BlackRock Inc CEO Larry Fink is hoping that a trillion points of data can revive his firm's ailing stock-picking business.
Even though BlackRock replaced many of its fundamental active equity managers over the past few years, a number of the firm's stock-picking funds are underperforming. Investors have pulled $7.5 billion from the funds over the past year, according to Morningstar.
To address this, the world's largest asset manager is taking the secret data sauce of its team of quantitative managers, academics and data engineers and feeding it to all of its portfolio managers, including its fundamental active equity team.
The goal: to arm its portfolio managers with data to give them an analytical advantage. The information ranges from satellite images of cars in retailer parking lots to shipping trends to word search analytics in company earnings calls.
While big data has long been the domain of quants and hedge fund managers, it is unusual for fundamental stock-pickers - who tend to use analyst reports, earnings figures and their own research - to rely on such wide ranging data.
If BlackRock succeeds, it could enable its stock-pickers to see market opportunities ahead of the competition. The challenge will be in getting these managers to understand what all the data means, said Ken Kam, CEO and founder of Marketocracy, a data-dependent online investment advisor.
"It will be a steep learning curve for them," Kam said. "That is not to say there isn't an opportunity, but it's a whole other ball game."
Fink, for one, is optimistic.
"We believe that if we can get insight through data, it will give us a differentiated advantage," Fink told Reuters in an interview in July.
To be sure, BlackRock could flood its managers with data and still not win assets in an era when investors increasingly choose the indexed investing that BlackRock is most known for. Nor is there a guarantee that more data will boost performance, said Jason Kephart, an analyst at Morningstar.