BlackRock plays Robot-card to win on Stock Market

BlackRock, the world’s largest fund company, will rely on robots to do its stockpicking. The $5.1 trillion asset manager announced on Tuesday that they will be restructuring the business to offer cheaper quantitative stock funds driven by computer models.

The change impacts about $30 billion in assets under management, including $30 million in annual fee-related dollars, says Jefferies analyst Daniel Fannon. Fannon says that while the scale of the reorganization is surprising, the change makes sense in the context of the firm's struggle to draw active stock assets. This means that traditional stock-pickers will be replaced, with reports indicating that 40 jobs are on the line in the shake-up, with Blackrock earmarking $25 million in severance and bonuses to those affected.

The company’s new investment strategy will be implemented in 11% of the stock fund business, which currently holds $275 billion in active stock.

The author of the company's new strategy is former Canada Pension Plan Investment Board Chief Executive Mark Wiseman, who was hired last year to turn around the stock-picking business, as Fox News reported.
"We're in really rough seas, but BlackRock is an aircraft carrier," Mr. Wiseman said. "Everyone else is in dinghies, and they're bailing like hell."

New York-based BlackRock also owns one of the most prized businesses in asset management, its iShares ETF franchise purchased from Barclays in 2009. Much of the company's active stock franchise is from its 2006 acquisition of Merrill Lynch Investment Managers.

According to CNBC's Leslie Picker, the changes come at a time when clients at BlackRock and other competing firms are frustrated with the high fees and investments that generated sub-par results, especially compared to much cheaper exchange traded funds.