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BlackRock Firings Follow Hard-Line Stance on Portfolio Performance

Defensive

In an era of low returns, everyone is getting impatient with underperformers. And that could mean your job is in jeopardy. That’s exactly what’s happening at BlackRock, which offloaded five portfolio managers, including those that invest in small-company stocks and energy.

Natural resources funds will be managed by Robin Batchelor and Poppy Allonby, replacing Denis Walsh and Daniel Neumann. BlackRock will also replace the managers for the $1.4 billion BlackRock Small Cap Growth Equity Portfolio, Andrew Thut and Andrew Leger. Also being replaced is Eileen Leary, who ran the $286 million BlackRock Mid-Cap Growth Equity Portfolio.

These personnel changes come on the heels of some very frank remarks that Robert Kapito, BlackRock’s president, made at a conference on Feb. 13: “I will have less patience going forward with underperforming active products and we will look to replace those teams quicker than we have replaced them in the past.”

The allegedly dissatisfactory funds include BlackRock Small Cap Growth Equity Portfolio (PSGIX), whose institutional shares returned 3.5% in the past year, trailing 74% of rival funds, according to Bloomberg. Meanwhile, BlackRock’s Mid-Cap Growth Equity fund returned 2.3% over the past 12 months, putting it behind 76% of rivals.

The reasons for the firings will perhaps leave some fund managers quaking in their boots. BlackRock, the world’s biggest money manager with $3.8 trillion in assets, is seeking to improve the performance of actively managed funds as deposits trailed those of index-based investments. Fair enough, right? Well, some might find it kind of worrisome, considering that by conventional wisdom, it was sort of understood that managed funds often give less aggressive returns than index funds, the trade-off being that the former had greater putative stability over the long haul. If BlackRock’s firings augur a new trend, it seems possible that we will see a shift in the received wisdom that one should cut managed funds a little slack.

Barclays’ Drastic Bonus Cuts (eFC)

Barclays’ UK and US Libor will be cutting its bonus pool by over $680 million in response to the Libor affair, which seems harsh in light of RBS’s expected cut of only $450 million.

Love, Actuaries (Yahoo! News)

Want to be wined and dined by potential employers? Forget the sexy trading floor jobs and become an accountant or auditor, which are among the fastest-growing of all professions.

TMI? (Guardian)

Scandal-plagued Barclays is expected to reveal next week that as many as 600 of its staff are paid more than $1.3 million, a far more detailed disclosure than is required by law.

New Ways to Pay Advisors (Financial Planning)

As asset growth has slowed, investment advisors are being compensated in new ways, in addition to the traditional system of receiving a fixed percentage of assets under management.

Team Building (Financial News)

Jeffries has finally made its first two equity analyst hires covering the lucrative European banking sector, over two years after appointing a head for this group.

Job Satisfaction (Financial News)

According to a survey, 92% of private equity execs are happy with their careers, the highest proportion since the survey began in 2009. The grounds for their cheeriness are surprising.

Goldman Departure (Financial Times)

Greg Tusar, head of electronic trading at Goldman Sachs, is leaving the investment bank after 13 years. The reasons for the departure were not made public.

Buzz Around the Office

Symbol of Man’s Hubris II (Yahoo! News)

Australian mining entrepreneur Clive Palmer unveiled blueprints for Titanic II, a modern replica of the doomed ocean liner. He stopped short of claiming it was unsinkable.

List of the Day: Ways to Get (Legally) Fired

While employers can’t fire you based on race, sex, national origin, age, disability or other protected categories, there are some appearance-based firings that may be perfectly legal.

  1. Too attractive
  2. Too thin
  3. Too short

(Source: AOL Jobs)

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