Research houses have maintained their current ratings and recommendations on local offerings of fund managers BlackRock and Barclays Global Investors (BGI).
BlackRock last Friday agreed to buy BGI in an industry record $17.01 billion deal. The combination will operate under the name BlackRock Global Investors (BlackRock). The transaction is expected to close in the fourth quarter of 2009.
Zenith Investment Partners investment analyst Graeme Miller said Zenith would keep its current ratings on BlackRock’s products, but will monitor any new developments and intends to engage in further discussions with BlackRock to gain more clarity surrounding its corporate strategy and product offering.
An acquisition of this size carries execution risks and could have a potentially destabilising effect on BlackRock’s investment teams, Miller said.
Research house Standard & Poor’s (S&P) will be maintaining its current ratings on BlackRock and BGI funds.
“At this stage the offer hasn’t been accepted, but we will be monitoring the situation closely,” S&P head of fund research Leanne Milton said.
Lonsec general manager Grant Kennaway said there is likely to be product rationalisation of local offerings once BlackRock completes the transaction.
However, given the deal is yet to be finalised Lonsec will not be changing any BGI or BlackRock ratings at this time. Lonsec will review fund ratings once the deal is complete and further details on the status of the investment teams are available, Kennaway said.
He said although the combined group will be a well resourced, high quality outfit, it wouldn’t necessarily lead to more choice for investors.
Morningstar manager of fund analysis Chris Douglas said both businesses are to a large extent complementary, rather than overlapping.
“We have reassessed our existing Morningstar recommendations for both fund managers, and at this stage don’t advise investors to make any changes to their portfolios on the basis of the likely acquisition,” Douglas said.
“We expect that successful investment teams and processes will be retained in the combined entity. For example, we anticipate that the BlackRock Global Allocation strategy will continue to be run by the same investment team under Dennis Stattman’s highly capable leadership.
“We also expect BGI’s quantitative approach to active management to be retained.”
