• The Role of Third Party Vendors in Asset Management

    This ViewPoint explores the role of third party vendors in the asset management industry and catalogues a broad range of vendors that help asset managers conduct key functions. All asset managers, including both external and in-house managers, use some third party services. In addition to third party vendors, there are a variety of financial market infrastructures that all market participants rely on, including exchanges, central clearing counterparties, electronic trading and affirmation platforms, and trade messaging systems such as SWIFT. These financial market infrastructures are the spinal cord of financial markets. This paper offers some recommendations regarding guidance that should be provided to purchasers of services and suggests a framework for approaching the analysis of the providers of these services.

  • Digital Investment Advice: Robo Advisors Come of Age

    This ViewPoint reviews the landscape for digital advice, including the different business models present today, and the existing regulation of digital advice. Digital advisors incorporate computer-based technology into their portfolio management processes – primarily through the use of algorithms designed to optimize various elements of wealth management from asset allocation, to tax efficiencies, to product selection and trade execution. Digital advice is subject to the same regulatory requirements as traditional financial advice, including supervision by the SEC and FINRA in the US, the FCA in the UK, and equivalent authorities in other jurisdictions. That said, appropriate regulatory supervision is important, making it helpful for regulators to explore best practices in digital advice while recognizing that business models and technology will continue to evolve over time. In this ViewPoint, we suggest that regulators focus on five key areas: (i) know your customer and suitability, (ii) algorithm design and oversight, (iii) disclosure standards and cost transparency, (iv) trading practices, and (v) data protection and cybersecurity.

  • Addressing Market Liquidity: A Broader Perspective on Today’s Euro Corporate Bond Market

    This ViewPoint is a continuation of previous BlackRock publications addressing market liquidity, focusing specifically on euro denominated debt, and integrating European data around trading and ownership. We begin by sizing the euro corporate bond market and move on to discuss secondary market liquidity. We then look at ownership of euro area debt, as well as evaluate the implications of the European Central Bank’s (ECB) corporate bond buying programme on euro corporate bond ownership and liquidity, the rise of bond Exchange Traded Funds (ETFs) in Europe as a source of bond market liquidity.

  • Improving Transparency: The Value of Consistent Data over Fragmented Data

    Financial market transparency, delivered through appropriately detailed and timely reporting, underpins well-regulated and robust markets where risks are monitored and properly understood. In this ViewPoint, we analyze fund data and transaction reporting regimes in the US and EU, comparing the aims objectives, remit and reporting requirements of both, and identify a number of challenges faced by regulators and firms. We conclude with policy recommendations regarding how data could be requested and reported in a more streamlined, consistent manner, and encourage global securities markets standard setters to take on this difficult and complex issue by establishing an international working group to study global reporting.

  • BlackRock: Worldwide Leader in Asset and Risk Management

    While BlackRock is known as a large asset manager, our size says little about our structure and risk profile, our history, or how we function today. In this ViewPoint, we provide an overview of our organization and discuss the factors that differentiate BlackRock specifically, and the asset management industry more generally.

  • Exploring ESG: A Practitioner's Perspective

    This ViewPoint sets out our views on environmental, social, and governance (ESG) issues from the perspective of a fiduciary investor acting on behalf of asset owners. We define different ways that investors can integrate ESG factors in the investment process, outline our views on how ESG factors contribute to long-term value, and describe the current landscape of ESG disclosure initiatives across organizations and regulatory bodies. There are a number of challenges associated with assembling and evaluating ESG information. To address these challenges, we provide recommendations for policy makers to establish a framework that enables stakeholders and market participants to develop detailed ESG standards and best-practice guidelines.

  • Breaking Down the Data: A Closer Look at Bond Fund AUM

    This ViewPoint explores the diversity of US bond funds and the range of investments made by funds within each category. We then review data on investor flows in the largest categories of bond funds to analyze investor behavior in response to historical market stress events. We observe different flow patterns in various categories of bond funds during these periods of market stress, which suggests that bond fund investors do not treat all bond funds as a single asset class, even during times of market stress. Based on this analysis, we conclude that any macro stress test that is unable to capture the diversity of bond funds and incorporate performance of different fixed income asset classes is unlikely to produce results that are reflective of potential market dynamics, particularly if such models assume that all bond fund shareholders react in the same way in response to market stress. Stress testing of individual funds should be incorporated into mutual funds’ liquidity risk management programs.

Older Jun 8, 2016 To Sep 19, 2016