Larry Fink knows which way the wind blows. The CEO of asset management giant BlackRock has shape-shifted with the times.
When it was trendy, he used his annual chairman’s letter to champion environmental, social and governance, or ESG, investing and the transition to a low-carbon economy. Later, under withering Republican anti-ESG attacks, he dropped ESG, appointed the head of Saudi Aramco to BlackRock’s board, and talked up the more politically palatable ‘energy pragmatism.’ The letters, once breathlessly covered, have more recently elicited eye rolls.
With his 2025 missive, dropped on Monday, Fink has reinvented himself again as a full-throated advocate of economic populism and shared prosperity. Everybody from Bernie Sanders to Steve Bannon is making the case for tangible benefits – lower prices, higher incomes, increased ownership and assets – for average Americans and working families.
Middle market private lender Lafayette Square is focused on “working class people and working class places.” Another strategy increasingly being adopted by private equity firms: broad-based employee ownership. “This is a crucial opportunity for everyone to participate in meaningful wealth creation,” wrote KKR’s Pete Stavros and the Ford Foundation’s Darren Walker in a recent essay in Fortune.
Fink’s means for achieving this goal: the merging of public and private markets. “Today, many countries have twin, inverted economies: one where wealth builds on wealth; another where hardship builds on hardship,” he says. By opening up lucrative private market investing to everyday Americans, he argues, they, too, can share in the gains.
Fink’s letter forcefully makes the case for increased access to private markets. In the US, roughly $25 trillion is parked in banks and money market funds, Fink noted. “But we’re repeating a mistake from the earliest days of finance: Abundant capital. Deployed too narrowly.”
Fink sees a golden age for private market investing, as tapped out governments face huge infrastructure spending needs and companies opting to stay private look beyond banks for growth capital.
“Assets that will define the future—data centers, ports, power grids, the world’s fastest-growing private companies—aren’t available to most investors,” he wrote. “They’re in private markets, locked behind high walls, with gates that open only for the wealthiest or largest market participants.”
Making Asset Management Great Again
That could change under a deregulatory Trump administration, which is expected to loosen investment rules, including those that bar 401(k) plan sponsors from including alternative investments such as private credit, infrastructure funds and crypto on their menus.
BlackRock has spent lavishly to gobble up private market players including Global Infrastructure Partners, which will lead the planned acquisition of two ports serving the Panama Canal and help put Fink in Donald Trump’s good graces. GIP, says Fink, is a “pipeline connecting BlackRock’s clients directly to the world’s $68 trillion infrastructure boom, including data centers.”
BlackRock also snapped up HPS Investment Partners, a key player in the booming private credit market, and private markets data provider Prequin. BlackRock expects the private debt market will more than double to $4.5 trillion by 2030. The asset manager has also teamed with Microsoft, and a state-backed investor from the United Arab Emirates on a $30 billion fund to invest in data center infrastructure.
It’s not just Fink who sees gold in them thar retail hills. “The most important driver of our business is an entire rethink of public and private,” Apollo CEO and restaurateur Marc Rowan said on a recent earnings call.
The over-concentration of equities portfolios in a handful of tech stocks and the recent stock market plunge is a painful reminder that public markets can indeed be risky. On the flip side, private credit and infrastructure investments offer steady yields and relatively low risk. (Not to mention the distinct advantage of not having to mark to market until late in the day.) As a capital source, individual investors “have the potential to be as large as institutions in the same sorts of products, and they will not take anywhere near 40 years to get to that size,” Rowan said.
The Apollo chief referenced BlackRock as Exhibit A of The Great Merging. “If people are not watching closely, the largest asset manager, the traditional asset manager in our industry, has delivered a wake up call to their entire peer set that private is going to be an important part of client solutions going forward.”
There are, of course, challenges to be ironed out, such as how to make traditionally illiquid investments suitable for retail investors. But the public-private mashup is already setting up an epic competitive scrum, pitting buyout firms against traditional asset managers or forcing them into each other’s arms.
Apollo, for example, has teamed with State Street on an ETF, SPDR SSGA Apollo IG Public & Private Credit, that combines public and private credit instruments.
Threading the needle
What was lacking, or almost lacking, from Fink’s letter this year is any discussion of ESG or sustainable investment. That’s not surprising, given the current administration’s hostility to the space and BlackRock’s own recent ruins concerning ESG. Fink, however, still tries to thread the needle.
He is keen to point out the need for investment in fossil fuels and the importance of domestic energy production, while acknowledging that “most new infrastructure investments have been flowing into renewables.” He tempers that by pointing out that “without major breakthroughs in storage, wind and solar alone can’t reliably keep the lights on.” This is Fink’s only reference to wind and solar in the entire letter, though he digs into nuclear energy as a potential for dispatchable power.
Fink also bravely makes the case that “within five years, China may have completely phased out internal combustion engines—not just for environmental reasons, but also to corner the global market on driverless, battery-powered vehicles—cars that don’t require gas and cost a third as much as their foreign competitors.” He ends the section with the Trump-friendly concluding thought that, even in the richest nations, ”prosperity is once again defined by our ability—and our willingness—to produce and consume more energy.”
Make energy production great again. With a little help from BlackRock.
Populist culture
Fink couches the access of retail investors to private markets in decidedly populist terms. Wealth begets wealth, and hardship begets more hardship. Recent decades have shown that those who have access to equity and capital have grown their share of wealth, while incomes and savings for those without have shrunk. It is a have and have-not economy.
Fink notes that, since 2015, BlackRock’s low-cost ETFs have saved clients $642 million in fees. Left unsaid: Private credit and infrastructure will help BlackRock pad its fees income once again, even as PE firms eyeing the retail market take a haircut. Asset management is indeed great, again.
But the idea that private markets, and private equity in particular, is great for average investors fails to take into account the broader effects of increased privatization of the economy and its impact on society and the retail consumer at large. When private equity corners the US market in carrots (really!), and carrots go up by more than 40%, is that a good thing for consumers?
The stakes are much higher when PE controls essential societal services, such as healthcare, housing and water (or, God help us, Social Security). It was just a little over a decade ago, after all, that the entire banking industry was selling us on the idea that everyone should be able to own a home — to disastrous effect.
Still, it is not for Fink in this forum to question the asset or private capital, nor the stakes of doubling down on oil and gas under cover of ‘energy pragmatism.’ Rather, he argues that more investors and more investment “is the answer.” That “when people can invest better, they can live better.”
The classic portfolio of 60% stocks and 40% bonds will shift to something more akin to “50/30/20—stocks, bonds, and private assets like real estate, infrastructure, and private credit,” he says.
Prequin private markets data will help make the industry less opaque, enabling private market indexes similar to public indexes that track, say, the S&P 500. “Once that happens, private markets will be accessible, simple markets. Easy to buy. Easy to track. And that means capital will flow more freely throughout the economy,” says Fink.
“The prosperity flywheel will spin faster, generating more growth—not just for the global economy or large institutional investors, but for investors of all sizes around the world.”
At least until the wind changes direction.
