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Are Institutional Investors Ready for BlackRock’s Big Data Pivot?

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BlackRock is the world’s biggest publicly-traded investment manager, overseeing an excess of US$ 5 trillion in assets under management. The behemoth manager runs portfolios and sells products to some of the largest sovereign funds, pensions, endowments and other long-term asset owners.

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The lucrative days of traditional stock picking, also known as active equity management, for larger asset managers has become intensely fierce, forcing rivals to merge with each other, mandating cutbacks in products and laying off professional staff. In March, Aberdeen Asset Management and Standard Life agreed to merge in an all-share deal, with shareholders of Standard Life owning two-thirds of the combined company. Preceding this merger, in October 2016, Janus Capital Group (the home of Bill Gross), merged with Henderson Group. On the layoff front, money manager Legg Mason Inc. chopped up roughly 30 jobs in its corporate offices, in a bid to refocus, “its resources in response to the disruption affecting the asset management industry,” according to a Legg Mason statement in March. Legg Mason’s Baltimore rival, T. Rowe Price Group Inc., is also facing financial pressure, as they try to realign its bread-and-butter active management business. With that being said, BlackRock has cautiously embraced smart beta strategies, while pivoting more resources toward computer-driven investment models.

Decades ago, the ticker tape or a discrete phone call to a “connected” broker was enough to make a decision to buy or sell a stock, then the rollout of Bloomberg or Reuters terminals, and now niche data sources are sprouting out, such as drones calculating A,B,C for X.

Choppy Waters Ahead

This gradual upheaval in the parochial asset management industry has gotten the attention of BlackRock’s founder and CEO Larry Fink. Fink had hired Mark Wiseman, the former President and CEO of the Canada Pension Plan Investment Board (CPPIB), to serve as BlackRock’s global head of active equities and chair of BlackRock Alternative Investors. Wiseman, known for his pragmatism and helping a government investor like CPPIB transform into an institution that manages a significant portion of capital internally, was tasked with undertaking a six-month analysis of BlackRock’s struggling active equity business. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

China Helps Pakistan’s Foreign Reserves

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Despite Pakistan witnessing an increase in exports, the rapid increase in crude prices and lackluster financial inflows, have affected the country’s balance of payments position. Trying to avoid a full-scale currency crisis, Pakistan is also dealing with a fiscal budget deficit and a current account deficit. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Russia-Japan Investment Fund to Back Wood Pellet Production in Russia

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The Russian Far East has a lot of timber, and for that wood pellets is a source of biofuel. A while back, the Russian Direct Investment Fund (RDIF) formed the Russia-Japan Investment Fund (RJIF) with the Japan Bank for International Cooperation (JBIC). RDIF and JBICIG Partners as part of RJIF, together with RFP Group and Japan’s Prospect Co., Ltd. have agreed to collaborate and consider potential investments in Russia’s biofuel industry. JBICIG Partners is a subsidiary of the Japan Bank for International Cooperation.

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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RDIF Lures Asian Investors Toward Russian Surgical Robot Project

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The Russian Direct Investment Fund (RDIF) is partnering with a number of unnamed Asian co-investors to allocate capital toward a project to create and manufacture Russian surgical robots. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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