The asset management industry is undergoing a series of structural changes that are reshaping active management, says BlackRock chief executive Larry Fink.
In his annual letter to shareholders, BlackRock chief executive Larry Fink said there are a number of "major trends" that are reshaping the investment industry.
There is a shift towards indexing accompanied by a growing adoption of ETF, which goes hand-in-hand with a "much greater focus on fees and transparency" by regulatory bodies, Mr Fink said.
In addition, wealth managers are migrating away from short-term active management and towards asset allocation and portfolio construction, he said.
Rapid technological advancement and digitalisation is also taking its toll; and the increase in longevity is having a "fundamental" effect on global retirement systems, Mr Fink said.
"These trends are structural, not cyclical, and [they] will define the way that clients access the asset management ecosystem in the future," Mr Fink said.
While BlackRock sees "significant opportunities" in active management, clients are focusing on outcomes and portfolios more than products, he said.
"We believe active equities remain a key part of the continuum of strategies – spanning index, smart beta, factors, quantitative, fundamental and alternatives – that we draw from to tailor solutions for clients," Mr Fink said.
"The active equity industry needs to change, and we are seeking to lead that change by repositioning our equity investment teams to even more effectively leverage the scale and breadth of BlackRock’s platform and sharpening the focus of our equity products to thrive in this new environment."
Wealth management relationships are under threat as clients look to switch providers driven by the impact of the royal commission. ...
S&P Dow Jones has announced a new addition to its global ESG index using enhanced ESG scores and granular data. ...
Investor confidence is on the rebound and the ASX hit a 12-year high on Monday. But it’s not all good news for the Australian economy. ...