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Long-term investing in European and US equity a must: Larry Fink

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Investing over the long term in European and US equity is a must for investors, according to BlackRock chief executive Larry Fink.

Speaking at the annual symposion of Dutch pensions magazine PBM in Amsterdam, Fink said: “People in their twenties, who fully and systematically invest in diversified equity, will find out that they are OK after 30 years.”

Fink argued that the relatively cheap euro has provided Europe with sound economic foundations.

In the US, Fink said that “despite the noise” the government would still be able to push through president Donald Trump’s ambitious infrastructure plans.

He also pointed to continuous improvements in fracking technology as enabling cheaper gas extraction for power generation, and described the current energy transition in the US as a “new revolution”.

The US is the “most innovative society in the world”, he added.

However, Fink noted that the country would not be able to reach its full potential as long as uncertainty continued.

Commenting on interest rates, Fink said he expected that the Federal Reserve was likely to slow the pace of interest rate hikes as long as uncertainty continued. The ECB was not “in a hurry either to change its current low rate policy”, he added.

He predicted that investments such as property and infrastructure would generate better returns than other asset classes. Fink added that he expected returns in general to be lower over the next 20 years than during the past 20 years.

Turning to emerging markets, Fink said he was surprised about the continuing strong economic growth of China, which was – in his opinion – responsible for much of global economic growth during the past few months.

He described China as “one of the world’s biggest innovators on technology”.

However, he expected the country’s economic growth to slow in the wake of reforms that are likely to be announced during the party’s congress in October.

Fink was positive about the economic outlook for India, citing its “enormous potential” since Narendra Modi took power. Long-term growth could be at least as fast as China’s, he said, adding that India was already BlackRock’s most “productive” area.

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