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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. ]

Japan’s GPIF Awards Nissay Asset Management with ESG Disclosure Mandate

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Increasingly asset owners across the Asia-Pacific region are studying the impacts of environmental, social, and governance factors on listed companies. As more Japanese pensions augment asset allocation to listed equities, the importance of corporate non-financial disclosures and practices becomes clear. These disclosures can have a material impression on company stock prices. In addition, Japanʼs Stewardship Code and Corporate Governance Code in 2014 and 2015 were launched, respectively. These codes helped the (environmental, social, and governance) ESG concept gain momentum in Japan.

Japan’s Government Pension Investment Fund (GPIF), the largest public pension fund in the world, awarded a research mandate to Nissay Asset Management Corporation. The mandate entails studying ESG disclosures. The study will conduct a comparable analysis on ESG standards and practices, while taking into account input from both investors and companies. With around US$ 110.5 billion in assets under management, Nissay Asset Management is owned by Japanese life insurance giant Nippon Life Insurance Company.

As GPIF boosted its allocation to domestic equities, the asset owner took a deeper look into the impact of ESG on equity investing. GPIF is keen on improving efficiencies in Japan’s capital markets. GPIF is a universal owner of stocks, similar in some aspects to what Norway’s Government Pension Fund Global (GPFG) does.

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Norges Bank Real Estate Management Buys Central Paris Property

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Norges Bank Real Estate Management, the real estate unit of Norges Bank Investment Management (oversees Norway Global Pension Fund Global), has signed an agreement to acquire a 100 percent interest in an office property located on 54-56 rue la Boétie in central Paris.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Schlumberger Gets Closer to Eurasia Drilling Company

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Russia’s sovereign wealth fund, the Russian Direct Investment Fund, and American oilfield services giant Schlumberger (SLB) have planned a deal to invest in Russia’s Eurasia Drilling Company Limited. RDIF CEO Kirill Dmitriev made the announcement. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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