BlackRock Is Now The Biggest Asset Manager

Investors pulled a net $320bl from mutual funds in 2008, a record in both dollar terms and as a percentage of assets, in one of the biggest flights to safety the industry has seen. The move out of what were previously regarded as safe and stable investments followed a record year of investor inflows in 2007.

• Jun 12: Blackrock, started 21 years ago in a one-room office, agreed to buy Barclay's investment unit for $13.5bl to become the world’s largest money manager. BlackRock will pay $6.6bl in cash and the rest in stock for Barclays Global Investors. Barclays will hold a 19.9% stake in the combined company. The purchase, the biggest of a fund manager, creates a company overseeing $2.7tl in assets, more than the Federal Reserve. BlackRock will add about $1tl in investments that track market indexes, which are attracting clients at the expense of funds whose managers choose securities to buy and sell. It’s the first top-ranked firm to attempt to combine both types of businesses.
• Jun 08: BlackRock is a step closer to becoming the world’s biggest money manager after emerging as the leading bidder for Barclays’s fund unit. BlackRock has moved ahead of contenders for Barclays Global Investors including BofNYMellon. Barclays, the U.K.’s third-largest bank, is seeking more than $12bl for BGI, and may keep a 20% stake in the combined company.
• Mar 27: BlackRock, the biggest publicly traded U.S. asset manager, will participate in the U.S. Treasury’s programs to purchase troubled securities from banks. BlackRock will take part in programs outlined today by the Treasury that will purchase loans and set up funds to buy mortgage-backed securities. Bill Gross, co-chief investment officer for Pimco, said his firm also would participate in the bailout programs.
• Jan 20: SSgA reported a 27% plunge in assets under management for 2008, to $1.44tl as of Dec 31 2008, from $1.98tl a year earlier, and down 14% from $1.67tl in Q3.
• Jan 13: Fidelity Investments, Franklin Resources and Legg Mason suffered the biggest U.S. mutual-fund withdrawals in 2008, cutting their base of fee- generating assets. Investors pulled $40bl from stock and bond funds at Fidelity, the biggest outflow from a single company. Investors took $21.5bl from Franklin and $21bl from Legg Mason.
• Dec 30: Legg Mason's once-celebrated Value Trust fund is set for its worst-ever annual returns in 2008, and some investors grumble that time is running out for its manager, Bill Miller. The flagship stock mutual fund lost 57% in the year to December 29, the worst in its class and under performing the S&P 500 for the third straight year following the S&P 500's 39.4% loss.The losses are so big, the fund now trails the benchmark S&P 500 over not just one year but over three, five and 10 years. It is barely ahead over 15 years. Hemorrhaging assets, its size has shriveled to about $4.3bl at the end of November from more than $20bl in mid-2007. Miller's luster is fading. The 58-year-old made his and Legg Mason's name as the only manager to beat the S&P 500 15 years in a row until 2006 with bold portfolio picks that once characterized the Value Trust.
• Nov 11: As the financial crisis hammers fund returns, many managers are touting their stable long-term records to convince investors that their money is safe. However, that argument may soon vanish. The 10-year returns of many funds have held up in the face of recent losses in part because of huge stock market gains in the 4Q of 1998. As this year ends, those returns will reflect a new decade of 1999 to 2009, a period that could look miserable for some big funds like Bill Miller's Value Trust.
• Nov 4: In Europe, BlackRock is promoting fiduciary management — the outsourcing of the management of a portion or an entire pension fund – beyond its Dutch stronghold. In the last two weeks of Oct. 2008, BlackRock had been in discussions with four different U.K. pension funds to provide fiduciary management services.
• Oct 21: BlackRock's 3Q earnings fell 15% as investors withdrew from its money-market funds. The biggest publicly traded U.S. asset manager had withdrawals of $41.6 billion from its money-market funds in the quarter, mostly after the Reserve fund faltered. The withdrawals, which represented about 12% of BlackRock's cash-management assets as of June 30, and falling stock and bond markets pushed the company's net income down for the first time in two years.
• Oct 15: Pimco, the world's largest bond fund, was selected to manage the CP assets for the Fed as part of the government's Commercial Paper Funding Facility program. State Street will serve as custodian and administrator of the program.
  

p/s photos: Kou Shibasaki