🧐 Take that, investing elites

BlackRock cookie monsters your cash | BoA side-eyes your stimulus check |

Hi Reader, here's what you need to know for July 15th in 3:06 minutes.

☕️ Finimized over a strawberry banana smoothie at Coffee Bar Bonch in Saint Petersburg, Russia (31°C/87°F ⛅️)

Today's big stories

  1. Investment firm BlackRock announced better-than-expected results
  2. You should know that you no longer need to be one of the investing elite to profit from VC funds – Read Now
  3. Bank of America saw its revenue fall last quarter, with low interest rates hurting the bank’s lending business

Sitting Pretty

Sitting Pretty

What’s Going On Here?

BlackRock’s quarterly results came in ahead of expectations on Wednesday, as the world’s biggest investment firm continues to take good care of investors’ pride and joy.

What Does This Mean?

The amount of money BlackRock looks after – a.k.a. assets under management (AUM) – hit a record $9.5 trillion last quarter, thanks to buoyant markets and the $81 billion worth of new client money invested into its funds (tweet this). And since the company makes most of its money from the fees it charges on that AUM, its profit saw a better-than-expected 14% jump last quarter compared to the same period last year. Top work, BlackRock: that makes this the eighth quarter in a row where its profit has come in above expectations.

Why Should I Care?

For markets: BlackRock’s best isn’t good enough.
An investment firm’s AUM can grow for one of two reasons: a rise in the value of its investments or a fresh influx of client cash. The former is much more dependent on financial market movements and, in turn, much more unpredictable. The latter is considered a much more reliable source of growth: new cash suggests investment firms are outperforming both their competitors and the market at large, which should attract even more business. But while BlackRock did bank $81 billion, that was 30% less than investors were expecting – which might be why they sent its shares down on Wednesday.

The bigger picture: China’s stance isn’t going unnoticed.
BlackRock might also be riding high since getting the okay to operate as a private wealth manager in China, as well as becoming the first overseas firm to win approval to launch an independent investment fund business in the country. It might want to start by, uh, selling all its Chinese tech stocks: that’s what the world-renowned ARK Investment Management has been doing at record pace as the Chinese government intensifies its crackdown on the sector.

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2. Analyst Take

VC Firms Aren’t Off-Limits Anymore

What’s Going On Here?

The VC business model goes like this: raise a pool of cash, invest that cash across 50-100 startups, and cross your fingers.

It’s a long-term game, and notoriously tricky to judge a fund’s performance until a decade or more has passed.

That’s why VC funds – and their stable of high-potential startups – have long been reserved for the ultra-rich, and kept off-limits for supposedly “less sophisticated” investors.

Now though, something’s changing all that.

And that’s today’s Insight: how you can finally get in on VC funds’ profits, and how to tell which are worth getting in on.

Read or listen to the Insight here

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Party’s Over

Party’s Over

What’s Going On Here?

So much for a post-pandemic blowout: Bank of America (BoA) – the second-largest US bank by assets – announced disappointing results on Wednesday.

What Does This Mean?

BoA’s second-quarter revenue fell by a higher-than-expected 4% compared to the same period last year. The culprit was a major drop in the bank’s lending revenue, which boiled down to a couple of problems: rock-bottom interest rates that reduced the amount of interest the bank made from its loans, and stimulus check-flush customers who were borrowing less money.

Still, BoA can’t be too irked with the government support programs: a lot of customers wouldn’t have been able to pay their loans back at all if not for them. And now that the biggest risks are in the rear-view, BoA felt confident enough to release cash it had set aside in case pandemic-hit borrowers couldn’t repay their loans, adding a tidy $2 billion to its bottom line.

Why Should I Care?

For markets: BoA is the rule, not the exception.
Investors sold off BoA’s shares on the back of the update, but at least the bank can take some comfort knowing that it isn’t alone. Both Citigroup and Wells Fargo admitted on Wednesday that their lending businesses took a knock last quarter: they posted 3% and 12% drops respectively in the total value of their loans compared to the same time last year.

Zooming out: A new borrower to the rescue.
Maybe all BoA needs is a new kind of borrower – like, say, weed companies. The drug’s still illegal on the federal level, which means they’ve been locked out of the US banking system up to now. But that could be about to change, with lawmakers unveiling a bill proposing nationwide marijuana legalization on Wednesday. If the bill ever becomes law, banks will finally be able to offer cannabis companies bank accounts and – you guessed it – loans.

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🙋 Ask a question

💬 Quote of the day

“I understand there’s a guy inside me who wants to lay in bed, smoke weed all day, and watch cartoons and old movies. My whole life is a series of stratagems to avoid, and outwit, that guy.”

– Anthony Bourdain (an American celebrity chef, author, and travel documentarian)
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🌎 Finimize Live

😨 The inflation situation

Prices are going up and up, and that’s not just bad for your pocket: it’s a problem for your portfolio too. Lucky for you, Aletheia Capital’s Sharmila Whelan knows a thing or two about how to protect yourself, and you can find out everything you need to know at What Does Inflation Mean For Your Portfolio?

🤔 What Does Inflation Mean For Your Portfolio: 2pm UK time, July 15th
🍷 How To Invest In Wine: 6pm UK time, July 19th
🌍 Why It Might Be A Good Time To Buy Emerging Market Stocks: 5pm UK time, July 20th
💥 How To Profit From The Commodities Boom: 1pm UK time, July 21st
👟 How To Invest In Sneakers And Streetwear: 1pm UK time, July 22nd
🌿 How To Invest In The Future Of Cannabis: 6pm UK time, July 23rd
📈 How To Protect Yourself From Rising Prices: 6pm UK time, July 26th
👑 How To Invest Like The Ultra-Wealthy: 5pm UK time, July 28th
🌎 How To Profit From Emerging Markets: 6pm UK time, July 28th
🏙 Investing In A Sustainable Metropolis: 11am UK time, July 29th
♻️ How To Turn Your Portfolio Green : 6pm UK time, July 29th
💰 How To Make Money From Money: 3pm UK time, August 4th
🤔 Are You An Investor Or A Trader?: 12pm UK time, August 25th

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