Has The World’s Largest Asset Manager Lost Its Way

Feb 9, 2023

Blackrock has been the world’s largest asset manager, with around $10T in assets under management. Much larger than Lehman Brothers and FTX.

Yet, they’ve recently seem to have lost their way. Just a few weeks ago they predicted that 2023 would be one of the biggest economic disasters we’ve ever seen. Then on January 24th they said everything could go back to normal, and stocks may even go up this year. 

Meanwhile, investors pulled out around $4B due to polarizing political issues. They also blocked withdrawals from one of their UK funds, and refused to honor investor requests to get their money out. 

This is concerning for some investors. It should be. We may see a lot more about them in the news this year. So, how can investors invest with more confidence, and keep on making wise money moves, despite stories like this, as well as crypto platforms going bankrupt, and the world’s largest companies making big layoffs?

Call Options

Obviously returns offered by funds are typically higher the longer you commit. Just like a certificate of deposit. If you have capital that you might need to access sooner in a crisis, then look for those with a 90 day call option. That means you can withdraw your funds with 90 days notice. 

Don’t Invest More Than You Can Afford To Lose

Do not invest more than you can afford to lose in any single investment or fund. Don’t put your entire portfolio in one fund, brokerage account, or asset. That’s just a recipe for disaster. It may burn to lose money, or for it to take longer to get back than you wanted. So make sure not all your eggs are in one basket. 

Be Wise About Who You Invest With

Know who is managing your money. It is still the number one factor in the success of an investment, and not only getting good returns, but simply getting your capital back. 

If you are investing through a brokerage, in funds of funds, or funds of many stocks, you have no idea who is really impacting the performance of your investment, whose best interests they are working towards, or anything. 

Big names have consistently proven to be no more secure. In fact, the bigger they are, it often just seems the harder they fall. 

Look For Deep Diversification

When investing in a fund, understand what is propping it up. If a fund is investing in illiquid assets, it can be hard for them to return your money in a crunch. If they are not investing in tangible hard assets, those investments can go to zero. 

In contrast, a well diversified fund will be investing in performing, cash flowing assets to maintain liquidity, in addition to value add assets backed by hard collateral. It is downside protection for your capital, with liquidity to cover demands, and deliver an overall smooth performance for investors. 

Investment Opportunities

Find out more about investing in secured debt and real estate, go to NNG Capital Fund.

Photo by Annie Spratt on Unsplash