GLOBAL - Institutional investors are showing increasing interest in active strategies following a first quarter of 2010 devoted to reassessing their asset allocations, BlackRock chairman and chief executive Laurence Fink said.
Speaking to analyst in the first quarter earnings call, Fink said conversations with institutional investors about active products, in particular alternatives, had been "quite robust" in the last four to five weeks.
Fink also said active fixed income was an area very likely to grow in the future. He said: "We expect fully to see much more robust fixed income active flows in the future. We're in heavy dialogue with some very large institutions now and so we feel very comfortable about the future of active fixed income and we believe that will continue to drive growth."
He added the renewed interest came after a period in which clients actually switched assets from the active to the passive space. He said: "Following last year's sharp rally in global equity markets and significant tightening of credit spreads, institutional investors stepped back to reassess their asset allocation strategies.
"As a result, institutional ‘re-risking' activity slowed down and reallocations focused primarily on shifting from active to passive and from money market funds to deposits."
Globally, BlackRock obtained US$18.2bn of net new business in index equity and fixed income products during the quarter and $13bn in multi-asset and alternative investments. BlackRock saw outflows of $22.3bn from actively managed equity and fixed income portfolios.
Following the acquisition of Barclays Global Investors, including its exchange traded funds (ETFs) arm iShares, ETFs is being looked as a key driver for the money manager's growth.
Fink told analysts in terms of non-US iShares business at least 70% of the flows were institutional, while the mix between institutional and retail in the US business was about 50/50.
Overall assets under management grew $17.6bn to $3.36trn at March 31. Equity assets under management ended the quarter at $1.58trn, up $46.5bn billion since year-end.
The fixed income allocations increased $3.6bn to close at $1.06trn, alternative investments decreased $200m to $101.9bn billion and cash assets stood at $306.5bn at quarter-end, down $42.7bn.
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