BlackRock Earnings Call Nuggets: Reengagement and Retail Demand for ETFs
Kenneth Worthington – JPMorgan: I have got two questions that are kind of related. One, there is widespread belief that investors will reengage in equities and you said in your prepared remarks about re-risking. I’d love to hear – and we think re-risking is more tactical in short-term, but love to hear your latest thoughts on reengage, which we think is more longer term and strategic. So, when accounting for the fiscal cliff, are there indications of reengagement in either the retail or institutional investors, and maybe if so, what are you seeing differently in the beginning of this year even the end of last year that may have been different than what we saw in either early 2011 or even early 2010?
Laurence D. Fink – Chairman and CEO: Ken, I was trying to talk about that. I agree with you. Re-risking is a tactical trade. Obviously, in some areas that maybe happening, but the flows that we’re seeing institutionally through iShares and mutual funds, it appears to me that people – the Federal Reserve’s actions in terms of persistent low rates are now making in my mind fixed income much riskier. It’s hard for me to say moving from fixed income products to equity is a re-risky trade. It’s more of a diversification of risk trade maybe, and we are seeing – we are beginning to see some large-scale, what I will call, systematic changes in behavior. Since the beginning of the year we have one large institutional client currently oriented towards fixed income. They warded us about $6.5 billion entirely in equities, mostly in index, but in our conversation with the client it is a reorientation of risk, how we think about it. As I said, this investor has predominantly been a fixed income investor and they are diversifying their portfolios accordingly. So, I think these are – the movements we’re beginning to see is, it’s not tactical anymore, it is much more of a secular movement and I think that will even in the ETF flows you are seeing a consistent flow. If you look at the flows year-to-date, and I’m talking about the first 15, 16 days in ETF, the flows I think as an industry are more than 80% in fixed income. This doesn’t feel to me that it’s a risk-on tactical movement, it’s people are looking for exposure in more equity like products.