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.
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.
