 for example is an index of the stocks of 500 publicly traded U.S. companies. The Dow consists of 30 of the largest and most successful companies in the U.S. Where these companies are handpicked by experts to represent a variety of industries.
ETFs are getting more and more attention from investors. ETFs are baskets of securities that give exposure to a large variety of stocks rather than a specific single stock. In other words.
Let’s take the example of the S&P 500 index, There are ETFs that simply consist of an algorithm that manages your money within the 500 biggest companies on the stock market. If one company in these 500 companies got bankrupted or get smaller, well the ETF or the computer will kick up that company and put in the next biggest company for you to come up with a profit. In a conclusion, the main purpose of an ETF is to give you broad exposure to the entire market with multiple varieties of industries and sectors in order to minimize risk and get a profit.
As mentioned, BlackRock moves from a traditional bond management company to an ETF provider since ETFs are considered to be low-risk management assets for the reason that they provide diversification at a very low cost.
In addition, ETFs tend to be more tax-efficient and more ideal for individual investors.
These benefits made ETFs more attractive to other passive institutional investors. the most common being, pension funds. A trillion of dollars of money invested finds its way into ETFs of some sort.
Not only that, BlackRock technology adopted and used by other ETF providers made that your money is being invested by BlackRock, More about that in the next chapter.