Future of Work – Banking – AI and investing at BlackRock

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.

At BlackRock, Machines Are Rising Over Managers to Pick Stocks

The initiative is the most explicit action by a major fund management firm in reaction to the exodus of investors from actively managed stock funds to cheaper funds that track every variety of index and investment theme. Some $30 billion in assets (about 11 percent of active equity funds) will be targeted, with $6 billion rebranded BlackRock Advantage funds.

 

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