BlackRock Inc. senior officials replaced portfolio managers on 80% of the firm's active equity teams in the past 18 months, and it's clear they won't hesitate to ax others whose performance is subpar.
The aim of the world's largest money manager: fix a sagging equities franchise that has seen large net outflows and has hurt revenue.
The changes have not been limited to portfolio managers, sources said. In some cases entire teams including research analysts have been replaced.
But analysts and consultants say even if the new blood can reverse the poor performance, it could take several years at the minimum to regain the confidence of investors who have been pulling their money out of the firm's active equity strategies.
Net outflows continue to plague BlackRock's active equity portfolios: $20.5 billion in the 12 months through March 31, with $5.6 billion in the last quarter alone. Much of the net outflows in that quarter were from two big undisclosed institutional clients, BlackRock officials said.
While active equity makes up only $291.7 billion, or 7%, of BlackRock's $3.9 trillion in assets under management, it plays a major role in the company's revenue because of the higher fees it generates over BlackRock's passive index strategies. Revenue from active equities made up a significant 20.3% of total base fees the firm collected in the first quarter, down 80 basis points from the previous quarter and 260 basis points from the year-earlier quarter, according to BlackRock data.