Displaying items by tag: Blackrock

(New York)

Despite all the worries that plagued the market this year, things have actually been very strong. Exceedingly so. But don’t expect that any longer, says Blackrock. The world’s largest asset manager expects returns in 2020 to come way down. The firm says that the big changes in monetary policy this year outweighed the geopolitical issues and caused huge returns, which won’t happen next year. Blackrock thinks returns in the mid single digits in 2020 seem realistic.

FINSUM: This is sort of a middle of the road call in terms of forecasted numbers, but we like the summary of what happened this year and how next year’s performance is not likely to be duplicated.

(New York)

This is a tricky environment for income investing. On the one hand, rising rates generally mean better yields, but at the same time, the chance of rate-driven losses is high. What if investors wanted to get safe 5% yields? Doing so is a little bit tricky and requires a blend of riskier credit and a mix of durations. However, investors can get pretty close with some individual ETFs. For instance, BlackRock’s iBoxx $ Investment Grade Bond ETF yields 4.39% and has shorter dated maturities with comparable credit quality to other funds.

FINSUM: This seems like a good choice, but there are also a number of rate hedged ETFs that have similar yields and almost no interest rate risk.

(New York)

Here is a mundane but important question: what is the best single fund to track the whole market? There is now a wealth of options, from Fidelity’s free index tracker all the way to popular, but more costly SPY. The answer to this question is not as straightforward as one might think, as each of the funds has its own characteristics. For instance, while Vanguard’s VTI is popular, it has a quirky structure that can boost unrealized gains. It is also harder to trade without fees. Fidelity’s zero fee index mutual fund is a good choice, but only available on its own platform. Blackrock’s ITOT might be the best choice overall when considering fees, performance, and availability.

FINSUM: For being considered “vanilla”, there certainly are a lot of different flavors of index tracker these days.

(New York)

If you think the market has been bad overall, take a look at the asset management sector, which has been brutalized in the last few weeks. The S&P index of asset managers has fallen 14% this month, compared with a 9.3% drop for the market overall. That adds to a lot of pain already this year—the index has lost almost 25% of its value in 2018 and is headed for the biggest loss since 2008. Some, like leader BlackRock, have been hit very hard just this month with shares down 17%.

FINSUM: Weak fees and poor fund flows are the immediate problem, but they are a major issue because they support investors’ fears of disruption in the industry.

(New York)

BlackRock just reported earnings and the results are not what many expected. Total inflows for the quarter were just $10.6 bn, the lowest since 2016. Interestingly, one of the biggest areas of losses was in passive strategies held by institutional managers, where BlackRock saw $30 bn of withdrawals. The poor results sent BlackRock’s stock to its lowest point since May 2017. BlackRock’s CEO Larry Fink blamed the uncertainty about rates and peak earnings as reasons for the outflows.

FINSUM: What is interesting here is that BlackRock is probably in the best position to keep devouring assets, but even it is having trouble.