BlackRock has hired Professor Andrew Ang, Ph.D., as managing director and head of its Factor-Based Strategies Group. He will lead the investment management firm’s effort to expand in the emerging field of active investing through exposures in different premiums.
BlackRock is currently managing $125 billion in client assets across different factor-based products and strategies.
Dr. Ang is a finance professor at Columbia Business School before joining BlackRock. For 15 years. Dr. Ang focused on understanding the nature of risk and returns in asset prices particularly the behavior of factor risk premiums within and across asset classes.
He conducted research on asset management, alternative investments, equities, bond markets, and portfolio allocation. Dr. Ang recently served as Chairman of the Finance and Economics Division and the Ann F. Kaplan Professor of Business at Columbia.
He also served as a consultant on factor investing strategy for Canada Pension Investment Board, Norges Bank, the Norwegian Ministry of Finance, the UAW Retiree Medical Benefits Trusts, and other large investment management firms.
The investment community praised his latest book entitled, Asset Management: A Systematic Approach to Factor Investing.”
BlackRock believes Dr. Ang could help drive factor-based strategies
BlackRock believes that Dr. Ang’s knowledge and experience could help drive its development of factor-based strategies.
In a statement, Ken Kroner, global head of multi-asset strategies at BlackRock noted that markets are constantly evolving. Investors widely understood and incorporated historic sources of outperformance, and their impact diminished.
According to him, “To generate sustainable investment results, investors will need to use data and technology in factor-aware investment processes. Ang is a leading light in this arena, having applied his knowledge to some of the largest portfolios in the world.”
A perfect opportunity to transform asset management
On the other hand, Dr. Ang emphasized that BlackRock has an established investment platform, data analytics capabilities, and superior talent. He said, “This is the perfect opportunity for factor investing to truly transform asset management.”
He also stated that BlackRock is a “trusted advisor, and its credibility in supporting the next generation of factor-based strategies will be critical in educating investors and clients about the important development in portfolio construction and active asset management.”
Separately, Goldman Sachs recently initiated coverage on asset managers – GS stated the following regarding BlackRock:
Source of opportunity
We initiate coverage of BlackRock, Inc. (BLK) as Buy, with 18% upside to our $421 price target. Despite its +$4.8tn AUM base, we believe concerns over BLK’s long-term growth prospects are overstated as the firm has an appropriate product set in some of the fastest-growing areas in asset management, which should keep flows at about the 5% level. Moreover, favorable mix shift (FX aside) should drive the firm’s fee rate higher, leading to a faster organic fee growth relative to AUM growth.
Also, we believe BLK’s scale in faster-growing products lends itself to further operating leverage that is not reflected in current consensus estimates. Coupled with modest capital returns, we see BLK as a steady 10%+ EPS grower (ex-market impact and closer to 15% with normal markets), which is not reflected in the stock’s 15.4X 2016E P/E, a PEG of just 1.2x vs. the average 1.8x of other large cap financials. Our 2015/16/17 EPS estimates are $20.52/$23.56/$27.29, +1%/+2%/+3% above consensus respectively.
