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BlackRock Positions Equity Investment Platform for Future of Active Management

Company Release - 3/28/2017 5:40 PM ET

Reorients Portfolio Teams and Enhances Data and Research to Leverage Scale and Drive Sustainable Alpha

Segments Active Equity Offerings into Four Product Ranges

Launches Advantage Series to Meet Emerging U.S. Retail Client Needs and Preferences

NEW YORK--(BUSINESS WIRE)-- BlackRock is positioning its equity investment platform for the future of active management – leveraging its unique scale and breadth of capabilities to drive sustainable alpha. The firm is also segmenting its active equity product offerings into four product ranges to meet evolving client preferences, which includes launching the new BlackRock Advantage series of core alpha products.

“At the heart of BlackRock is a culture that embraces change and turns it into opportunity,” said Laurence D. Fink, Chairman and CEO. “We are constantly anticipating how macro trends will reshape both our industry and our clients’ needs; we then pivot accordingly.

“That unwavering commitment to embracing change for the benefit of our clients has resulted in an almost continuous review of BlackRock’s product platform. Over the past few years, we have deliberately evolved our offerings in ETFs and indexing; we refined and expanded our active fixed income platform in the face of record low interest rates; and we have found new ways to leverage our unique technology platform – all of which helped to drive record net new flows in 2016.

“When we hired Mark Wiseman last year, we announced we would similarly review active equities in anticipation of changes in the investment landscape and client preferences. We are acting now to leverage our unique business model to lay the foundation for what we believe will be the future of active equity management.”

The Future of Active Equity Investing

“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,” said Mark Wiseman, Global Head of Active Equities at BlackRock.

“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. We are revitalizing our active equity capabilities by harnessing the power of ‘human and machine’ to efficiently and consistently deliver investment performance to our clients.”

Leveraging Scale of Investment Platform, Data Innovation and Collaboration to Drive Sustainable Alpha Generation

The changes BlackRock is making include reorienting certain investment teams, primarily in the U.S., around a more focused product line-up, while also shifting resources and responsibilities within teams to best leverage the full breadth of BlackRock’s platform in seeking to generate sustainable alpha.

The firm is also investing further in data science innovation, which leverages the unique capabilities of Aladdin®, and strengthens the connections that quantitative and fundamental investors both need to distill unstructured information into investable insights.

BlackRock is creating a more integrated approach to collaboration across fundamental research teams to leverage the firm’s global reach, including insights generated from teams in local markets. This new structure will allow the best insights derived both through big-data analysis and fundamental research to be shared across every investment team across the active equity platform.

Segmenting Product Offerings to Align With Distinct Client Needs

BlackRock’s equity strategies reflect a continuum of investment building blocks – spanning index, factors, quantitative, fundamental and alternatives – used to tailor solutions for specific client needs. Within that spectrum, BlackRock’s active equity offerings are being organized in four product ranges, each designed for a specific client need and priced along a continuum to deliver the value clients expect.

“Clients have moved beyond just active and passive techniques. They are choosing from a variety of products that incorporate multiple investment strategies, return targets, levels of risk and cost expectations,” said Wiseman. “We are evolving our product offerings to ensure we stay ahead of those changing client desires.”

The four distinct product ranges for BlackRock’s active equity products will be:

1. Core Alpha – products for clients seeking market returns plus consistent alpha (outperformance over a benchmark) with lower levels of risk. This includes a new Advantage series of products for U.S. investors and initially is expected to include nine mutual funds providing access to BlackRock’s industry leading quantitative investment team. Approximately 90% of the investment team’s overall strategies have outperformed their respective benchmarks or peer median over the past five years.*

2. High Conviction Alpha – for clients seeking higher risk/return products. These strategies provide access to portfolio managers that can deliver returns in more highly concentrated and unconstrained/absolute return strategies.

3. Outcome Oriented – products 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.

4. Country and Sector Specialty – offering clients specific country and sector exposures, where BlackRock offers deep expertise.

“The segmenting of our active equity offerings will sharpen the focus on different client needs, just as we have successfully done with our iShares® ETF product ranges,” said Wiseman. “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.”

Strategy or portfolio management repositioning will impact approximately $30 billion in assets under management (about 11% of total active equity AUM). There will be no repositioning of active equity products currently managed outside of the U.S. The Boards of Directors of applicable funds reviewed and voted in favor of the various proposals.

Launch of the new Advantage series and an expanded range of income funds includes both new products and the conversion of certain existing funds with approximately $8 billion in assets. These changes will result in approximately $30 million of annualized savings to clients from lower fees. BlackRock anticipates that these products will attract new assets at a faster rate over time as a result of improved pricing and performance. The firm will also incur a charge of approximately $25 million in the first quarter of 2017 reflecting certain one-time, severance and accelerated compensation expense associated with the repositioning.

About BlackRock

BlackRock is a global leader in investment management, risk management and advisory services for institutional and retail clients. At December 31, 2016, BlackRock’s AUM was $5.1 trillion. BlackRock helps clients around the world meet their goals and overcome challenges with a range of products that include separate accounts, mutual funds, iShares® (exchange-traded funds), and other pooled investment vehicles. BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions®. As of December 31, 2016, the firm had approximately 13,000 employees in more than 30 countries and a major presence in global markets, including North and South America, Europe, Asia, Australia and the Middle East and Africa. For additional information, please visit the Company’s website at | Twitter: @blackrock_news | Blog: | LinkedIn:

*Source: BlackRock, as of 12/31/2016. 90% of accounts for the investment teams' retail and institutional strategies, which include three retail mutual funds (performance applies to institutional share class), five institutional mutual funds, 28 institutional CTFs, 13 private commingled vehicles and 15 separate accounts.

Forward-looking Statements

This press release, and other statements that BlackRock may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to BlackRock’s future financial or business performance, strategies or expectations. Forward-looking statements are typically identified by words or phrases such as “trend,” “potential,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” and similar expressions.

BlackRock cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and BlackRock assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.

In addition to risk factors previously disclosed in BlackRock’s Securities and Exchange Commission (“SEC”) reports and those identified elsewhere in this press release, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: (1) the introduction, withdrawal, success and timing of business initiatives and strategies; (2) changes and volatility in political, economic or industry conditions, the interest rate environment, foreign exchange rates or financial and capital markets, which could result in changes in demand for products or services or in the value of assets under management; (3) the relative and absolute investment performance of BlackRock’s investment products; (4) the impact of increased competition; (5) the impact of future acquisitions or divestitures; (6) the unfavorable resolution of legal proceedings; (7) the extent and timing of any share repurchases; (8) the impact, extent and timing of technological changes and the adequacy of intellectual property, information and cyber security protection; (9) the potential for human error in connection with BlackRock’s operational systems; (10) the impact of legislative and regulatory actions and reforms, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, and regulatory, supervisory or enforcement actions of government agencies relating to BlackRock or PNC; (11) terrorist activities, international hostilities and natural disasters, which may adversely affect the general economy, domestic and local financial and capital markets, specific industries or BlackRock; (12) the ability to attract and retain highly talented professionals; (13) fluctuations in the carrying value of BlackRock’s economic investments; (14) the impact of changes to tax legislation, including income, payroll and transaction taxes, and taxation on products or transactions, which could affect the value proposition to clients and, generally, the tax position of the Company; (15) BlackRock’s success in negotiating distribution arrangements and maintaining distribution channels for its products; (16) the failure by a key vendor of BlackRock to fulfill its obligations to the Company; (17) any disruption to the operations of third parties whose functions are integral to BlackRock’s ETF platform; (18) the impact of BlackRock electing to provide support to its products from time to time and any potential liabilities related to securities lending or other indemnification obligations; and (19) the impact of problems at other financial institutions or the failure or negative performance of products at other financial institutions.

BlackRock’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and BlackRock’s subsequent filings with the SEC, accessible on the SEC’s website at and on BlackRock’s website at, discuss these factors in more detail and identify additional factors that can affect forward-looking statements. The information contained on the Company’s website is not a part of this press release.

Investor Relations
Tom Wojcik, 212-810-8127
Media Relations
Brian Beades, 212-810-5596

Source: BlackRock