Blackrock, the world’s largest fund company, has laid out plans for an ambitious revamp of its actively managed equity funds – with the plans revealing a big bet on machines and algorithms.
The overhaul is in response to investors shifting to lower cost passive funds, with the asset manager recently facing active stock fund withdrawals.
Part of the revamp will involve Blackrock turning to data-mining, alongside putting a greater emphasis on technology-driven investing.
The company plans to axe seven portfolio managers from funds with around $30 billion (£24 million) of assets, shifting its strategy towards a numbers-driven quantitative approach. This means that traditional stock-pickers will be replaced, with reports indicating that 40 jobs are on the line in the shake-up, with Blackrock earmarking $25 million in severance and bonuses to those affected.
The company’s new investment strategy will be implemented in 11 percent of the stock fund business, which currently holds $275 billion in active stock.
Product costs are also being slashed, with specific sets of products being rebranded and redirected. Some products will filter into a new “Advantage” series; the alterations will mean that these products will be lower-cost active funds.
Lower fees are expected to hit Blackrock’s annual income to the tune of $30 million.
There appears to be extensive planning behind this new attack plan outlined by BlackRock, as the head of Canada’s most prominent public pension fund, Mark Wiseman, was brought on board and tasked with monitoring stock picking. Wiseman also encouraged and promoted the use of technological investment options such as data-mining.
Talk of robots entering finance is a prominent and growing talking point in recent years, with robo advisers coming to use across Europe and the UK, as well as robots used for tax. The reality of this development is not greeted with joy by all, with suggestions of taxing automation arising, and figures such as Bill Gates standing against jobs stolen by tech.