BlackRock says outside commentaries on index funds could pose risk

NEW YORK (Reuters) – BlackRock Inc, the world’s largest asset manager, on Wednesday said that commentary by third parties suggesting possible adverse impacts from the growth in index investing could pose a risk to its business.

“As a leader in the index investing and asset management industry, BlackRock has been the subject of third-party commentary citing concerns about the growth of index investing,” the company said in a new risk disclosure its annual report, filed with the U.S. Securities and Exchange Commission.

“If the conclusions advanced by such commentators were to gain traction or result in the enactment of policy measures that place limits on asset managers, BlackRock’s business operations, reputation or financial condition may be adversely affected,” it said.

Most publicly traded U.S. companies are required to file annual 10-K reports with securities regulators, disclosing among other details their most essential risks in plain language.

Criticism of index investing is not new, but BlackRock’s highlighting a particular thread of concern as a primary risk factor in this way is. The company manages $1.8 trillion in iShares-brand exchange-traded funds (ETFs), most of which track an index, and another $2.4 trillion in non-ETF index funds.

BlackRock zeroed in on one argument about index investing that says index funds’ “common ownership” of several companies in a single market segment reduces competition between those companies, imposing a cost on society that may need to be regulated. The asset management company and other researchers have disputed academic studies coming to that conclusion.

BlackRock also referenced commentary about the risk of index investing “to distort investment flows, create stock price bubbles, or conversely, exacerbate a decline in market prices.”

Reporting by Trevor Hunnicutt; Editing by Leslie Adler

Filed in: Top News Tags: 

You might like:

U.S. banks teach financial literacy with hands-on experience U.S. banks teach financial literacy with hands-on experience
Retirement success: focus on the paycheck, not a savings number Retirement success: focus on the paycheck, not a savings number
Australia's AMP channeled pension funds to subsidiaries: inquiry Australia's AMP channeled pension funds to subsidiaries: inquiry
Why Americans are more cautious about the cost of college Why Americans are more cautious about the cost of college
SEC charges Ameriprise for not safeguarding client assets SEC charges Ameriprise for not safeguarding client assets
Be humble, be frugal: Life lessons from Big Sick's Showalter Be humble, be frugal: Life lessons from Big Sick's Showalter
Ackman's Pershing Square trimmed ADP stake in second-quarter: filing Ackman's Pershing Square trimmed ADP stake in second-quarter: filing
Activist Starboard Value halves its stake in Newell: filing Activist Starboard Value halves its stake in Newell: filing

Leave a Reply

Submit Comment
© 9498 Stock Investors News. All rights reserved. XHTML / CSS Valid.