The co-Founder of Blackrock, Rob Kapito, thinks that share markets can continue to slowly go higher.
Blackrock is one of the world’s largest asset managers with close to US$7 trillion of assets and it’s a huge exchange traded fund (ETF) provider.
What Does Blackrock Think Is Going To Happen?
Mr Kapito is a co-Founder of Blackrock and oversees day to day operations of the fund manager. He recently spoke to the Australian Financial Review.
He said that investors have US$50 trillion of cash but can’t find a place to put it to work.
Part of the problem is that there has been a number of share buybacks, causing global share markets to shrink, and there has also been few new large businesses hitting the public boards.
There are also few opportunities in the bond market with central banks being major buyers of long-dated bonds.
So the only real option for investors to go for is the share market with there being more money flowing into equities, slowly pushing values higher.
He pointed to the fact that bonds being issued in Europe have a negative yield, which doesn’t make sense for investors looking for a return.
What Does This Mean?
It makes sense that investors are looking to the share market like an S&P 500 fund to help them make the returns they’re after. On the ASX an S&P 500 fund investment option by Blackrock is the iShares S&P 500 ETF (ASX: IVV).
Businesses/shares have delivered the best returns over the long term because of their ability to grow profit and provide compounding returns which can’t happen with bonds or similar fixed-return assets because the money they generate can’t change.
But if every investor is going for the same assets then it pushes up the value, perhaps too much, which brings forward returns and hurts future returns.
We live in a very strange investment world with ultra low interest rates. I only want to buy shares of assets that make sense, with some of them being the ones outlined in the free report below.
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