(Updates with industry redemptions in fourth paragraph.)
Feb. 10 (Bloomberg) -- BlackRock Inc.’s Laurence D. Fink, who urged investors this week to put all their money in equities, said his call was aimed at getting cash back into the capital markets.
“It’s important to get cash off the sidelines and back into the markets so people can get the returns they need and we can get our economies moving again,” Fink, chief executive officer of the world’s largest asset-management firm, told BlackRock employees in Beijing yesterday. “Obviously, everyone needs a portfolio tailored to their risk-tolerance and goals; one size doesn’t fit all,” Fink said, according to a transcript of the comments obtained by Bloomberg News.
Comments by Fink that yields from traditional bonds are too low to provide meaningful returns for investors have been echoed by billionaire investor Warren Buffett, who said yesterday that bonds are among the “most dangerous of assets.” The Federal Reserve has kept borrowing costs near zero, and said last month that economic conditions may warrant “exceptionally low” interest rates through 2014.
Mutual fund companies are trying to reverse stock fund redemptions after investors pulled money from funds that invest in U.S. equities for five straight years, withdrawing $134 billion last year, according to Investment Company Institute. Funds that invest in non-U.S. stocks attracted $4.1 billion in 2011, down 93 percent from the prior year’s deposits of $58 billion, according to the Washington-based ICI.
“It’s a flight to safety, investors are certainly still anxious and that’s what’s showing,” said Greg Cherry, a senior analyst at Boston-based research firm Aite Group.
BlackRock, based in New York, manages $3.5 trillion in assets, including $1.25 trillion in fixed-income and $1.56 trillion in stocks.
The Standard & Poor’s 500 Index, which was unchanged last year, rallied 7.5 percent this year through Feb. 9. The MSCI ACWI Index, which includes developed and emerging-market stocks, fell 9.4 percent last year as the European sovereign-debt crisis prompted a flight to the perceived safety of bonds. Through yesterday, the global index had advanced 9.5 percent this year.
“Too many people are underweight equities, and one of things I’m trying to do is to get people to think about the opportunities they’re missing, with valuations at these levels,” Fink said in Beijing.
--Editors: Christian Baumgaertel, Steven Crabill
To contact the reporters on this story: Sree Vidya Bhaktavatsalam in Boston at firstname.lastname@example.org; Alexis Leondis in New York at email@example.com
To contact the editor responsible for this story: Christian Baumgaertel at firstname.lastname@example.org