Blackrock vs Blackstone: the differences between these two financial powerhouses

Although their names can be confusing, Blackrock and Blackstone are not the same company. They are the largest asset management companies in New York and two of the largest financial firms in the world, with more than $10 trillion in assets under management. For this reason, we talk about Blackrock vs Blackstone.

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Blackrock vs Blackstone: What do they do?

Blackrock

Blackrock is one of the largest global asset management firms. It is a multinational investor headquartered in New York. Today, the company is a leader in environmental, social, and even governance issues.

Its operations are in more than 30 countries, although its client services reach more than 100 countries.

The company was initially established as an asset management company specializing in fixed-income and corporate risk management. Today, it brings together under its portfolio the largest concentration of assets under management in the world. 

With shares of Microsoft, Apple, Amazon, P&G, Johnson & Johnson, and even Pfizer, in addition to many other globally recognized companies, Blackrock has earned the reputation of “owning the world” as well as the title of the world’s leading asset management company.

Blackstone

The Blackstone Group is an investment bank that manages assets located mainly in the United States, its country of origin, and Europe. Although its presence does not span the globe with the magnitude of Blackrock, it is currently the largest private equity firm in the world.

Blackstone stands out mainly for its role in private equity investments, often with a controversial tinge, and has made headlines for its aggressive moves.

Although initially founded for the purpose of acquiring and merging companies, over time Blackstone diversified its operations to position itself as an alternative investment bank.

Its operations now encompass financial management of distressed companies, debt investment, real estate management, and, of course, equity investment. 

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Blackrock vs Blackstone: a trip back in time

Blackrock vs Blackstone. This second company started in the market in 1985, when its creators, Peter George Peterson and Stephen A. Schwarzman of the Lehman Brothers group, decided to found an investment bank that would stand out for its controversial moves and its focus on real estate investments.

This Wall Street giant was founded with an initial capital of 400,000 dollars and to date has a turnover of more than 880 million dollars a year with more than 3,700 employees at present. 

Blackrock, on the other hand, emerged in 1988, just a few years after the gestation of Blackstone, and appears as the materialization of a “family” of investment companies. Hence the choice of a similar name. 

Thus, executives from First Boston and Lehman Brothers, including Larry Fink as its current CEO, decided to create “Blackstone Financial Management”.

Blackrock vs Blackstone: Differences

As these are distinct businesses, risk investment on the one hand, and asset management on the other, the biggest and most notable difference lies in the service each company offers. 

The distinct nature of each responds to a different market niche.

Blackrock vs Blackstone. In the case of Blackrock, it can be said that its global success is a reflection of the ease with which investors can participate in the company’s operations.

Blackstone, on the other hand, leads the real estate investment market with venture capital concentrated in private property. So while not just anyone can invest in the business, those who participate in the company’s operations continue to drive the top-tier investment model.

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The Blackrock strategy

For Blackrock, which currently has trillions of dollars in assets under management, it is key that both individuals and entities can invest without major difficulties. To this end, the company offers a wide range of iShares ETF options, including a presence in the Colombian market.

It is this diversification and easy access that has allowed the company to expand to dozens of countries around the world. The success of this mechanism is, at the same time, what gives Blackrock the title of “owner of the world”, having under its portfolio large corporations of global scale.

Blackrock and ESG criteria

The term ESG refers to criteria of an “environmental, social, and governance” nature that comprise sustainable investment.

These criteria were designed to promote so-called “participatory capitalism”, and to strive to meet the environmental targets set for 2050 in relation to greenhouse gas emissions. 

The concept was initially introduced in 2004 as a United Nations proposal that is now embraced by the vast majority of the world’s most powerful companies.

In recent statements, however, the company’s CEO, Larry Fink, stated his intention to disassociate Blackrock from the ESG concept, as it has become a political issue highly criticized by experts in the financial world.

Blackstone: A risky alternative

Blackstone’s presence in the real estate sector is key to its business nature. It should be clarified, however, that as it is a venture capital fund, potential investors are considerably reduced. 

The objective of this company is focused on boosting the economy by building businesses in line with global market trends. It is a more aggressive business model, designed for potential clients with higher purchasing power, mostly of a legal nature.

Blackrock vs Blackstone: Monopolization of the World’s assets

Several experts describe as worrying the concentration of a large percentage of the world’s assets in just a handful of financial firms. 

Of course, in this case, it could not be said that this concentration is limited to Blackrock vs Blackstone, as Vanguard is another firm with a major global presence.

The truth is that the three financial firms, concentrate close to 20 trillion dollars of assets under management. A figure that is disturbing and even worrying for those who consider it unsafe for a handful of companies to become the “masters of the world”.

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