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BlackRock faces active equity outflows following wholesale changes

Business-Finance-Strategy-Plan-Chess-700x450.jpgBlackRock saw net outflows of $3.3bn from its institutional active equity strategies in the third quarter following the firm’s decision earlier this year to move $6bn in assets from US actively managed equity funds to quantitative investment strategies.

In March, BlackRock announced it was making wholesale changes to the actively managed equities funds that have continued to fall out of favour as a result of the investor shift towards lower cost passive funds. The move affected funds with a total of $8bn in assets, $2bn of which were relaunched as fixed income funds. Institutional fixed income strategies saw net inflows of $0.5bn in Q3.

The asset management giant had previously merged its fundamental active equity and scientific active equity groups into a unified business.

BlackRock’s retail arm saw long-term net inflows of $7.4bn, $3.7bn of which was from outside the US. The bulk of flows went into fixed income, which attracted $4.6bn, while $1.7bn went into index funds.

BlackRock took the largest market share of ETF flows globally in Q3, with long-term net inflows of $52.3bn.

Total net inflows for the business were $96bn in Q3 while revenues increased 14 per cent year on year, which the firm attributes to the growth in base fees, performance fees and revenue from technology and risk management.

“BlackRock’s third quarter results reflect the continued growth of our global investment and technology platform and the trusted relationships we have built with our clients,” says Chairman and CEO of BlackRock Laurence Fink.

“Strong organic asset and base fee growth are a direct result of the investments we are making in our platform. We saw $96bn of total net inflows in the third quarter. This brings year-to-date total organic growth to $264bn, already surpassing our total flows for the full year of 2016.”

Fink adds: “With regulation, technology and market forces transforming the ecosystem for asset and wealth managers globally, BlackRock is at the forefront of change in the industry. As our focus remains on the long-term, we continue to purposefully and prudently invest in the future of our business, reinforcing our differentiated ability to serve clients and generate long-term value for shareholders.”

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