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Fink Mulls Ending BlackRock PAC After ‘Assault’ on Democracy

Annie Massa
·4 min read

(Bloomberg) -- BlackRock Inc. Chief Executive Officer Larry Fink said his firm will consider eliminating its political action committee after last week’s attack at the U.S. Capitol.

The incoming administration must work to “bring people together,” Fink said in an interview Thursday, after BlackRock reported fourth-quarter results. Fink joins a chorus of corporate voices reconsidering their roles in the political process in the wake of the Jan. 6 unrest, which resulted in an unprecedented second impeachment for President Donald Trump.

The company had already paused PAC-giving after hundreds of rioters, egged on by Trump, stormed the building, where 147 Republican lawmakers sought to block the certification of Joe Biden’s election victory.

The riot was an “assault on our democracy” and “on the democratic foundations of what this country represents,” Fink, 68, said in an earlier interview with CNBC. “It’s going to leave a real mark.”

Fink, who had been considered a potential candidate for a Cabinet post under previous Democratic administrations, said easing political tensions will be a critical challenge for Biden.

BlackRock’s PAC gave about $178,000 to Democrats and $141,500 to Republicans in the 2020 election cycle, according to data compiled by OpenSecrets.org.

An analysis by nonprofit Majority Action showed that the PACs of six fund managers, including New York-based BlackRock, donated a combined $1 million to Republican lawmakers who opposed certifying the election results since the start of the 2016 campaign cycle. BlackRock’s PAC contributions to 15 of the objectors totaled about $85,000 in that span, the analysis shows.

Read more: Fund Managers Donated $1 Million to GOP Election Deniers

Even with the political upheaval and Covid-19 ravaging the country, Fink remains bullish on the economy in the year ahead. He predicts that markets will march higher in 2021, particularly in the second half, as vaccines become more widely available.

BlackRock finished 2020 on a high note, with a record $8.68 trillion of assets under management at the end of the fourth quarter, an 11% increase from Sept. 30.

The shares fell 3.2% to $754.74 at 11:07 a.m. in New York, the biggest intraday decline since October.

One reason for the drop, according to Edward Jones analyst Kyle Sanders, is that a U.S. public pension client is moving $55 billion of low-fee index assets to another manager in the first half of this year, resulting in a significant net outflow. BlackRock executives disclosed the move in an earnings call Thursday.

Still, the stock surged 44% last year, its best annual performance since 2013, compared with a 4.1% decline for the 65-company S&P 500 Financials Index.

Market Swings

While other asset managers struggled in 2020, BlackRock thrived in the wake of the economic shocks caused by the pandemic, which triggered the sharpest market swings in years. Investors pumped cash into almost all of the firm’s products.

They added a net $116.2 billion to the firm’s long-term investments such as mutual funds and exchange-traded funds, BlackRock said Thursday.

Equity funds took in a net $48.1 billion, and fixed income products drew $62.7 billion in net inflows.

While many asset managers will continue to struggle as they face redemptions, BlackRock’s results are impressive, Sanders said in a note to clients.

“BlackRock’s robust flows illustrate that the company is widening the competitive gap against rivals,” he wrote.

Investors also continued to add funds to BlackRock’s passive products through the end of 2020. Quarterly net inflows into iShares ETFs were near record levels, taking in $78.8 billion in the period, up from $75.2 billion in the same period a year earlier.

Fourth-quarter adjusted earnings rose 20% from a year earlier to $1.57 billion, or $10.18 share, beating the $9.19 average estimate of analysts surveyed by Bloomberg. Revenue of $4.48 billion also topped estimates of $4.31 billion.

(Updates with PAC details in sixth paragraph.)

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