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BLACKROCK’S BILLIONS: Guess Where Those ESG Fees Are Going?

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Investors in funds purporting to buy companies focused on “environmental, social, and governance,” (ESG) issues, are paying much higher fees than those buying market index funds. The ESG funds are funnels for the follies of CEOs with big EGOs, who want to mold the world in their image using investors’ money to give them power.

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Now, mega-ESG pusher BlackRock, has reported a 23% profit increase for the quarter, ahead of anyone’s expectations. You know what powered those profits? Fees on actively managed funds, like ESG. Dawn Lim reports for The Wall Street Journal:

BlackRock Inc.’s BLK +4.27% third-quarter profit rose 23% during a volatile stretch for markets as the company took in more money in its lucrative actively managed funds.

The money-management company posted a profit of $1.68 billion, or $10.89 a share, for the quarter ended September, up from $1.36 billion, or $8.87 a share, a year earlier. The company beat analysts’ profit expectations.

BlackRock’s revenue grew by 16%. Actively managed funds, funds where managers pick and choose investments, represented a little over half of the $75 billion in net new money BlackRock took in during the latest quarter. Asset managers can typically charge higher fees for funds they actively manage versus funds tied to indexes.

The growth in high-fee funds helped BlackRock grow its profit while continuing to undercut rivals with its low-fee products. It also made the company’s revenue less vulnerable to the swings in the market that move index assets.

“A lot of people say, ‘active is dead,’ ” Chief Executive Larry Fink said in a Wednesday interview. “I invested in more teams and products there.”

Action Line: When you buy the storyline on funds that are supposed to change the world, guys like Larry Fink make record profits. You invest, they win.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.
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