Aladdin (BlackRock)

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Aladdin , an acronym for Asset, Liability, and Debt and Derivative Investment Network , is the name for a data analysis system that is the risk management platform of the US financial services company BlackRock .

description

BlackRock has approximately EUR 5.1 trillion in assets under management worldwide (as of December 31, 2016). For comparison: Germany's gross domestic product was 3.1 trillion euros in the same year. No other company manages as much capital. BlackRock is the world's largest investor.

Aladdin is the analysis system BlackRock uses to evaluate individual investments. In addition to BlackRock's financial products worth around EUR 4.6 trillion ( assets under management ), Aladdin also monitors the development of around 30,000 investment portfolios valued at around EUR 15 trillion. This asset corresponds to about 7-10% of all assets worldwide, which come from over 170 pension funds , banks, insurance companies, foundations and other institutional investors .

Customers who use Aladdin include CalPERS (California Public Employees' Retirement System) with fixed assets of US $ 260 billion, Deutsche Bank with approximately EUR 900 billion and Prudential plc with approximately US $ 700 billion. Aladdin builds on a fund of historical data that uses Monte Carlo simulation to select large, randomly generated samples from the very high number of possible future scenarios. This creates a statistical picture of different scenarios resulting from stocks and bonds under different future framework conditions. A portfolio can also be stress tested. For example, the impact of a global flu pandemic or a type of Lehman Brothers bankruptcy on a portfolio can be simulated. However, the program does not advise you to buy or sell any particular investment, such as a stock or bond. This decision is left to the user, i. H. a portfolio manager.

One of the four centers of Black Rock, where Aladdin is operated, is located in Wenatchee in the state of Washington . In Wenatchee, the network consists of around 6,000 computers. The software uses it to analyze global economic data, stock market prices and numerous other economic influencing factors. For example, sudden changes of government, earthquakes, periods of cold and drought are also taken into account in the portfolio valuation. Aladdin is said to do around 200 million calculations a week. In the future, BlackRock wants to supply Aladdin with even larger amounts of data (“ Big Data ”) in order to defend its market leadership. The company wants to access data from companies and private individuals. This includes, for example, recordings from surveillance cameras in parking lots of large retailers or social media activities. If, for example, a term is searched more and more often in a search engine, this is taken as an indication of a new trend. An investment in the shares of the marketing company could be worthwhile from an investment perspective. If, on the other hand, a share is mentioned particularly often in investor forums, this is rated as negative, since the share is already well known and the price potential may already be exhausted. With the help of data processing experts and Aladdin, the resulting data volumes are to be structured.

Aladdin is said to consist of 25 million lines of code (as of 2016), which has been created by over 1000 developers over the years. According to BlackRock, the program can cover the entire investment process across all asset classes and thus bundle the entire knowledge of the group.

The name Aladdin is said to come from Benett W. Golub. In the opinion of the author Heike Buchter, Aladdin is what “holds BlackRock together at its core” and the “basis for its growing power”. Other authors describe Aladdin as "a kind of SAP for investors and the basis of the entire BlackRock business".

Aladdin is a registered trademark of BlackRock, Inc. Organizationally, Aladdin is part of BlackRock Solutions (BRS).

history

His debut took Aladdin 1988 on a single workstation from Sun Microsystems . This workstation, purchased by Charles Hallac (1964–2015), stood between a refrigerator and a coffee machine in the company's one-room office at the time. Hallac is considered to be the initial architect of Aladdin. The first mathematical models for Aladdin were developed by Hallac and Benett W. Golub. These included models for mortgage paper (CMOs, collateralized mortgage obligations ), which were a new financial product at the time.

Aladdin's first major job was in 1994 for an order from General Electric (GE). BlackRock was asked to analyze the troubled mortgage portfolio of the investment bank Kidder, Peabody & Co , which had been a GE subsidiary since 1986. At the time, the portfolio was considered one of the most complex in the world. With the help of Aladdin, BlackRock was able to handle this order without any problems and Kidder, Peabody & Co was sold to Paine Webber in the same year . Golub and other BlackRock employees determined that the analyzes and models that were originally created using Aladdin for their own purposes are also of interest to customers. This created a new business area and in 2000 the use of Aladdin was officially offered to customers.

As a result of the financial crisis from 2007 onwards, the topic of risk management came into focus for financial investments . Very few asset managers had the necessary staff and know-how for this . BlackRock's offer to use Aladdin's analytical tools and databases for risk assessment met market needs and brought BlackRock a very broad customer base. The financial crisis and the Aladdin product play a major role in BlackRock's dominant position. The US government also trusted Aladdin's risk management team during the financial crisis and handed over “toxic papers” worth US $ 130 billion to the financial services provider. These "scrap papers" came from the state and the US Federal Reserve , from the winding-up of Bear Stearns and American International Group . As the financial crisis continued, BlackRock was allowed to evaluate the balance sheet items of the now nationalized mortgage lenders Fannie Mae and Freddie Mac and manage the repurchase of $ 1.25 trillion in mortgage-backed securities for the US Federal Reserve. BlackRock was then in the financial world as "one-eyed among the blind". The government contracts, including from Great Britain and Greece, gave BlackRock access to information, which in turn flowed into Aladdin.

criticism

BlackRock critics point out the risks inherent in Aladdin's high market weight. This could be a cluster risk for the financial markets. If several financial heavyweights acted according to the same pattern based on identical Aladdin recommendations, it could contribute to instability. BlackRock, on the other hand, does not see this danger, since Aladdin is only an advisor, every investor makes his own decisions and pursues different strategies and goals.

Aladdin is geared towards the highest possible return while at the same time minimizing risk, is another criticism. Non-monetary factors such as environmental protection, employee satisfaction and long-term business prospects would not be included in Aladdin's analyzes.

Web links

Individual evidence

  1. ^ Carol J. Loomis: BlackRock: The $ 4.3 trillion force. In: fortune.com. July 7, 2014, accessed November 17, 2016 .
  2. ↑ Heike Buchter: The secret masters of the Dax. In: handelsblatt.com . June 1, 2011, accessed November 17, 2016 .
  3. ↑ a b c d The monolith and the markets. In: economist.com. December 7, 2013, accessed November 17, 2016 .
  4. ↑ a b Markus Frühauf: Financial Markets in Climate Change. In: FAZ.net . September 7, 2016, accessed November 17, 2016 .
  5. ↑ Gross Domestic Product 2015 for Germany (PDF) Federal Statistical Office; Accompanying material for the press conference on January 14, 2016 in Berlin
  6. ↑ Heike Buchter: Financial Market: Change of Power. In: zeit.de . May 5, 2011, accessed November 17, 2016 .
  7. ↑ a b Stefan Beutelsbacher, Tina Kaiser: Asset manager BlackRock: Does supercomputer Aladdin rule the stock market? In: welt.de . November 6, 2016, accessed November 18, 2016 .
  8. ↑ Carolyn Cohn: Prudential's fund arms to use BlackRock's Aladdin platform. In: reuters.com. November 15, 2016, accessed December 8, 2016 .
  9. ↑ a b tg: Aladdin - BlackRock's central nervous system for the market? In: fondsdiscount.de. January 5, 2016, accessed November 18, 2016 .
  10. ↑ a b Hans Stoisser: The black tiger. Kösel-Verlag, 2015, ISBN 978-3-641-16192-7 , p. 86 ( limited preview in Google book search).
  11. ↑ a b c d Heike Buchter: BlackRock. Campus Verlag, 2015, ISBN 978-3-593-50458-2 , p. 199 ( limited preview in Google book search).
  12. ↑ Julian Claudi: Millions fine for Blackrock. In: dw.com. March 20, 2015, accessed November 19, 2016 .
  13. ↑ cls: Get rich with Google evaluations. In: 20min.ch. December 4, 2015, accessed November 18, 2016 .
  14. ↑ fp: Blackrock relies fully on the big data card. In: fondsprofessionell.de. November 3, 2016, accessed November 18, 2016 .
  15. ↑ a b Trauma, Fink and Aladdin: How Blackrock wants to tame the risks of the markets. In: dasinvestment.com. August 21, 2014, accessed November 17, 2016 .
  16. ↑ a b Ulrich Horstmann : Back to the social market economy !. FinanzBook Verlag, 2014, ISBN 978-3-86248-396-9 , p. 25 ( limited preview in Google book search).
  17. ↑ ALADDIN - Trademark Details , accessed on November 18, 2016.
  18. ↑ Sabrina Willmer, Stephen Miller: Charles Hallac, BlackRock's Co-President, Dies at 50. In: bloomberg.com. September 9, 2015, accessed November 18, 2016 .
  19. ↑ Henny Sender: BlackRock executive Charles Hallac dies at 50. In: ft.com. September 10, 2015, accessed November 17, 2016 .
  20. ↑ Charles Hallac (In Memoriam). In: blackrock.com. Retrieved November 18, 2016 .
  21. ↑ Landon Thomas Jr .: At BlackRock, a Wall Street Rock Star's $ 5 Trillion Comeback. In: nytimes.com. September 15, 2016, accessed November 2016 .
  22. ^ Frank Romeike: Black Rock. In: risknet.de. August 17, 2015, accessed November 18, 2016 .
  23. ↑ a b Jens Berger: Who owns Germany? Westend Verlag, 2014, ISBN 978-3-86489-547-0 , pp. 87 f. ( limited preview in Google Book search).