(Adds further comment from BlackRock CEO)
By Tim McLaughlin
BOSTON May 28 BlackRock Inc Chief
Executive Larry Fink, who runs the world's largest asset
manager, said Wednesday he had fielded angry phone calls after
he sent a letter in March to S&P 500 executives warning them
about the perils of short-term thinking.
"I've had some really angry phone calls," Fink said at a New
York investment conference hosted by Sanford Bernstein.
He did not name any of the callers.
In the March 21 letter, Fink warned against relying too much
on dividends and buybacks to produce quick returns at the
expense of long-term investment.
He knew the letter would be "kind of edgy," said Fink, who
had never encountered such an outcry during his professional
Fink said he realized a few years ago that managing index
funds carried more responsibility than overseeing actively
managed assets. BlackRock, which oversees more than $4 trillion
in client assets, is the world's largest exchange-traded fund
manager with nearly $1 trillion in ETF assets.
"As an index fund manager, you have to really own some
crummy companies that you have in your index," Fink said. "Your
horizon has to be long term."
In contrast, actively managed funds can sell a stock if they
don't care for a company's management team, Fink said.
He described his letter as a wake-up call to investors to
focus on long-term outcomes.
"In the wake of the financial crisis, many companies have
shied away from investing in the future growth of their
companies," Fink wrote in the March letter.
"Too many companies have cut capital expenditure and even
increased debt to boost dividends and increase share buybacks.
... It can jeopardize a company's ability to generate
sustainable long-term returns."
(Editing by Meredith Mazzilli and Bernadette Baum)