BlackRock Replaces Equity Managers to Boost Performance
February 27, 2013
BlackRock, the world’s biggest asset manager, replaced portfolio managers at funds including those that invest in energy as it seeks to improve performance at actively run products.
Natural resources funds including the $773 million BlackRock Energy and Resources Portfolio and the $384 million BlackRock All-Cap Energy and Resources Portfolio will now be managed by Robin Batchelor and Poppy Allonby, according to a filing today by the New York-based company with the U.S. Securities and Exchange Commission. The funds were previously managed by Denis Walsh and Daniel Neumann, who took over after former manager Daniel Rice said in June he was stepping down to avoid the appearance of a conflict of interest.
BlackRock, which manages $3.8 trillion, is seeking to improve the performance of actively managed funds as deposits trailed those of index-based investments. BlackRock hired Chris Leavy in October 2010 from OppenheimerFunds to oversee fundamental equity, and last year reorganized its bond unit to give more autonomy and accountability to individual managers.
“We have to continually find ways to improve by identifying opportunities to enhance performance,” Robert Kapito, BlackRock’s president, said Feb. 13 at the Credit Suisse Financial Services Forum in New York. “I will have less patience going forward with underperforming active products and we will look to replace those teams quicker than we have replaced them in the past.”
The managers for the $1.4 billion BlackRock Small Cap Growth Equity Portfolio, Andrew Thut and Andrew Leger, will be replaced, as will Eileen Leary, who ran the $286 million Blackrock Mid-Cap Growth Equity Portfolio, according to separate filings today. Jessica Greaney, a spokesman for BlackRock, confirmed that Walsh, Neumann, Thut, Leger and Leary will be leaving the firm.
Rice, who helped manage five energy and natural resource mutual funds at BlackRock, stepped down last year amid an incident related to disclosure. Rice is one of the founders of Rice Energy, a company with a subsidiary that has a joint venture with one of the top holdings of a mutual fund he managed.
BlackRock Energy and Resources Portfolio lost 21% in the past 12 months, trailing 99% of peers, according to data compiled by Bloomberg. Over the past five years, the fund has declined at an average annual rate of 6 percent, behind 82% of rivals.
The institutional shares for BlackRock Small Cap Growth Equity Portfolio (PSGIX) returned 3.5% in the past year, trailing 74% of rival funds, according to data compiled by Bloomberg. Travis Cooke will be the lead portfolio manager for the small-cap fund, according to the filing.
BlackRock’s Mid-Cap Growth Equity fund returned 2.3% over the past 12 months, putting it behind 76% of rivals. Lawrence Kemp, who joined BlackRock in December, will lead the fund, along with Phil Ruvinsky and Kathryn Mongelli.