According to the "New York Times" report, according to the BlackRock reorganization plan, about 40 active fund department employees will be laid off, including 7 portfolio managers.
The restructuring plan involves US$30 billion in assets, accounting for approximately 11% of BlackRock’s active funds, of which US$6 billion will be incorporated into the Group’s BlackRock Advantage Fund, which invests primarily in computer and mathematical models. The quantitative investment strategy.
ETF Overlord Active Assets Are Poorly Developed
In recent years, the investment boom in the global market, represented by the US market, has been a passive victory over active products. Passively managed mutual fund management assets grew by 18% in 2016 to reach US$6.7 trillion, a year-on-year increase of over 8% from 2015. During the same period, the growth rate of actively managed mutual fund management assets was only 4%. Horizontal comparison of the two types of assets resulted in the growth rate of passively managed assets being 4.5 times that of active assets.
It is understood that BlackRock's growth and expansion are integral to its mergers and acquisitions. Its most successful ASUS ETF product line is the world's largest ETF product line. It has been acquired from Barclays in 2009; but it is not a successful active management. In 2006, mergers and acquisitions of Merrill Lynch were overseen. Although BlackRock is the world's largest asset management company, in charge of 5 trillion US dollars of assets, surpassing the GDP of many small countries, its active management has been inferior to passive products.
The ETF business from Barclays became its signature business, but active management from Merrill has hardly improved. Taking performance as an example, BlackRock’s active management fund’s revenue in the past three years was only 4%, and its revenue in the last five years was 7.3%, which was lower than the industry’s average of 5.3% and 8.8%. The scale of active assets was also only the total assets. 1/3.
In 2012, BlackRock started a five-year plan, hoping to improve this situation by hiring top-level active stock pick fund managers and increasing the number of researchers. Company CEO Larry Fink also said that he would use hundreds of millions of dollars to promote this. A change. In the past four years, the leadership of BlackRock's active management business has also changed and changed, but still no improvement.
Active assets to make more money to choose to quantify the success of the breakthrough?
At the same time, another trend of Wall Street is that, with the rapid growth of technology-driven and ETF assets, the overall rate of US-funded products has declined. In the migration of customers from active management to passive assets, it also virtually harmed nearly one-third of BlackRock's active management products.
Passive products with lower charges will also affect the company’s income. According to the U.S. Association of Investment Companies, the fund company can earn 131 U.S. dollars from an average of 10,000 U.S. dollars in active management funds, but the passive assets are only 3 U.S. dollars, which is less than the former. %. The bad environment in 2016, combined with the lack of active product performance, ultimately led to the annual revenue decline of BlackRock in 2009. According to analysis, due to the reduction of actively managed assets this year, BlackRock’s revenue will drop by US$30 billion.
In terms of improving active management of assets, BlackRock’s latest bets were placed on quantitative investment. In September of last year, Blackrock hired Mark Wiseman, head of the Canadian Pension Management Association, to take charge of the stock team. He merged. Quantitative and stock selection team, and BlackRock's active stock picking direction in the technology-driven quantitative stock picking.
Wiseman said that the current regulatory environment in the United States puts too much pressure on the traditional active stock selection and they hope to make a breakthrough. Of the 275 billion U.S. dollars of active assets it actively manages, 11% of assets will shift to quantitative direction. At the same time, the rate of active management of the product will also be reduced, giving the product a stronger appeal.
The adjustment of BlackRock will transfer the assets of the active stock selection to its quantitative team. The Advantage series of quantitative funds will administer 9 previously managed mutual funds. In addition, there are foundations that are turning to fixed income and industry funds. Mark Wiseman, BlackRock’s global active stock picking director, said that using a quantifiable approach can generate excess returns at a lower cost.
It is understood that the quantification adopted by BlackRock mainly uses machine algorithms to screen stocks and select strategies. However, according to Bloomberg, BlackRock's first year attempt was unsuccessful. Among them, 4 products recorded a record high in losses in 2016, and more than 2/3 of their product performance failed to exceed the benchmark.
Some market analysts believe that quantification is the key to the rescue of BlackRock's active management lag. On the one hand, it can improve performance; on the other hand, it can be differentiated from traditional stock selection investment, but it has not yet been successfully tried to make shellfish. Ryder is determined to give it a go. This reflects the two major trends in U.S. asset management: quantifying the rise of investment and the continuation of low-cost product trends, while BlackRock, in the context of its ineffective proactive business development, is attempting to implement these two major trends in active asset management. Integration.
In this layoff, BlackRock's direction is very clear, that is, to improve the company's active management structure, which is very different from the previous few. In 2016, at the beginning of the global market panic fall, the number of layoffs will reach 3% of BlackRock's 13,000 employees. In January 2016, the company’s CEO, Lawrence Fink, stated that market fluctuations at the beginning of the year have added pressure on the company and may lead to layoffs.
It is understood that layoffs in 2016 are overall, cross-departmental, and cross-regional. The goal is to restructure the business structure and deploy more resources in key development sectors. One of the major costs is increased costs, especially the payroll cost of manpower.
In 2013, the company laid off 300 employees, equivalent to 3% of the total number of employees. This layoff is an optimization of the restructuring of the investment sector in 2012. The goal is to increase product performance. Since the previous layoffs, the total number of companies has increased by 2,500.
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