03 April 2017
New York
Reporter: Drew Nicol

BlackRock revamps equity business

BlackRock has revamped its equities strategy into four distinct business lines, including the launch of a new series its Advantage products aimed at US mutual funds investors.

The bank’s equity business will be broken down into sections known as core alpha, high conviction alpha, outcome oriented, and country and sector specialty products.

Core alpha products promise market returns plus consistent alpha (outperformance over a benchmark) with lower levels of risk, including the Advantage series, which is expected to include nine mutual funds.

According to BlackRock, the Advantage series brings new products and the conversion of certain existing funds with approximately $8 billion in assets. This will bring approximately $30 million of annualised savings to clients from lower fees.

The firm will incur a charge of approximately $25 million in Q1 2017 reflecting certain one-time, severance and accelerated compensation expense associated with the repositioning.

In the second section, high conviction alpha products will cater for investors looking for higher risk/return products, while outcome oriented products are designed to provide clients with specific outcomes, such as income or sustainable investment strategies.

This will include an expanded range of income products to meet growing client needs for higher dividend yields, according to BlackRock.

Finally, country and sector specialty offerings bring specific country and sector exposures.

Mark Wiseman, global head of active equities at BlackRock, said: “The segmenting of our active equity offerings will sharpen the focus on different client needs, just as we have successfully done with our iShares exchange-traded funds product ranges.”

“This reinforces our commitment to our active equity franchise for offering important building blocks in the portfolios of many clients and to delivering maximum value for clients with those products.”

BlackRock predicts the strategy restructure will affect approximately $30 billion in assets under management (AUM), which equates to about 11 percent of total active equity AUM.

The bank confirmed that there will be no repositioning of active equity products currently managed outside of the US.

Wiseman continued: “Traditional methods of equity investing are being reshaped by massive advances in technology and data sciences. At the same time, client preferences are shifting, focusing not just on outcomes but on how both performance and fees impact value.”

“The active equity industry needs to change. Asset managers who simply use the same techniques and tools from the past will limit their ability to generate alpha and deliver on client expectations. The steps we are taking are an extension of the strategy we announced in 2016 to combine our quantitative and fundamental investment teams into a cohesive active equity investment platform that leverages the full scale and resources of BlackRock.”

More technology news
The latest news from Securities Lending Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
Whitebox Advisors chooses Broadridge suite solution
17 August 2017 | New York | Reporter: Drew Nicol
Whitebox Advisors has mandated Broadridge Financial Solutions to transform its technology platform into a fully integrated, hedge fund operation
CloudMargin unveils microsite for OTC derivatives
15 August 2017 | London | Reporter: Jenna Lomax
The new microsite, designed by UK-based design agency Eight Arms, was created to help financial institutions globally become accustomed to the new margin rules and other regulations affecting their collateral management functions
NEX Group launches new solution to deal with EMIR
10 August 2017 | London | Reporter: Jenna Lomax
NEX Group has launched a solution that enables compliance with revisions to the European Market Infrastructure Regulation
LCH and Euronext secures 10-year deal on derivatives clearing
08 August 2017 | Paris | Reporter: Jenna Lomax
The deal allows for clearing services for listed financial and commodity derivatives for the next 10 years between the two companies
Lombard Risk and Elixium have teamed up to improve repo trading and collateral management capabilities
AcadiaSoft launches new consultancy service to tackle margin calls
02 August 2017 | New York | Reporter: Jenna Lomax
Its first release under the AcadiaSoft Expert Service programme will be ISDA SIMM Approval Guidance, which will help with obtaining permission from regulators to use the ISDA SIMM for initial margin calculations
Optimas Capital opts for Broadridge investment management solution
01 August 2017 | New York | Reporter: Jenna Lomax
Optimas Capital, which has more than USD 250 million in assets under management, chose Broadridge’s Portfolio Master solution for its “accurate and smooth processing capability"