BlackRock on Tuesday said it would overhaul its actively managed equities business, cutting jobs, dropping fees and relying more on computers to pick stocks in a move that highlights how difficult it has become for humans to beat the market.
The world’s biggest money manager has faced active stock fund withdrawals and the revamp is its biggest attempt yet to engineer a turnaround.
Last May, BlackRock blk said it had recruited Mark Wiseman, the head of Canada’s biggest public pension fund, to oversee the stockpicking operations after he revamped that fund’s operations to embrace data-mining and other technological approaches to investing.
BlackRock is rebranding or adjusting investment strategies on about 11% of its $275 billion active stock fund business, putting a greater emphasis on technology-driven investing approaches in the largest set of sweeping changes for the business since transformational mergers that allowed it to grow to manage more than $5 trillion in assets.
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 exchange-traded funds, 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.
The changes mark the latest of several attempts by BlackRock to boost an active fund business that represents nearly a third of its assets but an outsized near-50 percent of its fees.
BlackRock CEO Larry Fink has sometimes expressed disappointment in the performance of the company’s actively managed stock funds, and he has pivoted increasingly to focusing on the company’s data-driven “Scientific” equity teams.