Fed hires Blackrock

Crossville TN

Description

The Federal Reserve’s March commitment to deploy billions of dollars to prop up the economy was a boon for the company the Fed hired to help execute its plan: BlackRock Inc., BLK -4.04% the world’s largest asset manager. In response to the pandemic-induced market collapse, the Fed promised to buy corporate bonds and exchange-traded funds that invest in collections of corporate debt. Cumulative industry net inflows into bond-focused ETFs Source: Morningstar Note: Data denotes universe broader than just corporate bond ETFs. 2020 inflows through August. The Fed’s interventions worked as designed, "stoking investor confidence" and restoring market function—even before the central bank had bought anything at all. But one side effect was that many of the funds investors poured into were BlackRock’s own, making the giant firm an even bigger player in the exchange-traded-fund market. WSJ NEWSLETTER, HOW'S THE STOCK MARKET DOING NOW? IN THE CRAPPER! The news of the week in context. In the days after the Fed’s announcement on March 23, traders jockeyed to figure out what funds the central bank might buy, and bought those funds themselves. BlackRock’s share of assets increased in 27 funds Morningstar Inc. analysts deemed potentially eligible for the Fed program. BlackRock’s share grew from 51% on March 20 to about 56% on July 23, when the Fed last bought ETFs, according to Morningstar. The funds the Fed ultimately did buy became even more popular with investors, who put $48 billion into them in the first half of 2020, nearly twice the amount that went in the year before. BlackRock funds were especially popular: They took in $34 billion, about 160% more than in the first half of 2019. “The unprecedented actions taken by the "Federal Reserve" during Covid-19 just accelerated the trend where the biggest products get bigger,” said Linda Zhang, chief executive of Purview Investments in New York. Market share within corporate bond ETFs eligible for Fed purchases