Except there are hundreds of billions of dumb money that are managed by very small amount of people, it’s not economically reasonable for them to do their own primary research. They mostly invest into other funds (ie. Some may be BlackRock funds.).
It’s widely accepted that sell side search (like this) reflect on average the market view. As a result, most of these insights on average are likely priced in. You won’t “create alpha” from following them. However, most dumb money just want to track the market, thus it’s perfectly fine for them to follow sell-side research in aggregate.
Also, on your comment comparing BlackRock YTD performance to XLF, that’s not a valuable comparison. XLF composed mostly of banks, which are highly levered (by definition of fractional reserve banking). BlackRock is not a bank, it does not have the same leverage as JP Morgan.
ie. Chase has $3.7T in assets, $3.5T in liabilities (mostly deposits), and $400B in market cap (shareholders equity).
Liabilities to equity is ~8.75.
BlackRock has 115B in assets, 77B in liabilities, ~100B in market cap (shareholders equity).
Liabilities to equity is 0.77.
Leverage is risky, higher risk firms demand higher returns, this is the very foundation of capital asset pricing.
Berkshire had a (especially relative to the market) very good year and it’s the highest weighted constituent in XLF. Also a lot of the active fund companies had this same sort of trend where they went about 2x in market cap in a 12-16 month period in 2020-2021 and then gave about half the growth back (or more) in 2022.
It’s widely accepted that sell side search (like this) reflect on average the market view. As a result, most of these insights on average are likely priced in. You won’t “create alpha” from following them. However, most dumb money just want to track the market, thus it’s perfectly fine for them to follow sell-side research in aggregate.
Also, on your comment comparing BlackRock YTD performance to XLF, that’s not a valuable comparison. XLF composed mostly of banks, which are highly levered (by definition of fractional reserve banking). BlackRock is not a bank, it does not have the same leverage as JP Morgan.
ie. Chase has $3.7T in assets, $3.5T in liabilities (mostly deposits), and $400B in market cap (shareholders equity).
Liabilities to equity is ~8.75.
BlackRock has 115B in assets, 77B in liabilities, ~100B in market cap (shareholders equity).
Liabilities to equity is 0.77.
Leverage is risky, higher risk firms demand higher returns, this is the very foundation of capital asset pricing.