Personal Finance and Investing

https://www.reuters.com/breakingviews/larry-finks-private-index-dream-may-be-holy-grail-2024-09-19/

LONDON, Sept 19 (Reuters Breakingviews) - BlackRock’s (BLK.N), opens new tab status as an asset-management behemoth stems from the success of passive investing, where customers buy an index rather than picking stocks or fund managers. It’s therefore notable that founder Larry Fink sees the chance for a similar revolution in alternative assets like buyout funds. His chief financial officer even said
, opens new tab that private-market index products could be one of the most attractive opportunities in the company’s history. The reality, however, looks messy.
Fink’s recent $3.2 billion purchase of private-markets data provider Preqin raises a tantalising idea. Could BlackRock, which is synonymous with the rapid growth in index products like exchange-traded funds, repeat the trick for private equity and direct lending? Fink has talked up the potential for indexing to aid the “democratization
, opens new tab” of private markets.
There’s lots at stake for BlackRock, whose index business now manages around $5 trillion of assets. One problem facing Fink’s core business is that public tracker funds are increasingly commoditised and low margin. Meanwhile, the companies who compile the underlying benchmarks, like S&P Global (SPGI.N), and LSEG’s (LSEG.L), FTSE Russell, gobble up a large chunk of the fees.

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