BlackRock Go-Anywhere Strategy

Chidem Kurdas

Where do investors want to be?  If we take BlackRock’s asset inflows as an indicator, investors want to be in any market that looks promising—taken there by managers able to move swiftly from one market to another.

BlackRock chief Laurence Fink calls this the go-anywhere strategy. Clients’ preferences showed up dramatically in the firm’s multi-asset-class investment programs, which grew to almost $186 billion at the end of 2010, from $142 billion at the end of 2009.

Multi-asset investments helped boost earnings. In the fourth quarter performance fees increased to $326 million, compared to $125 million in Q4 2009, thanks to relatively strong returns from multi-strategy hedge funds, multi-asset investments, regional or country stocks and fixed income products.

Blackstone is one of the largest alternative investment managers, with about $110 billion in total including real estate, hedge funds and fund of funds.  However, in the past year growth in alternatives was not as substantial as in multi-asset-class investments, largely because of big outflows from real estate. Mr. Fink says the real estate outflows were expected and hide inflows to other alternatives.

He said, at a conference call, that demand for alpha-return products is strong and Blackstone continues to build out the alternatives space.

In the past growth in hedge funds came from acquisitions— fund of funds manager Quellos and more recently Barclays Global Investors, which included hedge fund assets in addition to the iShares exchange-traded fund franchise. Early in 2010 there were reports Blackstone might buy Man Group but the company denied this.

Blackstone has $3.56 trillion in assets but Mr. Fink is clearly not averse to expansion. Scale is a virtue,  he said. Multi-asset or multi-strategy managers are likely targets for acquisition, judging from where investors have chosen to put their money in the past year

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Tags: BlackRock, Laurence Fink, Man Group plc