Asset managers haven’t had the best year, but this hasn’t stopped Blackrock president Rob Kapito from giving a bullish speech to investors at the Goldman Sachs Financial Services conference in New York. This is what he has to say about job prospects for 2016.
1. Blackrock is in the market for buying in talent
The asset management industry is undergoing consolidation and the expectation is that M&A activity on the buy-side will continue. But Kapito isn’t interested in acquiring the clunking infrastructure of competing buy-side firms. The real opportunity is to lift out top teams in areas where Blackrock is not competitive.
“It’s less about mergers and more of a case of identifying high-performing consistent teams looking to move to another organisation where they can do better,” he said.
2. Blackrock is looking to steal business from hedge funds
The hedge fund industry is floundering and Kapito views this as an opportunity. Yes, US active equity funds have endured the worst outflows ever, despite decent performance, but Kapito believes that assets will flow back to those asset managers who can offer consistent performance.
"There will be a wave of money out of some of the hedge funds,” he said.
This may not mean new opportunities at Blackrock, but at least jobs will be safe. “We brought in six new teams and tested them. Today, for the first time ever, we’re in the top quartile,” he says.
3. Wall Street’s technology is terrible, Blackrock’s is not
“Everyone knows that financial services has the worst technology than any other industry,” said Kapito. The implication, of course, is that the technology behind Blackrock’s Aladdin platform, which is used by over 200 financial institutions, is not. Blackrock’s ‘Solutions’ division, which includes technology, is likely to be an area focus in 2016.
4. Blackrock will be building its ETF business
Blackrock’s ETF business has had some flack – Carl Icahn recently said that they were over-priced, illquid and therefore dangerous – but Kapito says that the market is still ripe for growth. Over the next three to four years, ETFs will “double in size”, he says. Expect Blackrock to hire in this area.
5. Blackrock will be building its regulatory crack-team
Blackrock has around 200 employees in its Financial Markets Advisory business and more within its Solutions division that advises the governments on financial services regulation. This will be a focus for next year.