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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. ]

HKMA Intervenes to Support Currency Peg for First Time Since May 2018

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The Hong Kong Monetary Authority (HKMA) intervened to defend its peg to the U.S. dollar. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Genoa Motorway Bridge Collapses

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The 51-year-old Genoa bridge death total has risen to 35 people. On August 14, 2018, a highway bridge, known as the Morandi Bridge, in the center of Genoa had collapsed in torrential rains. The roadway, which was built of reinforced concrete, fell as much as 45 meters. The cause of the collapse was under investigation, according to Angelo Borrelli, chief of the Civil Protection Department. A good number of Italy’s viaducts, galleries and bridges were built during the 1950s and 1960s. Italy-based Autostrade is a motorway operator controlled by Atlantia S.p.A. Autostrade was conducting maintenance work on the bridge. Autostrade said it had been strengthening the road foundations of the bridge.

The Italian Benetton family founded the Benetton Group S.p.A. fashion company in 1965. Sintonia SA is the Luxembourg financial holding company controlled by the Benetton family, which has about a 30.25% stake in Atlantia. Singapore’s GIC Private Limited owns 8.14% of Atlantia as of March 31, 2018. BlackRock holds a 5.12% ownership stake in Atlantia during the same time period.

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Bill Gross Can’t Save Janus Henderson

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Speculation is swirling that legendary bond king Bill Gross could be ousted from the fund he oversees at Janus Henderson (JHG). However, Janus Henderson CEO Dick Weil is firm in his belief that Gross is fit for the position, though he also stated that Gross has been performing in a way that was “challenging and disappointing.” Bloomberg’s Francine Lacqua suggested that Gross could “taint” the overall picture at JHG.

After acknowledging that Gross was struggling, Weil was quick to defend him, pointing to his successful 40 year career in the industry. Weil expects Gross to recover from his current investment woes “in time.” He went on to underscore his unshakable confidence in Gross, “Bill’s a terrific investor, and a terrific, strong player.” Gross, for his part, is said to have admitted to making “bad bets,” according to Weil. Weil was only recently chosen over contender Andrew Formica, his Co-CEO, to serve as sole CEO of the company. Australian-born Formica was dismissed by JHG’s board of directors. JHG’s single largest shareholder is Japanese life company Dai-Ichi Life.

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

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