What's going on?

BlackRock reported better-than-expected quarterly earnings on Thursday, as contentious elections and swift vaccines drove investors toward the world�s biggest investment manager.

What does this mean?

The more cash BlackRock looks after for its clients, the more money it earns in fees. And since it�s currently got its hands on a record $9 trillion pot, profits were high last quarter � higher than analysts had anticipated.

A lot of the money belonging to retail investors was poured into stocks, even as institutional investors diverted their money away from stocks and into bonds. Those different strategies could be down to diverging opinions on how expensive the assets were, if not diverging priorities: big institutions � like pension funds and insurance companies � probably leaned more toward the lower-but-safer income generated by bonds.

Why should I care?

Zooming in: Power play.�

Most of the money BlackRock looks after is invested in low-fee exchange-traded funds (ETFs) � which passively track a group of stocks � rather than in higher-fee �actively managed� funds, which involve constant tinkering. ETFs have become so popular, in fact, that the three biggest ETF providers � BlackRock, Vanguard, and State Street � are now the biggest shareholders in almost 90% of US stocks (tweet this). And since they get to vote on the company�s strategy on their clients� behalf, they have an awful lot of power�

Zooming out: With great power comes great responsibility.

BlackRock mostly uses that dominant shareholder position for good, like when it promised late last year to support more climate change-focused proposals. It even pledged that it would sell most of its shares in fossil fuel producers � a move that was hailed as a victory by environmental activists. But there�s a caveat to being in the ETF business: BlackRock has to invest in a wholesale collection of stocks � like, say, a major index � rather than picking just the environmentally friendly ones. That might be why, despite its pledge, it�s still ended up holding $85 billion in coal investments�