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BlackRock to create GEM hub in Asia in major restructure

BlackRock to create GEM hub in Asia in major restructure

In addition to the sweeping changes involving a shift from actively managed portfolios to quantitative investment strategies, BlackRock has decided to set Asia Pacific as its new global emerging markets hub, according to a spokesperson at the firm.

‘From an Asia perspective, we are adding resources to our investment teams and research capabilities to create a global emerging markets hub for BlackRock in Apac,’ said the BlackRock spokesperson.

As part of the move, the world’s largest asset manager is moving leadership for its GEM strategies to Asia, reflecting the importance of the Apac region to its emerging markets strategies.

The spokesperson at the firm said Andrew Swan, head of Asian equities’ role has now been expanded.

Andrew Swan, head of Asian equities, becomes head of Asian and global emerging markets equities, responsible for the wider core global emerging markets platform.

‘Emerging market teams will be led by Belinda Boa, as CIO of emerging markets, fundamental active equity, to bring about greater alignment and an exchange of insight throughout emerging markets professionals covering Latin America, emerging Europe and Asia equities.

'She remains as head of active investments for Asia Pacific, covering active equities, fixed income and multi-asset.'

Both Swan and Boa will be based in Hong Kong, according to the spokesperson.

Furthermore, Gordon Fraser, a portfolio manager in the global emerging market equity team, will be relocating to Hong Kong from London to assume portfolio management responsibilities alongside Swan for the global emerging markets core portfolio.

The firm noted that emerging markets is a global category that it intends to lead by unifying its GEM and Asia fundamental equities teams to create a global emerging markets platform and to generate alpha for clients.

‘In fact, Asia ex-Japan now comprises 70% of the MSCI Emerging Markets Index, and this could increase to 80% over the next 5-10 years if the Chinese A-share market sees full inclusion.’

Additionally, the firm is expanding local research capabilities, including the newly created role of Hong Kong-based head of research (not appointed yet) for the GEM team, to support its Asian equities and emerging markets franchises and benefit its global platform.

‘We have also appointed Doug Chow to become global head of active equities integration and data, based in Hong Kong,’ said the spokesperson.

The spokesperson said the focus of this positioning is to further leverage the scale and capabilities of BlackRock’s entire investment platform and to lead the industry in active equities by delivering sustainable alpha.

US changes

The Asia move is happening alongside changes to the US business. The New-York based fund house removed seven portfolio managers from their funds, which are actively managed, in a bid to pursue a quantitative investment approach.

According to Citywire Asia’s sister website Citywire USA, five out of the seven managers are leaving BlackRock.

Luiz Soares, head of global emerging markets, and manager of the BlackRock Emerging Markets Dividend fund and BlackRock Emerging Markets fund;

Ian Jamieson, who ran a number of funds alongside Callan, including the International Opportunities and US Opportunities fund;

Murali Balaraman, who ran a number of small and mid cap funds, including the $882 million Global Small Cap fund;

John Coyle, who worked alongside Balaraman on these funds

• and Pete Stournaras, who ran seven large cap funds for the firm, including the $1.5 billion BlackRock Large Cap Core fund.

The two remaining ones are:

Bart Geer, the head of the basic value team who ran the $3.5 billion Basic Value fund, will step back from portfolio management and be an advisor at the firm.

Tom Callan, who ran a number of funds, including the $4.9 billion BlackRock Health Sciences Opportunities fund and the $1.2 billion US Opportunities fund, is to retire from fund management but retain a role with the firm.

The changes on the US side are said to have impacted around $30 billion of assets under management at the firm.

BlackRock has said it will pay out $25 million in severance and bonuses packages.

In a statement, Larry Fink, BlackRock CEO, said: ‘At the heart of BlackRock is a culture that embraces change and turns it into opportunity.'

The decision to move away from human stock picking was taken by Mark Wiseman, BlackRock global head of active equities, who joined the firm from the Canada Pension Plan Investment Board last year.

'Traditional methods of equity investing are being reshaped by massive advances in technology and data sciences,’ said Wiseman.

'At the same time, client preferences are shifting, focusing not just on outcomes but on how both performance and fees impact value.’

The firm is now segmenting its active equity product offerings into four product ranges to meet evolving client preferences, which includes launching the new BlackRock Advantage series of core alpha products.

The four product ranges will be core alpha; high conviction alpha; outcome oriented; and country and sector specialty.

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