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Posts Tagged ‘BlackRock’

Blackrock votes for robots

In Uncategorized on 22/04/2017 at 2:33 pm
From NYT Dealbook

By Amie Tsang

Laurence D. Fink, the founder and chief executive of BlackRock, has cast his lot with the machines.
BlackRock, the largest fund company in the world, plans to consolidate a large number of actively managed mutual funds with those that rely more on algorithms and models to pick stocks.
The move is the most explicit action by a major fund management firm to try to take advantage of the increasing opportunities in lower-cost computer driven funds.
About $30 billion in assets, or 11 percent of the firm’s active equity funds, will be included. The funds will focus on strategies that adopt a more rules-based approach to investing. Seven of BlackRock’s 53 stock pickers are expected to step down, but some will stay on as advisers. At least 36 employees connected to the funds will leave the firm.
“The democratization of information has made it much harder for active management,” Mr. Fink said.
Could this be the end of the cult of the brainy mutual fund manager?
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NEW BREED OF ETF

In ETFs, Financial competency on 27/03/2015 at 10:31 am

BLACKROCK’S NEW BREED OF E.T.F. Exchange-traded fund have been a hit with passive investors for years. Now, BlackRock is introducing a new type of bond E.T.F. that aims to “blend the best of active investing (security selection) with index investing (cost and consistency),” Landon Thomas Jr. writes in DealBook. Of the financial inventions in the history of Wall Street, few have been as successful as E.T.F.s, which hardly existed 15 years ago and now, at $2 trillion, make up close to 15 percent of the mutual fund industry.

BlackRock’s iShares division has become a crucial profit driver for the fund company, accounting for close to a quarter of its $4.6 trillion assets under management. “The rush into E.T.F.s has come at a time when the performance records of mutual fund portfolio managers, especially on the equity side, have been poor,” Mr. Thomas writes. According to Morningstar, 74 percent of equity mutual funds trailed their benchmark index last year. For that reason, the bulk of E.T.F. flows have been into large fundsthat track stock indexes. Bond E.T.F.s have also grown in size in recent years, though the numbers have been smaller.

BlackRock’s new fund, called United States Fixed Income Balanced Risk, will invest in an equal split of corporate bonds, which will benefit if rates spike upward, and Treasury securities, which will protect the fund if rates fall. “Because these funds target a specific area of demand in the market but follow an index, they are seen by their champions as joining the best aspects of active and passive fund management,” Mr. Thomas writes. “Yet because the cult of the bond manager still holds sway, there have been few if any quasi-active bond funds that have thrived.”

NYT Dealbook