| NEW YORK
NEW YORK Aug 12 BlackRock Inc, which
has been heavily promoting alternative investments to retail
investors, intensified that effort on Tuesday with the launch of
a new multi-manager fund.
The BlackRock Multi-Manager Alternative Strategies Fund
combines the strategies of seven different managers into one
fund. It is the seventh of so-called alternative mutual funds
that BlackRock has launched aimed at penetrating the retail
alternatives market, an area that executives at the New
York-based asset manager say they want to dominate.
Alternatives, which BlackRock defines as investments other
than long-only stocks and bonds, and cash, typically command
higher fees. They are already a big revenue driver at BlackRock,
which manages nearly $4.6 trillion in assets as the world's
largest money manager. Alternatives generated about 9.1 percent
of the firm's total revenue last quarter, while accounting for
just 2.6 percent of total assets under management.
The new fund will be a pricey addition, with an annual
management fee of 1.95 percent. Annual fund operating expenses,
after fee waivers and reimbursements, could be as much as 3.64
percent for some investors who buy the fund through brokers.
Cash flows into retail alternatives, including mutual funds,
are projected to produce as much as 50 percent of the net new
revenues that U.S. asset managers will make from retail
customers over the next five years, according to an Aug. 6
report from McKinsey & Co.
"It's certainly a big opportunity for them," said KBW
analyst Robert Lee, noting that BlackRock has already "invested
a lot in beefing up" their retail business and alternative
The fund is designed to seek total return and, like other
alternatives, diversify investor portfolios beyond core stock
and bond holdings. It includes alternative investment strategies
from seven different managers, or sub-advisers, whose focuses
range from fundamental long/short to event driven strategies.
Among the fund's sub-advisers is LibreMax Capital, whose
manager Greg Lippmann told Reuters last year they have been
"very active" in consumer asset-backed securities, particularly
student loans but also credit card debt.
BlackRock already sells hedge funds, private equity,
infrastructure and real estate investments - all termed
alternatives - to institutional investors. Packaging offerings
like that into mutual funds that Mom and Pop investors can buy
is a logical extension of the firm's strategy.
"It fits very well with our footprint as a firm," said Matt
Botein, chief investment officer and co-head of BlackRock's
alternatives business, in an interview. The firm has been
promoting alternatives to financial advisers through sales
meetings, white papers and more.
BlackRock is not alone in its push with retail alternative
funds, which generally tuck sophisticated hedge-fund type
strategies into mutual funds anyone can buy. There have been 40
new alternative funds launched this year, by research firm
Morningstar's tally, and $14.6 billion in net inflows into the
category, which now boasts a total $156.3 billion in assets.
(Reporting by Ashley Lau in New York; Editing by Linda Stern,