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BlackRock's Fink: Mutual fund liquidity, fiduciary rules ultimately good for asset managers

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BlackRock's Fink: Mutual fund liquidity, fiduciary rules ultimately good for asset managers

There'sa silver lining to the Department of Labor's fiduciary rule and other regulatory actions: increasedinvestor confidence.

Trillionsof dollars in assets sitting in bank accounts ought to be put to work as investments,BlackRock Inc.Chairman and CEO Larry Fink told analysts and investors on an call. The size of thosecash deposits is evidence that retail investors have low confidence infinancial markets and investment managers, he said.

BlackRocksaw retail outflows of $6.29 billion during the second quarter, according toits earnings release. The company measures those assets separately from itsiShares ETF business, which brought in $15.68 billion in the quarter.

"Weare highly enthusiastic with rules that give more confidence to investors —that they believe it's a level playing field so they can invest. If we can seethat confidence build and unlock some of this huge cash holdings, we're in avery good position," Fink said.

Turningcash into investments, even as the indirect result of regulations like theSEC's proposed liquidityrule for mutual funds, is good for the entire asset managementecosystem, he added. That proposed rule would limit the proportion of a mutualfund's portfolio that can be placed in illiquid assets, as well as require moredetailed disclosures about funds' composition.BlackRock supports that higher level of disclosure, Fink said.

Thecompany also expects the need for better risk management under the fiduciaryrule to raise demand for Aladdin, its investment and risk management platform.Revenue for the Aladdin business grew 13% year over year for the secondquarter, Fink said.