Masters in Business (Bloomberg):

"Building New Financial Products with BlackRock's Stephen Cohen"
Host: Barry Ritholtz | Guest: Stephen Cohen, Chief Product Officer and Head of Product Solutions, BlackRock
Date: December 12, 2025

Episode Overview

Barry Ritholtz sits down with Steve Cohen, BlackRock's Chief Product Officer and Head of Global Product Solutions, for a deep dive into the innovation, growth, and future of financial products—especially ETFs—at the world’s largest asset manager. Their conversation traverses Cohen’s career from early days in fixed income on trading floors to shepherding the explosive expansion of iShares and the ETF ecosystem, as well as the growing intersection with digital assets, privates, and technology. Throughout, Cohen shares candid insights on product development, market evolution, and the changing expectations and needs of investors globally.

Key Discussion Points & Insights

1. Steve Cohen’s Journey to BlackRock

• Background & Early Career ([02:56]–[09:52])
  • Studied economics with no family background in markets.
  • Serendipitous exposure to trading floors via a neighbor led to fascination with market dynamics.
  • Early professional years spent in fixed income and convertibles at UBS, ING Barings, and Nomura—especially focused on Japanese markets.
• "For someone who had never experienced this before, it was amazing. There were people shouting, screens flashing... this buzz." (Steve Cohen, [04:07])
• Reflected on Japan’s economic trajectory and differences in market structure versus the US and Europe, emphasizing the historical importance of the banking sector.

2. Joining BlackRock & The ETF Revolution

• Transition to BlackRock in 2011 ([09:52]–[13:48])
  • Lured by the "sense of mission" at iShares to democratize investing and increase transparency.
  • The ETF market, especially in Europe, was in its infancy—offering massive potential for education and growth.
• "It was very clear there was a big opportunity to do something different in an industry ... that hadn't really been shaken up." (Steve Cohen, [12:27])

3. Educating Investors and Changing Paradigms

• Early Education and Strategy ([13:48]–[15:55])
  • Initial focus: What are ETFs? How do they work? How to use them in portfolios?
  • Shift from rigid “active vs. passive” debates to blended, pragmatic portfolio construction.
• "Every decision you make is active... Investing in US equities is an active decision. Deciding to use an ETF is an active decision." (Steve Cohen, [14:54])
• Recognized how core+satelitte investing has evolved; now the ETF "core" is the foundation for most investors.

4. Explosive Growth and Diversity of ETF Adoption

• ([16:52]–[18:17])
• ETF adoption accelerated, with new users ranging from central banks to individual savers in 401(k)s.
• Europe is roughly a decade behind the US but catching up rapidly as regulation and infrastructure evolve.
• "The breadth of users now is anything from central banks to end retail investors... that's been one of the secrets to why ETFs have grown so quickly." (Steve Cohen, [17:10])

5. Role and Scope of Chief Product Officer at BlackRock

• ([24:40]–[27:00])
• Oversees innovation and relevance in the global product range, ensuring solutions fit client preferences—including active ETFs and digital assets.
• Coordinates across public and private markets, liquid and illiquid assets, actively integrating emerging investment themes.

6. The Product Development Process

• Top-Down vs. Bottom-Up ([27:00]–[28:54])
  • "It’s a real mixture" of client demand and identifying structural market gaps.
  • Success of IBIT (Bitcoin ETF) cited as a case study in responding to existing client needs and bridging traditional and digital finance.
• Noted that many IBIT investors already held Bitcoin, illustrating demand for user-friendly vehicles.

7. Alternatives and Private Assets—ETFs for Illiquid Markets?

• ([31:02]–[36:40])
• Discussion of the drive to open access to private markets (private equity, debt, infrastructure) for a broader investor base—possibly via new wrappers, but complexity and standardization remain hurdles.
• "The real story is how do you open up access appropriately for more people to access private markets as part of the portfolio... that may end up requiring an ETF, but there are lots of other ways." (Steve Cohen, [31:30])
• The rise of the model portfolio and technology’s role in integrating privates into diversified strategies.

8. Technology, Aladdin Platform, and Data

• ([36:40]–[38:57])
• BlackRock’s acquisition of Prequin, EFront, and integration with Aladdin aims to deliver more transparent, data-driven private market investing—enabling better risk management for all client types.
• "The private markets will become more transparent, there will be more data... very similar to what Aladdin and BlackRock did with public markets." (Steve Cohen, [37:31])

9. ETF Industry Trends and Deliberate Product Development

• ([38:57]–[41:56])
• Reflects on the proliferation of new ETFs—often “throwing things at the wall”—versus BlackRock’s methodical, strategy-first approach.
• "Our approach is very much, where do we believe that we can develop products... that are going to help create better portfolios?" (Steve Cohen, [39:55])
• Evolution from broad indices to granular exposures, then to different asset classes, and now active funds and digital assets in ETF wrappers.

10. Asset Class Innovation and The Future of ETFs

- ([42:32]–[47:55])
- Digital assets like IBIT and Ether ETFs are at the early stages—expect continued innovation and demand.
- Fixed income ETFs: explosive growth, but only 2% of global bonds are in ETFs; on a long runway.
- The need for more granular bond strategies; even mature asset classes like US large cap equities are still areas for innovation (e.g., capped/equal-weight indices).
- **"Less than 2% of bonds in the world are in an ETF... even in the context of a $140 trillion market, ETFs are still a tiny part."** (Steve Cohen, [43:26])

11. Artificial Intelligence in Asset Management

- ([50:27]–[53:59])
- BlackRock applies AI in three areas:
  1. AI as an investment theme (e.g., data centers, related stocks and credits)
  2. AI-powered investment strategies: systematic, machine-learning driven groups parsing huge data for alpha (“We were doing AI before it was called AI!”)
  3. AI for product development: using internal/external data to identify new themes, simulate strategies, and better stress-test products.
- **"We're really seeing a huge demand for systematic investing... there's a psychological shift and a greater acceptance of systematic investing using AI."** (Steve Cohen, [52:04])

12. Why Some Ideas Don't Happen & What’s Next

- ([53:59]–[57:48])
- Some products are dropped for lack of demand; others because they’re simply before their time or regulatory environment isn’t ready.
- The next ten years: expanding private credit/infrastructure, blending publics and privates, continuous innovation even in "mature" asset classes.

13. Underappreciated Forces & Long-Term Industry Shifts

- ([57:48]–[59:17])
- Demographics, immigration, and persistent aftereffects of Covid are underestimated drivers of markets and policy.
- Housing in the US provided as an example of long-tail trends shaped by financial crises years earlier.

Notable Quotes & Memorable Moments

• On the ETF Revolution:
  "[ETFs] really shaken up the industry on behalf of end investors... very low cost, more transparency, and more access." (Steve Cohen, [12:27])

• On Active/Passive Blending:
  "Every decision you make is active. ... Investing in US equities is an active decision." (Steve Cohen, [14:54])

• On Alternatives in ETFs:
  "The real story is how do you open up access appropriately for more people to access private markets ... that may end up requiring an ETF, but there are lots of other ways." (Steve Cohen, [31:30])

• On Technology and Data:
  "As we bring public and private together, the need to risk manage and understand those portfolios in different scenarios is incredibly important. That's what Aladdin is about." (Steve Cohen, [37:02])

• On the Proliferation of ETFs:
  "There is a lot out there of throwing things out that sticks. Our approach is very much where do we believe we can develop products...that are going to help create better portfolios." (Steve Cohen, [39:55])

• On AI’s Role:
  "We're really seeing a huge demand for systematic investing... there's a greater acceptance of saying actually systematic investing using AI, that's really interesting and exciting." (Steve Cohen, [52:04])

• On Fixed Income ETFs:
  "Less than 2% of bonds in the world are in an ETF... In the context of the $140 trillion of fixed income out there, ETFs are still a pretty tiny part." (Steve Cohen, [43:26])

• On Longevity and Compounding:
  "Only when you look back do you realize the power of compounding. ... You learn about it, but it’s only after a while you see what it means." (Steve Cohen, [65:19])

Important Timestamps

• Steve Cohen’s early trading floor experience – [03:50]–[04:52]
• Japan market lessons & Kiritsu discussion – [05:45]–[09:04]
• Joining BlackRock, ETF landscape in 2011 – [09:59]–[13:48]
• The active vs. passive debate – [14:54]–[15:55]
• How ETF client base evolved – [16:52]–[18:17]
• Chief Product Officer role explained – [24:40]–[27:00]
• Bitcoin ETF (IBIT) impact & private assets in ETFs? – [27:58]–[33:13]
• Bringing alternatives to portfolios – [31:30]–[36:40]
• The rise (and criticism) of thematic/levered ETFs – [39:36]–[41:56]
• Data and Aladdin for risk management/privates – [36:40]–[38:57]
• AI: strategy, investing, and product development – [50:27]–[53:59]
• What’s next, market themes & persistent trends – [57:48]–[59:17]
• Mentors, book recs, and career advice – [60:14]–[65:19]
• Closing on power of compounding – [65:19]–[66:13]

Episode Highlights: Book, Streaming, & Career Advice

• Favorite Books:

  • Sweet Tooth by Ian McEwan
  • A backward-written novel by Martin Amis (likely "Time's Arrow") ([61:32])

• Recent Streaming:

  • Yellowstone, 1883, 1923, Landman
  • UK Spy series Black Bag and Slow Horses ([62:51])

• Advice to New Grads:

  • "Keep learning. This [finance/investing] is constantly changing, and that's where opportunities come from." (Steve Cohen, [64:29])

• Biggest Lesson Gained with Experience:

  • The profound, counterintuitive power of compounding over time ([65:19])

Tone & Style

The conversation balances detailed finance industry insight with candid, accessible discussion. Cohen is reflective, analytical, and consistently pragmatic—focused on serving client needs and thinking several steps ahead in product design, while Barry Ritholtz brings curiosity, occasional humor, and sharp industry context.

This episode is an invaluable listen for investors, wealth managers, and anyone interested in the mechanics and evolution of financial innovation, ETF adoption, and the interplay of technology, markets, and investor behavior.