Masters in Business

Building New Financial Products with BlackRock's Stephen Cohen

December 12, 2025

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  • The evolution of the ETF industry has fundamentally shaken up asset management by forcing a re-evaluation of active manager fees and promoting passive indexing as a core portfolio component. 
  • The integration of private markets into traditional portfolios (moving toward a 50-30-20 structure) is a major theme, though standardizing illiquid assets operationally remains a significant challenge. 
  • Product development at BlackRock, as discussed in this episode of *Masters in Business*, is driven by a mixture of top-down investment views and bottom-up client demand, utilizing technology like AI to identify and stress-test new strategies across asset classes like digital assets and fixed income. 
  • The host, Barry Ritholtz, promotes his new book, "How Not to Invest: The Ideas, Numbers, and Behavior That Destroys Wealth and How to Avoid Them," and thanks the production team responsible for the "Masters in Business" episodes. 
  • The latter part of the transcript is dedicated to advertisements, including promotions for Pepperidge Farm cookies, Venmo Stash cash back rewards, Fox One live sports streaming, and the Stello continuous glucose biosensor. 
  • Despite the episode focusing on BlackRock's Stephen Cohen discussing financial products, this specific segment concludes the program and contains no further substantive discussion related to the episode's main topic. 

Segments

Stephen Cohen’s Early Career
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(00:00:00)
  • Key Takeaway: Stephen Cohen’s entry into finance was serendipitous, sparked by observing the ‘buzzy environment’ of a trading floor during work experience.
  • Summary: Cohen studied economics but was drawn to finance after a neighbor, a telecoms engineer, offered him a day of work experience on a bank’s trading floor. This exposure to the shouting, flashing screens, and energetic environment solidified his interest in markets. His first roles out of university involved fixed income and convertible bonds at UBS and ING Bearings, where he developed a market strategist focus.
Japan Market Dynamics
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(00:05:25)
  • Key Takeaway: The Japanese economy’s recovery from its bubble involved solving banking crises and shifting market reaction from dismissing fiscal stimulus to viewing it as essential economic support.
  • Summary: Cohen noted that Japan’s market in the late 1990s/early 2000s was defined by unresolved banking issues stemming from the bubble collapse. Historically, Japan was a bank-lending-centric economy, unlike the US’s more diverse private sector financing. The market’s perception of government fiscal spending has completely flipped from skepticism to acceptance, moving the focus from deflationary concerns to potential inflation.
Transition to BlackRock and ETFs
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(00:08:59)
  • Key Takeaway: Cohen joined BlackRock in 2011 to help expand the nascent European iShares ETF business by educating clients on ETF usage and identifying missing product opportunities.
  • Summary: The move to BlackRock was motivated by the opportunity to apply his market background to the rapidly growing, yet still early-stage, European ETF industry. In 2011, the mission involved educating clients on what ETFs were and how to integrate them into portfolios. Cohen emphasizes that ETFs have shaken up asset management by highlighting the cost-effectiveness of indexing relative to active fees.
ETF Adoption and Portfolio Construction
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(00:13:23)
  • Key Takeaway: Early ETF education focused heavily on explaining the mechanics (creation/redemption) and establishing the concept of blending active and indexing strategies, moving beyond the rigid ‘core and satellite’ terminology.
  • Summary: Cohen’s initial role involved setting up an investment strategy team within iShares to educate clients on implementing market ideas using ETFs. He recalls that in the early days, much effort was spent explaining basic ETF mechanics to wealth managers and institutional investors. The industry successfully shifted the narrative from a binary ‘passive versus active’ debate to the accepted practice of blending indexing for the core with active management for alpha.
Product Development Philosophy
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(00:24:03)
  • Key Takeaway: The Chief Product Officer role focuses on ensuring the firm’s product range remains innovative, meeting client needs across evolving access methods, including active ETFs and digital assets.
  • Summary: The role involves driving innovation across all investment capabilities—ETFs, liquid active, and private markets—to deliver comprehensive solutions rather than just individual products. Product ideas stem from a mixture of top-down firm investment views and bottom-up client feedback regarding portfolio gaps or access needs. The ETF wrapper is increasingly seen as an efficient vehicle for delivering various strategies, including active ones, without the capital gains penalties associated with mutual funds.
Bitcoin ETF Success and Private Markets Access
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(00:26:41)
  • Key Takeaway: The rapid success of the Bitcoin ETF (IBIT) demonstrates the ETF wrapper’s power to bridge traditional finance comfort with access to decentralized assets for existing crypto holders.
  • Summary: The Bitcoin ETF (iBIT) achieved explosive growth because the ETF wrapper provided ease and comfort for investors to access crypto, even for those already holding Bitcoin directly. Many buyers of the ETF were existing Bitcoin holders seeking a simpler custody solution, highlighting the value of traditional access methods. While private market assets in an ETF wrapper are possible, the larger focus is on developing solutions to incorporate private markets into portfolios more broadly.
Fixed Income and Equity Index Evolution
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(00:41:44)
  • Key Takeaway: Despite being a mature area, US large-cap equity indexing requires continuous innovation (e.g., equal-weight or capped indices) due to market concentration shifts, while fixed income ETF adoption is still in its early innings.
  • Summary: Digital assets and fixed income are key areas of transformation; fixed income ETFs, though growing rapidly toward a projected $6 trillion by 2030, still represent a tiny fraction of the total bond market. Active fixed income ETFs show promise because the bond market historically lacked transparency, making simple screens effective for generating alpha. Even in US large-cap equities, market concentration has driven demand for non-market-cap-weighted indices like equal-weight S&P 500.
Overlooked Macro Trends and Career Advice
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(00:56:59)
  • Key Takeaway: Demographics and immigration impacts on inflation and income streams are macro factors that investors are overlooking, while continuous learning is essential for new entrants in the rapidly changing finance industry.
  • Summary: Demographics and immigration are significant, yet often background, factors that will increasingly influence inflation and required income streams for retirees. The long-term impact of post-COVID shifts on specific industries, like luxury goods, still needs to be fully processed by the market. Cohen advises recent graduates to prioritize continuous learning, as the pace of change in finance, especially concerning technology and product development, is faster than ever before.
Podcast Promotion and Credits
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(01:05:54)
  • Key Takeaway: The “Masters in Business” podcast is available across major platforms, and host Barry Ritholtz credits his production team, including Alexis Noriega and Anna Luke.
  • Summary: Listeners can find the podcast on iTunes, Spotify, Bloomberg, and YouTube. The host thanked the crack team, naming Alexis Noriega (video producer), Anna Luke (podcast producer), Sage Bauman (head of podcasts at Bloomberg), and Sean Russo (researcher). The segment concludes by identifying the program as “Masters in Business on Bloomberg Radio.”
Pepperidge Farm Ad Spot
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(01:06:37)
  • Key Takeaway: Pepperidge Farm cookies are marketed as a ‘fancy’ holiday treat, specifically highlighting Milano mint chocolate, Chessman butter cookies, and Linzer Raspberry varieties.
  • Summary: The advertisement focuses on the perceived luxury of Pepperidge Farm cookies, using descriptors like ‘so rich’ and ‘so buttery.’ Specific products mentioned include Milano mint chocolate, Chessman butter cookies, and Linzer Raspberry. The overall theme positions the cookies as a ‘fancy’ item suitable for gifting or enjoying.
Venmo Stash Cash Back Offer
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(01:07:07)
  • Key Takeaway: The Venmo Stash feature allows users to earn up to 5% cash back on purchases from selected brands when using the Venmo debit card, with a monthly maximum of $100.
  • Summary: Users can stack cash back by using the Venmo debit card for everyday transactions like takeout and ride shares. The program offers up to 5% cash back on chosen brands by selecting a bundle of go-to’s. Terms and exclusions apply, limiting the maximum cash back earned to $100 per month.
Fox One Live Sports Streaming
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(01:07:37)
  • Key Takeaway: Fox One enables streaming of major live sports events, including NFL Sundays, college football, NASCAR, and MLB postseason, to replicate the in-person viewing experience.
  • Summary: Fox One allows viewers to stream favorite live sports, ensuring they do not miss major moments. Content available includes NFL Sundays, college football games, NASCAR, and the MLB postseason. The service aims to deliver the feeling of being right there in the action through high-octane moments.
Stello Glucose Monitoring Promotion
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(01:08:05)
  • Key Takeaway: Stello is a prescription-free glucose biosensor that tracks glucose levels 24/7 to reveal the impact of food, exercise, and sleep on personal health.
  • Summary: Stello is introduced as an easy way to track glucose, contrasting with tracking other trends like podcasts or album releases. This powerful biosensor operates 24/7 without requiring a prescription. It helps users understand how daily activities like eating, exercising, and sleeping affect their glucose levels to promote a healthier lifestyle.