Structured product offerings
BlackRock’s multi-asset class offerings have mainly been preferred by institutional investors. Recently, even retail investors are considering non-traditional investment options.
BlackRock (BLK) manages $377 billion in the multi-asset class category. It forms 9% of the total assets under management, or AUM. It generated ~13% of the total fees as of December 31, 2014.
BlackRock’s separate team manages the funds for a diversified client base. It has investments across asset classes like equities, currencies, bonds, and commodities. The team’s various solutions include long-only portfolios—buy side, alternative investments, and tactical asset allocation overlays—focusing on short-term mispricing among various asset classes, including buy and sell side.
Attracting institutional clients
BlackRock witnessed strong growth in the multi-asset segment. It had a compound annual growth rate, or CAGR, of more than 35% in AUM in the last six years. This was mainly due to demand from institutional investors. Product offerings, like defined contribution plans under the category, were the prime drivers of the flows in the last five years.
- Asset allocation and balanced product-based strategies combine equity, fixed income, and alternative asset balancing between benchmark returns and risk budget. The product category forms ~50% of the total multi-asset class category.
- Target date and target risk products predominantly cover the defined contribution plans with major investments by institutional investors.
- Fiduciary management services involve complex mandates from pension plan sponsors, endowments, and foundations to assume the management for some or all aspects of plan management.
BlackRock faces competition from structured product offerings from Goldman Sachs (GS), T. Rowe Price (TROW), Morgan Stanley (MS), Franklin Templeton Investments (BEN), and other players that are part of the Financial Select Sector SPDR Fund (XLF).