Active Equities
Use of index strategies has increased in recent years, but institutional investors globally say that has not diminished the importance of active equity strategies in their portfolios.
Why BlackRock for active equity?
BlackRock offers both fundamental and systematic strategies that combine human insight and technology in varying degrees to seek the outcomes that you need. Four key strengths underpin BlackRock’s active equities platform.
Learn more about active equity investing at BlackRock
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Investment strategies
BlackRock’s active equity team is actively ambitious on your behalf. Our active strategies are offered in two complementary approaches — fundamental and systematic. Each is distinct enough to seek to offer a differentiated source of investment return that can easily partner with other portfolio components to best target individual risk/reward goals.
BlackRock’s active equity strategies are fueled by combining human insights with innovative technologies
Source: BlackRock. For illustrative purposes only.
Fundamental active equity (FAE)
Driven by human insight, enhanced by innovative technologies.
Systematic active equity (SAE)
Driven by innovative technologies, guided by human insight.
Leadership
Raffaele Savi
Managing Director, is Co-Chief Investment Officer of BlackRock's Active Equity Platform and Co-Head of Systematic Active Equity (SAE).
Tony DeSpirito
Director of Investments, U.S. Fundamental Equities and Head of U.S. Income & Value Team
Jeff Shen
Managing Director, is Co-Chief Investment Officer of BlackRock's Active Equity Platform and Co-Head of Systematic Active Equity (SAE).
Belinda Boa
Managing Director, is Co-Chief Investment Officer of BlackRock's Active Equity Platform & CIO of Fundamental Active Equity Emerging Markets.
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Market themes may drive investment opportunities
Unprecedented market volatility over the year to date likely shifted many institutional investors away from their strategic asset allocation targets. These strategic targets are often designed to control risk, making rebalancing a critical component of a disciplined investment process.
As investors begin to rebalance, we see several opportunities to take advantage of changing equity markets and attractive valuations through active equity management. In an uncertain environment, we believe investors may find benefits in remaining disciplined, diversified, risk aware and flexible in their approach.
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Investors can seek resiliency in different ways:
- Minimum volatility: Minimum volatility strategies are designed to have less exposure to more volatile sectors, industries and individual securities. While less likely to outperform in up markets, min vol strategies may help mitigate downside risk, and recover more quickly than the broad market.
- High quality dividends: Income, especially in an era of historically low bond yields, can be a critical component of total return, providing the potential for outperformance over time.
- Hedge funds: While sometimes viewed as high risk, hedge fund drawdowns have proven to be shorter and shallower than equity market drawdowns, as shown in the chart below. In addition, returns typically demonstrate low correlations with traditional strategies.
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- Emerging markets and China: Emerging markets have more attractive valuations than developed markets following the market declines with P/Es at a 26% discount as of 31 March. China’s inclusion in the MSCI global indices is prompting increased interest in its diversified market.
- Technology: The technology includes a diverse set of opportunities in sub-sectors ranging from hardware to online services to gaming and beyond. Technology adoption in response to the pandemic may change the way people engage, boosting growth already strong growth.
- Health: In addition to favourable demographics, the health sector’s defensive characteristics and limited reliance on the economic cycle create resiliency and potential for growth
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Countries, sectors and individual stocks have reacted differently to the COVID-19 pandemic, creating a dynamic environment for active stock selection.
Active managers can take advantage of a high dispersion environment, where what you don’t own can be as important as what you do own.
Unconstrained strategies give managers the flexibility to pivot to the what they believe are the biggest areas of opportunity while avoiding areas expected to underperform. High conviction strategies offer the potential for amplified returns through concentrated portfolios.
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During the rebalancing process, consider increasing exposure to sustainable investments through dedicated impact strategies or implemented within traditional equity mandates.
Investors are increasingly aware that material sustainability-related factors can be tied to a company’s long-term growth potential. This makes sustainable investing a necessary component of a comprehensive research and due diligence process.
Flows to sustainable strategies support the idea they are becoming the norm, not an anomaly.
