The rest of the asset management industry should be taking serious note of BlackRock’s decision to merge its EMEA mutual fund and ETF sales teams last month.
This new team, which is headed-up by BlackRock’s head of ETF and indexing sales, EMEA, Ivan Pascual, will be responsible for distributing the firm’s entire fund range to wealth and asset management clients.
The world’s largest asset manager is the first in Europe to combine sales forces in this way. BlackRock’s EMEA head Rachel Lord says the decision reflects a changing environment where clients are adopting a whole-portfolio approach.
The move to no longer have a divide between the two fund structures is a firm signal the world’s largest asset manager has finally put the last nail in the coffin of the tiresome active versus passive debate.
This seemingly never-ending debate has been fuelled over the years by the media and benchmark-hugging active managers worried about losing flows, however, for asset allocators and asset managers, it has never been an issue.
For BlackRock, as with the rest of the industry, the focus must be on providing solutions to the wide variety of outcomes clients are demanding, regardless of the fund structure.
As part of this, portfolio construction is becoming increasingly important for asset managers as more and more clients look to centralise their investment proposition so having all the required building blocks in-house will also be crucial.
What the US giant has shown through this team merger is it believes both ETFs and mutual funds can be useful building blocks when looking to deliver these different client demands.
This is especially the case for European investors as ETFs do not come with same tax incentives compared to the US. This side of the pond, investor demand for active mutual funds is still high and because the region does not allow non-transparent ETFs, which will likely encourage more active fund managers to launch strategies using the ETF wrapper, this is likely to remain high.
Those asset managers still without an ETF range face being left behind in the changing environment and for the executives at other asset managers who offer a full service of funds, this should come as a major wake-up call.
