* Tough markets pressure money managers, Fink says
* Large investors shunning riskier assets
* ETF business recovering from tracking error mistake
* Says stocks of Siemens, Nestle, Allianz appealing
(Adds comment on Barclays, paragraph 14; clarifies quote on
bonds by adding (only), paragraph 6)
Sept 12 Tumultuous markets and financial
problems in Europe are hurting profits in the asset management
industry, according to Laurence Fink, chief executive of
BlackRock Inc (BLK.N), the world's largest asset manager.
"This (volatility) is not a good short-term trend for the
asset management business," Fink said, speaking in New York at
a Barclays Capital conference on Monday.
He said BlackRock, which oversees more than $3.6 trillion,
will seek to maintain its profit margin by being "even more
disciplined" on expenses.
Most large investors continue to shun equities and other
relatively risky assets and favor fixed-income securities, Fink
The trend may be appropriate in the short term but not over
the long term, he said.
For long-term investors "it makes no sense to have a
portfolio of (only) bonds, other than being frightened of the
world," Fink said. "Right now, maybe being frightened of the
world is a good position to be in."
BlackRock's iShares exchange-traded fund business has
recovered from problems last year, Fink said, which he blamed
on poor management at one particular fund. Performance of the
iShares Emerging Market ETF (EEM.P) trailed its benchmark index
generating substantial "tracking error," he said. The problem
has been corrected, he said.
BlackRock's share of net new money coming into U.S. ETFs
was 26 percent to 27 percent in the first three quarters of
2010 but fell to 16 percent in the fourth quarter. It has since
bounced back to 24 percent in the second quarter of 2011, Fink
He said BlackRock's ETF performance was "poor in the last
year and much of it was our doing."
"It wasn't because of the success of Vanguard," he added.
"It was because of the failure of BlackRock."
Asked about his favorite stocks, Fink first joked that he
was not a portfolio manager. "I'm the overhead," he said.
But he said BlackRock sees long-term value in some
beaten-down European blue chip stocks like Siemens AG
(SIEGn.DE) and Nestle NESN.VX.
"Even in financial services, I do believe there are some
great opportunities in Europe," he said, pointing specifically
to insurance giant Allianz (ALVG.DE), which owns U.S. money
Fink also said he does not expect British bank Barclays
(BARC.L) will have to sell off its stake in BlackRock to meet
new capital rules. "I don't believe there is any pressure," he
Shares of New York-based BlackRock gained 23 cents, or 0.2
percent, to $151.30 on the New York Stock Exchange on Monday.
The shares have fallen 19 percent over the past three months,
almost double the decline in the Standard & Poor's 500 Index.
(Reporting by Aaron Pressman; Editing by Steve Orlofsky and