Newspaper article International New York Times

Hiring Is Signal of a Shift at BlackRock

Newspaper article International New York Times

Hiring Is Signal of a Shift at BlackRock

Article excerpt

BlackRock has hired Andrew Ang, a finance professor, to lead a new strategies group in an effort to bolster its exchange-traded funds business.

For the last four years, the asset-management giant BlackRock has dominated exchange-traded funds, the fastest-growing segment of the mutual fund industry.

But while BlackRock, the world's largest fund company, remains the undisputed market leader for mainstream E.T.F.s, smaller, nimbler firms are challenging it when it comes to introducing a new generation of E.T.F.s that track specific market segments.

BlackRock took a significant step on Tuesday to bolster itself in this area by hiring Andrew Ang, a finance professor and advocate of an emerging investment style that singles out themes or factors, like value, momentum and quality of earnings.

He will be a managing director and lead a new strategies group that will oversee $125 billion in client assets.

The hiring shows the extent to which BlackRock is focusing more attention and resources on systematic approaches to investing as opposed to traditional styles, in which fund managers try to beat indexes.

While BlackRock has been pulling in assets at an impressive rate, that has not been the case for actively managed equity funds, which have experienced $17 billion in outflows over the last year because of disappointing performance.

Of the $4.7 trillion that BlackRock oversees, $3 trillion is managed in a systematic fashion through E.T.F.s or index funds.

Factor-based investing, as it is known within the industry, has been providing the intellectual firepower behind the latest craze in E.T.F. investing -- smart beta funds -- where BlackRock is looking to expand aggressively.

Traditional E.T.F.s track an index of stocks or bonds, like the Standard & Poor's 500 or a basket of high-yield bonds. Because of their liquidity, transparency and low fees, these funds have become tremendously popular for individual and institutional investors and have contributed significantly to BlackRock's growth in assets.

Smart beta funds, on the other hand, will create a specially designed index that tracks a specific investment theme, like companies that pay the highest dividends or derive most of their earnings from exports, as opposed to the company's size. …

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