MutualFundWire.com: Fink Explains How Blogs and Fund Outflows Relate

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Thursday, October 20, 2011

Fink Explains How Blogs and Fund Outflows Relate

Beating the street and bringing home more profits than analysts were looking for did not stop Larry Fink from venting during yesterday's earnings call. Fink also told CNBC that BlackRock has no interest in buying another asset manager even with European banks looking to unload assets to raise capital.

The BlackRock CEO blamed European regulators for causing outflows in the firm's most profitable mutual funds? That is the way Business Insider is spinning Fink's comments to analysts in yesterday's earnings call. Seeking Alpha carries the complete transcript for those interested.

"When government focus on short-termism, when government focuses on blogs, when government is not focusing on how to best prepare an economy over a long cycle, it becomes really difficult for investors to focus on long-term investing, too," lamented Fink.

Fink pointed to the sudden collapse and takeover of Dexia as an example of the situation:

"A good example of what I would call government's failure is the European stress test, where just 10 weeks ago, the governments indicated in their stress test results that a bank like Dexia, a client of BlackRock's, has capital of 10%. They're on capital at 10%, only to have that bank nationalized a few weeks ago. And it's that sort of information and problems is really unsettling to the marketplace. I don't need to tell you that, but to me, this is just a glaring example of how government has really unsettled the marketplace. We just can't understand how they could have an institution that's cited in the top 10 most capitalized banks in Europe, then weeks later, nationalize it."

All of that uncertainty is causing European shareholders to sell of BlackRock's highly profitable European equity funds. Added Fink:

"And if you look at our flows, the most amount of de-risking and flows that we've seen in our high-fee business has been in our European mutual funds, which I'll talk about, where we saw the greatest amount of outflows because of fear in Europe, because of things like that have been the most severe."