Size may not be everything, but increasingly the scale and breadth of the investment solutions a money manager can bring to the table will be the key to success in the industry, BlackRock Inc. Chairman and CEO Laurence D. Fink predicted.
Of course, Mr. Fink has a dog in that fight. BlackRock — an active bond and equity giant — announced June 17 that it would acquire index and ETF behemoth Barclays Global Investors. That deal is set to spawn an industry colossus with more than $2.7 trillion in client assets, roughly twice the size of the next biggest money manager.
Speaking July 21 on BlackRock's second-quarter earnings call, Mr. Fink argued that the quantum leap in scale the creation of “BlackRock Global Investors” will achieve is perfectly timed to meet growing demand from institutional investors for strategic partners with multiasset-class investment and risk management capabilities to oversee their portfolios.
Fears that money managers can become too big to be nimble are giving way to an appreciation for firms that can offer a comprehensive, coordinated suite of investment capabilities, Mr. Fink said.
By way of example, he noted that one institutional client — who put BlackRock "in the penalty box" when it acquired Merrill Lynch Investment Managers in 2005 — awarded his firm an additional mandate of $800 million following BlackRock's announcement that it would acquire BGI, and its $1.5 trillion in assets, for $13.5 billion.
BlackRock spokesman Brian Beades declined to identify the client.
The BlackRock model “is clearly working,” with much of the $46 billion in commitments BlackRock has in its pipeline now made up of large, multiasset-class “comprehensive relationships,” Mr. Fink said.
Industry veterans say there's reason to believe industry trends will favor managers capable of serving as a one-stop supermarket for investors.