This week, we speak with BlackRock Senior Managing Director Salim Ramji, Head of iShares Index and ETFs. Ramji’s division manages more than $4 trillion of Blackrock’s $7.1 trillion in assets. He a member of the firm’s global executive committee. Before joining BlackRock, he was a senior partner at McKinsey & Company where he led the asset and wealth management practice areas.
Ramji recalls how he originally turned down Larry Fink for a job at BlackRock, which led to an amusing anecdote about what soon followed. Not long after, he reversed that decision, and joined as global head of corporate strategy, before running BlackRock’s U.S. wealth advisory business.
Ramji also discuss fee wars, explaining how they have re-invested more than $600 million dollars back into clients through reduced fees. On average, Blackrock lowers already low fees by about 1.5%-2.5% per year. This, plus the tax inefficiencies of mutual funds, helps to explain how his division has accumulated over 4 trillion dollars.
He explains the financial engineering of precisely tracking an index, and what it takes to manage the challenges of this. Index tracking error is more complex than people realize, and the firm constantly invests in technology and people to increase their operational and engineering efficiency. We also cover the rise of ETFs, ESG, Factor investing, active ETFs, and how the ETF industry has completely changed the bond trading market.
We discuss why a Bitcoin ETF is unlikely to occur anytime soon, at least at BlackRock.
A list of his favorite books are here; A transcript of our conversation is available here.
You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Overcast, Google, Bloomberg, and Stitcher. All of our earlier podcasts on your favorite pod hosts can be found here.
Be sure to check out our Masters in Business next week with Morgan Housel, former writer for Motley Fool and WSJ, and partner at Collaborative Funds. His new book, The Psychology of Money: Timeless lessons on wealth, greed, and happiness, will be out September 8th.
Salim Ramji’s current reading
Twilight of Democracy: The Seductive Lure of Authoritarianism by Anne Applebaum
Wellington: The Iron Duke by Richard Holmes
Wolf Hall by Hilary Mantel