NEW YORK (Reuters) - BlackRock Inc (BLK.N) on Wednesday announced that it has expanded its senior leadership team and reorganized its investment and client-facing businesses in an effort to grow its business.
The New York-based investment firm has added eight executives to its global executive committee, bringing the total to 21, according to an internal memo provided by the company to Reuters.
BlackRock is replacing its portfolio management group, which had been headed by Rich Kushel, with five new investment groups. Kushel will be deputy chief operating officer of the firm, reporting to President Robert Kapito and chief operating officer Charles Hallac.
Kushel will also head a new strategic product management group, according to the memo.
The changes come as BlackRock Chief Executive Laurence Fink shifts the $3.56 trillion company’s focus from being an acquirer to operating its businesses.
In recent months, amidst a spate of high profile departures and rumors that Fink may leave to become U.S. Secretary of the Treasury, some analysts have said they wanted more insight into the firm’s bench strength. Others wondered if the firm had gotten so big, that it needed more leaders at the top.
The changes seem to address those concerns. The additions to the global executive committee “will ensure a broader, more diverse representation of views, including from the investment side of the business,” Fink wrote in the memo.
In the memo, Fink indicated that he is not going anywhere. “I look forward to working with all of you in the years to come to realize the full potential of this reorganization,” he wrote.
The new portfolio management group structure comes as BlackRock is working to improve performance, particularly of its equity funds.
BlackRock will have five new investment groups: Alpha Strategies reporting to Quintin Price; Beta Strategies, which includes all of firm’s passive investments such as exchange-traded funds, and will be led by Amy Schioldager; Multi Asset Strategies reporting to Ken Kroner; Alternative Strategies reporting to Matt Botein; and Trading and Liquidity Strategies reporting to Richie Prager.
In its July 18 earnings call with analysts, Fink was not happy with the performance of BlackRock’s fundamental equity managers. “We still are not hitting as well as we need to,” he said. “We are working towards building that platform up and making sure those issues are addressed.”
On the client facing front, BlackRock is bringing together its iShares ETF business with its retail mutual fund business, and the firm’s institutional with its BlackRock Solutions business, which includes its risk analytics.
The retail and ETF group will report to Rob Fairbairn while the institutional group will report to Rob Goldstein, according to the memo.
It makes sense for BlackRock to combine its retail fund sales effort with its iShares sales effort so that advisers will have one point of contact with the firm, said Dave Nadig, director of research at IndexUniverse, which researches ETFs.
“The interesting thing will be to see how they bring that sales process together,” he said, noting that on one hand BlackRock has actively managed mutual funds and on the other it has passively managed ETFs.
Reporting By Jessica Toonkel; Additional reporting by Aaron Pressman; Editing by Alden Bentley, Bernard Orr