Billionaire investor Larry Fink says inflation isn’t likely to get below 4 per cent soon, but higher rates mean investors can take less risk for the same return.
Larry Fink, the co-founder and chief executive of $US9.1 trillion investment giant BlackRock, says inflation will remain stuck between 4 per cent and 5 per cent for much longer than expected, but can be positive for investors and savers who can earn better returns with less risk.
Governments are pushing inflation higher, too. In the US, for example, Mr Fink says the Federal Reserve is aggressively trying to dampen inflation with higher interest rates at the same time the US government is just starting to inject $US1 trillion of stimulus into the economy via infrastructure spending, its efforts to relocate computer chip manufacturing to America and“Public policy is more inflationary than it has been in the last 25 years.
But Mr Fink said it was also important to recognise that 4 per cent inflation had been fairly typical over the course of his 40-plus year career, and there were some benefits to higher inflation. Florida governor and US presidential hopeful Ron DeSantis has been the most strident critic of what he has decried as “woke ESG considerations in investing” and directed his government to remove some mandates from BlackRock and other managers.
“We had $US4 billion of very public outflows. Last year, we raised $US400 billion, of which $US200-plus billion were from US clients. So the reality is we’re winning more share of wallet despite the noise.”Mr Fink said he was not concerned that a Republican victory in next year’s US presidential election could drag BlackRock into a new battle, pointing out that BlackRock had been hired by more Republican governments than Democratic ones.
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