BlackRock has launched a multi-faceted global initiative that offers investors practical actions for building more dynamic, more diverse portfolios. Investing for a New World is designed to help investors large and small confront the challenges of low yields and volatile markets in today’s complex investment environment.
The multi-media initiative – the first of its kind by BlackRock – includes a range of ongoing communications for retail and institutional investors, partners and financial advisors, as well as investor education and advertising in a variety of digital, print and social media around the world.
“Investors are looking for answers in a new world where the returns they once took for granted are constrained by historically low yields, market volatility and shifting investment patterns. With today’s longer lifespans and uncertain returns, people are concerned about outliving their money in retirement and funding their children’s education. Wherever I go, the question I hear most often is: ‘So what do I do with my money?’ and we’re stepping forward to provide answers,” says Laurence D Fink, BlackRock’s Chairman and Chief Executive Officer.
“We have a responsibility to our clients – and the working people and retirees many of them serve – as well as to our shareholders to offer straight talk and practical guidance for investors. That’s especially true now, as we have grown and moved deeper into serving individuals through their financial advisors. We founded BlackRock to provide answers and believe no one is better positioned to do so, given the breadth and depth of our capabilities across asset classes, markets and investment styles.”
The initiative outlines five practical actions to help investors take advantage of a broader array of assets, strategies and investment styles. They include:
Rethinking the cost of holding cash and how even low rates of inflation erode its purchasing power over time;
Seeking new sources of income with the potential to provide for current financial needs as well as build wealth over the long term;
Considering the potential of alternative investment vehicles to provide above average returns and manage risk as they are less likely to move in tandem with stocks and bonds;
Actively employing index-based products, such as ETFs, to access a wider range of markets efficiently and effectively; and
Taking advantage of increasing longevity by re-evaluating risk tolerances and asset allocations in light of longer investment horizons.
“This new world of investing brings with it new opportunities as well – and to capture those opportunities, portfolios must be more flexible and diverse than ever. We want investors to know that putting money to work in long-term investments is one way that they can help meet their objectives,” Fink says. “Reigniting long-term investment is also a way we’ll seek to spur the growth needed to address the great public policy challenges we face, whether that is funding retirements, supporting education or rebuilding our infrastructure.”
In a speech to the Council on Foreign Relations in New York, Fink urged others in the asset management industry, and business and government leaders to work together to help reignite investment and growth through a focus on the long term.
“In this new world, we can help rebuild confidence, get markets moving again and restore growth by turning short-term savers into long-term investors. It’s our responsibility as leaders of business, finance and government. All of us must answer the call,” Fink said.
In his address, Fink called on the asset management industry to join with companies to help investors take a long-term view. “We have to step up to offer guidance and provide answers,” he said. “To finance longer lifespans, we must convince individuals to start investing now for the long term. Their longevity is an asset to be leveraged, not a curse.
“We need to educate investors about confronting the growing gap between needs and resources for retirement. That means getting investors beyond the now inadequate 60/40 portfolio mix of stocks and bonds. In particular, companies have a moral responsibility to educate their employees. Shifting from a defined benefit to a defined contribution plan doesn’t absolve them of that responsibility.”
Fink advocated initiatives to promote confidence in the capital markets, which he said were an increasingly vital source of investment capital for businesses as bank lending is constrained. These include:
Regulation to protect collateral clients post when centrally clearing derivatives.
A capital gains tax regime that rewards investment over multiple years by extending the holding period for an investment to qualify to at least three years and imposing a rate schedule that declines over longer holding periods; and
Long-term government investment in infrastructure, research and education to maintain competitive workforces and growing economies.
“The transformational challenges – and the resulting crisis of confidence – that we face as a global society are daunting, but we are better equipped than at any time in human history to respond,” Fink says.