BlackRock Inc. is shifting its active management resources and teams to focus on a group of new and reorganized product lines.
The investment company said it is reorganizing its active equity offerings into four new product groups: core alpha, high-conviction alpha, outcome-oriented, and country and sector specialty. U.S.-based investment teams will be shifting toward a more product-focused operation.
BlackRock said that the changes of strategy or portfolio management will impact about $30 billion in assets under management, or about 11% of total active equity assets under management. The company's board has already voted in favor of the proposals.
The company is launching a new BlackRock Advantage series of products, which falls within the new core alpha category and will include nine mutual funds with access to the company's quantitative investment team. Over the last five years, about 90% of the team's strategies have outperformed their respective benchmarks or peer median, the company said.
The introduction of the Advantage funds, among other changes, will bring about $30 million of annualized savings to clients through lower fees, the company said. The company expects to see a related one-time charge of about $25 million, due to severance and compensation costs, in the first quarter of 2017.
The core alpha line also includes products for clients who want market returns plus consistent out-performance with low risk levels, while the high-conviction alpha line is designed for clients looking for higher risk and higher returns, the company said. Outcome-oriented products will include funds seeking particular results, such as income or sustainable investment strategies.
The changes are part of the many changes that began at the company in 2016, including the combination of BlackRock's quantitative and fundamental investment teams into an active equity investment platform, said Mark Wiseman, the asset manager's global head of active equities.