Apart from the Mergers and Acquisition process and other parts of banking (see previous posts), stock picking is becoming driven by A.I: and human stock pickers are being laid off at Black Rock, one of the largest investment firms globally.
Now, after years of deliberations, Laurence D. Fink, a founder and chief executive of BlackRock, has cast his lot with the machines. On Tuesday, BlackRock laid out an ambitious plan to consolidate a large number of actively managed mutual funds with peers that rely more on algorithms and models to pick stocks.
This has been part of a larger trend for years, showing that most fund managers do not outcompete indices after cost:
Last year, for example, $423 billion left actively managed stock funds and $390 billion poured into index funds, according to Morningstar.
Some $30 billion in assets (about 11 percent of active equity funds) will be targeted, with $6 billion rebranded BlackRock Advantage funds. These funds focus on quantitative and other strategies that adopt a more rules-based approach to investing. “The democratization of information has made it much harder for active management,” Mr. Fink said in an interview.