BlackRock’s Roberts on the firm’s ambitious plans and challenging traditional thinking

As the world’s largest asset manager, with $5.1tn under management, BlackRock regularly makes the news. Recent headlines have included the appointment of former Chancellor of the Exchequer George Osborne as a part-time senior adviser to the BlackRock Investment Institute (more on which later) and the switching of a number of active equity funds in the US to quantitative strategies.

Around $8bn in assets under management is being converted into outcome-orientated income funds and a new series of products for US investors, drawing on the quantitative investment team.

In March Mark Wiseman, global head of active equities at BlackRock, said: “The active equity industry needs to change. Asset managers who simply use the same techniques and tools from the past will limit their ability to generate alpha and deliver on client expectations.”

On this side of the pond, head of UK retail sales Jeremy Roberts is equally passionate about the role of active investment.

Roberts says gross flows into passive and active strategies in the UK retail arm are about even and he maintains that active managers “have a fantastic role to play”. However, he has no truck with the ongoing passive versus active debate.

“I want to kill the active versus passive debate,” he says. “It is focusing on the wrong thing. The two should be blended; use both to create a solution that is right for the client.”

Last year saw a raft of changes at the firm. In January, a reshuffle of the leadership across its investment business saw Rich Kushel appointed to head of multi-asset strategies, Pierre Sarrau promoted to CIO of MAS, Tim Webb named global head of fixed income and Rick Rieder made CIO of global fixed income.

Meanwhile, the active equity strategies were merged into one team, with the fundamental active equity and scientific active equity groups becoming a unified business.

In February, MP George Osborne joined the firm as a part-time senior adviser to the BlackRock Investment Institute, with a widely-reported annual salary of £650,000. The firm declined to comment on Osborne’s subsequent appointment as editor of The Evening Standard.

“As a senior adviser to BII, George will provide perspectives on European politics and policy, Chinese economic reform, and trends such as low yields and longevity and their impact on retirement planning,” BlackRock says. “George is uniquely positioned to provide valuable insight and perspective to BlackRock and our clients.”

The investment institute, Roberts says, “brings together the most senior investment thinkers in the firm across the world, formulates views on asset classes and marries up what investors should be allocating to and where we have strategies”.

BlackRock, which celebrates its 30th anniversary next year, began in 1988. Roberts attributes its success to a history of fortuitous acquisitions, including Merrill Lynch Investment Managers in 2006 and the firm’s largest merger in 2009, when BlackRock acquired Barclays Global Investors.

“The beauty of BlackRock today is that its acquisitions over time made so much sense, due to the complementary natures of the businesses,” Roberts says.

“BlackRock was focused on fixed income and the institutional market in the US, while Merrill Lynch had a strong international retail equities presence, so that was a fantastic fit. BlackRock was predominantly active fundamental while BGI was predominantly scientific passive. They were two very complementary businesses.”

Roberts has been with the firm for 17 years, having joined Mercury Asset Management – which was later acquired by Merrill Lynch – in 1999. As well as managing the discretionary UK wholesale and regional wealth sales teams, Roberts also now oversees the defined contribution team following head of retirement Tony Stenning’s departure at the end of last year.

There are 48 funds in the UK domiciled retail fund range with $67bn in assets under management in the combined active and passive ranges, not including investment trusts and defined contribution.

Roberts says the firm has “done a lot of work to ensure the fund range is as exciting as it can be”.

In 2013 Mark Wharrier was drafted in to join Adam Avigdori on the £379m UK Income fund, replacing Nick McLeod-Clarke, with David Goldman joining as a third co-manager in 2015.

“I wanted a team of excellent fund managers just focusing on UK income strategies,” Roberts says. “The three managers have delivered fantastic results. It is a very competitive sector. Flows have been relatively slow, but Mark, Adam and David now have a three-year track record of working together. We are seeing higher interest.”

Also in 2013, Nigel Ridge joined Nick Osborne as co-manager of the £290m UK Absolute Alpha fund. At its peak in 2012, the fund had £1bn in assets under management with Mark Lyttleton at the helm, before his departure from the firm in 2013 and subsequent conviction for insider dealing.

“UK Absolute Alpha has seen annualised returns of 6 per cent since Nigel was  appointed,” Roberts says. “Flows started coming through at the beginning of this year. The UK equity team is really firing.”

Recent launches have focused on fixed income and factor-based investing, with the Sterling Strategic Bond fund and the BSF Style Advantage fund rolled out last year.

The Sterling Strategic Bond fund launched in May 2016 and is managed by Ben Edwards and Simon Blundell. Roberts says it is a case of “so far, so good”, admitting that fixed income generally did not see enormous net flow last year.

The $468m Style Advantage fund was launched in February 2016 and is run by Ked Hogan and Philip Hodges. The global multi-asset Ucits fund uses several investment styles, including value, momentum, carry and defensive.

“The Style Advantage fund returned 8-9 per cent last year and targets a volatility of 7,” Roberts says. “Clients are struggling to find diversification and the correlation of this fund to equities and fixed income is basically zero. Its performance is very good; it is working well.

“Now it has a one-year track record, we are taking the fund to market in a significant way. It has significant capacity and we have very ambitious plans. Style Advantage is a flagship product and it will be one of our main focuses this year.”

Going back a little further to 2011, BlackRock launched the Global Income fund with Stuart Reeve as manager; Andrew Wheatley-Hubbard and James Bristow joined as co-managers in 2013.

The fund invests in around 50 stocks, seeking out the highest quality companies and holding them, Roberts says. Although the fund is small, with £158m in assets under management, Roberts says the managers are “doing a fantastic job” and the fund is “an example of what I want to drive in the market”.

He adds: “I want to get the market thinking longer term and not just look at the benchmark and quartile rankings. It is not the only way of assessing the performance of active funds.

“This fund is for some people all of the time, not for all people some of the time. Quartile rankings are irrelevant for this product. It is our mission to get the adviser community to look beyond quartile rankings. I am challenging traditional thinking.”

Over the next five years, Roberts hopes to cement BlackRock’s position as a “real, true investment partner for clients”.

“We are blessed with a wide and deep product range. But it is about getting together with clients to provide solutions for customers. I want to be at the forefront of technology. I want active funds that are performing well and we are on a fantastic path.”

The numbers

$5.1tn  In global AUM

48 Funds in the UK domiciled retail fund range

13,000 Employees globally

$67bn In assets under management in the UK retail fund range


BlackRock provides investment management, risk management and advisory services for institutional and retail clients with $5.1tn in AUM at the end of 2016. The firm offers a range of products, including mutual funds and its ETF range iShares. As of 31 December 2016, the firm had approximately 13,000 employees in more than 30 countries, with a presence across global markets including North and South America, Europe, Asia, Australia and the Middle East and Africa.

Independent views

Martin Bamford, managing director at Informed Choice

BlackRock is a giant of a global asset manager, with a significant share of the UK market. They have strengths in both active and passive approaches, with the popular iShares range of ETFs in the latter category. Within our own portfolios, we currently use the UK Gilts All Stocks Tracker fund, which aims to track the performance of the FTSE Actuaries UK Gilts All Stocks TR Index. Within their range of actively managed funds, they are especially well known for the Gold & General fund, managed for the past eight years by Evy Hambro. BlackRock has indicated it will focus on its index investment range in the future, at the expense of active management, and it is well positioned to take advantage of a shift in investment behaviour towards passive investing.

Darius McDermott, managing director at Chelsea Financial Services

For a large company, BlackRock does a remarkable job of having consistency across most of its range – there are very few weak points. We are advocates of their actively managed funds and it was with these funds that it came in the top half of the table in FundCalibre’s last annual Equity Fund Management Index, with 72 per cent of its 25 eligible equity funds outperforming their benchmarks over five years. It is particularly strong in European equities and absolute return and the hidden gem is its Asian equity franchise, headed by Andrew Swan. It also has an extensive range of passive options in its iShares business, most of which are reasonable value for those looking to simply track an index.

Justine Fearns, research manager at Chase de Vere

BlackRock is huge in institutional pensions so it is no surprise that through its widely used retail index tracking fund range, it has looked to extend its reach by creating a range of multi-asset funds, some specifically designed to capitalise on pension freedoms. It has strong and well-resourced retail teams, of which the European and natural resources desks command most investor attention with the Corporate Bond team following not far behind. BlackRock’s strengths are reflected in these areas where, with the exception of some multi-asset funds, its trackers, European and natural resources funds dwarf all other actively managed funds in terms of assets under management and performance.