GLOBAL - BlackRock has reported net outflows by institutional investors of $39.6bn (€29.9bn) and inflows of $8.9bn, as the global equity rally and tightening credit spreads have caused investors to reconsider investment strategies and shift from active to passive investments.
First quarter figures from the asset management firm showed assets under management increased by $17.6bn to reach $3.36trn by the end of March. This growth was achieved by inflows of $8.9bn into long-term products such as equity, fixed income, multi-asset and alternative investments. On a global basis retail and iShares investments were particularly strong, while investments also came from institutional investors in the US and Canada.
The inflows combined with $51.2bn of investment performance and market appreciation, but these figures were partially offset by $2.9bn of disbursements in advisory portfolios and $39.6bn of outflows in cash management products.
Figures showed while BlackRock received $18.2bn of net new business globally in index equity and fixed income products, plus $13bn in multi-asset and alternative investments, £22.3bn was redeemed from actively managed equity and fixed income portfolios.
The asset management firm admitted that some of these outflows were "merger-related" following the acquisition of iShares from Barclays Global Investors last year, but it stated "a greater proportion reflected a shift in clients' asset allocation strategies given market outlook and interest in using index and exchange-traded funds to quickly an efficiently add and adjust market exposure".
New investment in long-term products by institutional investors reached $5.2bn in the US and Canada, with a further $3.3bn from iShares investors, however across all other regions long-term products saw outflows of $10.2bn by institutional investors, although this was partially offset by $5.4bn inflows from retail clients and a further $800m from iShares investors.
Equity assets under management, globally, increased to $1.58trn, while fixed income assets reached £1.06trn as index products saw inflows of $13.6bn, of which $7.1bn went into iShares. However active fixed income products saw outflows of $14.4bn, which BlackRock attributed to "asset allocation shifts by several large institutional institutions".
Laurence Fink, chairman and chief executive of BlackRock, said: "Following last year's sharp rally in global equity markets and significant tightening of credit spreads, institutional investors stepped back to reassess their asset allocation strategies."
"As a result, institutional 're-risking' activity slowed down and reallocations focused primarily on shifting from active to passive and from money market funds to deposits. Our new business results reflected these trends," he added.