BlackRock Inc. is looking to focus more of its attention on factor-based investing capabilities at a time when this type of investing is regaining momentum.
Laurence D. Fink, chairman and CEO of the New York-based money management giant, told investors in an earnings call on April 16 that BlackRock intends to announce “some very substantial hires” in its factor-based investing sectors in the near future.
Edwin N. Conway, a New York-based managing director and head of BlackRock's institutional group in the U.S. and Canada, said in a phone interview that the firm is looking to recruit across all of its quantitative teams, including its scientific active equity platform, fixed-income and smart beta teams.
“We want to continue to invest in that space, invest in resources for the space,” said Mr. Conway. “There's a very significant role for factor investing. It's highly complementary to the investors' allocation.”
Mr. Conway didn't have an exact number of people to be hired or a timeframe to recruit them. BlackRock's SAE team now has more than 80 investment professionals.
The BlackRock plans to further develop quantitative investing resources follow the belief from firm executives that the returns in that sector have been consistent.
Mr. Conway added that institutional investors are very frustrated with active management — and are particularly frustrated with the active management fees, which are higher than factor-based strategy fees.
The BlackRock executive also warned against asset owners completely turning their backs on active management, including quantitative active management.
“At a time when volatility has picked up in the market, there's a significant amount of chatter of moving more capital to passive,” he added. “We think that could be a mistake, because there (are) more opportunities for active management.”