NEW YORK, March 28 (Reuters) - BlackRock Inc on Tuesday said it would dramatically recast a portion of its fund management operations, conceding that the business of picking stocks has grown increasingly competitive.
The world’s largest asset manager said in a statement it will rebrand, or adjust investment strategies or portfolio management on about 11 percent of its $275 billion active stock fund business.
Among the changes, BlackRock is removing some seven traditionalist “Fundamental” portfolio managers from their current assignments, according to a source familiar with the matter. It was not immediately clear how many additional jobs would be affected by the changes.
As part of the changes, the company will cut fees on some products that are being rebranded as an “Advantage” series of lower-cost active funds. Planned fee cuts will slice about $30 million of BlackRock’s revenue, and the company will take a $25 million charge this quarter to reflect severance and other compensation expenses.
The company said it will also expand its investments in data-mining techniques that it said can improve investment performance. Other funds are being refocused to take “high-conviction” bets on stocks.
Active stock managers in the United States have been smacked with withdrawals in recent years as investors increasingly fled to lower-cost products, including index-tracking ETFs, some of which charge as little as $3 annually for every $10,000 they manage, while the average charged by U.S. stock mutual fund managers is $131, according to data for 2015 from the Investment Company Institute trade group.
An industry bellwether, New York-based BlackRock also owns one of the most prized businesses in asset management, its iShares exchange-traded funds franchise. (Reporting by Trevor Hunnicutt; Editing by James Dalgleish)