Jean-François Cirelli (BlackRock France): Les marchés financiers sont-ils surévalués ?

Yes, of course, but I'm not worth that much.

Yes, that's right. I think the figure of 2.9 trillion naturally impresses, but we're comparing a stock of capital with, in general, an annual flow — the GDP of a country — so that doesn't have much importance. What's really interesting is to see the dynamics of savings in the world today, and I think we can say three things. First, there is an excess savings due to the current pandemic. We consume less, and it's normal that people save. In France, we saw 120 billion euros in additional savings, but it's true for the whole planet. Secondly, these savings, people want them to be invested, and that's actually good news for the economy rather than keeping them under the mattress or in a bank account.

It's a trend. In France, they want to invest. Why? Because there is optimism about the markets, about the economic recovery, whether in the United States, in Asia, and I hope soon in Europe, even if we're a bit behind. So there is optimism, and it's good for growth, it's good for the economy. And thirdly, and above all, this allows me to say it — it's a trust that we see. The savers who go to BlackRock, our clients are not individuals, it's not you, it's not me — they are large financial institutions that have the capacity to invest in thousands of different companies. They choose BlackRock because we have invested for several years, because we have an investment philosophy that is now well known, carried in particular by our president Larry Fink, which is responsible capitalism, long-term capitalism. Today, it's responsible investment. And all of this, I believe, is the strength of our relationship with our clients.

No. There are naturally risks on the markets. There is a risk of inflation. The first risk, by the way, would be that we fail to contain this pandemic — so vaccination. That doesn't seem to be the case, fortunately, but that is a risk. No, there are many growth opportunities everywhere. The economy is stimulated, perhaps very stimulated by monetary authorities, but also by fiscal policy, and also by technological disruptions, innovation, the money that is there, the willingness of economic actors to develop, to grow, to consume. All of this is rather good news for the future.

But of course! There are two types of management: index management — let's call it passive management, very fashionable — and active management, which involves choosing. To give you an example, of the 172 billion we collected in the first quarter of this year, it was fifty-fifty, so you see it's very balanced. That said, index management has a lot of value, and I want to say this. First, it's still very minority — it's no more than 10% in the United States, which is the leading country for index management. You're very present in ETFs.

But it's really a democratization of savings because it's much cheaper for savers. So that allows all French people to access management with much lower fees. You can invest in an ETF with 25 euros, so that's really very good, and it puts individuals on the same level as institutional management. And finally, we had an extraordinary stress test — it was the crisis of March 2020 — and we saw that index management passed through crises well.

You gave the answer yourself. You need to tell your banker and your insurer, the one who manages your savings, 'Couldn't I have a little bit of BlackRock in my portfolio?' And it's they who will come to us and say, 'I have money to place for my clients.' And yes, and in fact, since we've become a bit more famous over the past year, many French people have gone to see their fund managers and asked, 'Why not BlackRock?' And they come to us.

Yes, but what people forget is that we have management mandates. We don't do whatever we want. You can well imagine that when a major French or German bank entrusts us with 200 million, it's not to say 'do whatever you want' — it's 'I want it here or there.'

For a very simple reason. Our two main jobs are: we manage risk. We are entrusted with money that we must invest. So the first thing we're asked is to know whether we're placing it with or without risk, and how far. And we consider today — and this was a company decision made more than a year and a half ago — that climate change, that the energy transition, is an investment risk. So it's not greenwashing because we would have values superior to others. It's because today climate change is an investment risk. If we don't take it into account, we will invest in products, in companies, in assets that will be bad for our clients because they won't have prepared for this transition.

Yes, we continue to invest in the oil industry, but what we ask — and what we ask of all companies — is a plan to reach net-zero carbon emissions by 2050. What matters today is this transition. We can't suddenly stop all financing of the economy. But what's happening today is that it's the investors — our clients — who are asking for it. It's not us who decided. And investors want responsible products. And if we don't offer them, last year BlackRock put more than 100 responsible investment products on the market. So we are on the verge of an immense transformation of capital allocation, and that's what we need to anticipate.

No, I don't think it presents itself that way. On the other hand, what is true is that we didn't have the products. There's always a question — you always leave a choice. We leave the choice, and we tell them that if they want products today that are, so to speak, dirty, we no longer offer them. Before, we would say 'the customer is king' — if he wants to invest in coal, we lend him for coal. Today, we say we won't do that anymore. Invest more in weapons? No, that's over.

But it will take billions and billions of money to transition to that world. We estimate that there's a need of 3,700 billion per year so that companies can go green, and that needs to be financed. And that will come from savers, from assets. So we need to give them the products and respond to their needs.

Well, our assets in France have increased over the years. We have very beautiful companies in France, so our assets are growing in France. We bring savings for the development of this country that is dear to us. And I'll give you another example: we just raised a renewable energy fund — the third largest — and we exceeded all our expectations. So today, France is an investment country for BlackRock, for the development of its infrastructure and its future.