Re:BlackRock Is Bailing Out Its ETFs with Fed Money and Taxp...
by arkis22 on Thursday June 04, 2020 @09:47PM
(#23424193)
You are correct that BlackRock has an incentive to maximize their AUM to maximize their revenue.
A critical distinction though is that the Fed isn't buying BlackRock's bonds. They are buying bonds that are represented in BlackRock's exchange traded funds that are meant to mirror prices of real bonds.
You're not wrong that it's a sweet set up. It's better to be in BlackRock's place. It is better to be buying coronovirus bonds for the government rather than selling them to the government. The latter implies your company is under severe cash flow pressure.
You shouldn't be distrustful of BlackRock because they maximize their revenue when they maximize their AUM. If they maximize their AUM, that probably means that your income is maximized as well.
Broadly speaking? Ok well what happens to the AUM when the market goes up or down? More or less AUM. More or less money no?
Am I missing something? Wouldn't they have a ton to lose during these times?
> Today, BlackRock has been selected in more no-bid contracts to be the sole buyer of corporate bonds and corporate bond ETFs for the Fed’s unprecedented $750 billion corporate bond buying program which will include both investment grade and junk-rated bonds.
Seems like a nice setup. Especially now.