BlackRock, the money manager led by Laurence Fink that got its start as a unit of Blackstone, trailed the private-equity manager after more than tripling since 2008. BlackRock ranked 15th in the Bloomberg ranking as the shares rose 28 percent on an absolute basis with below-average volatility of 25.
Capital Flows
Investors are turning from core bonds and index-tracking products to put money into non-traditional strategies such as credit and high yield. Clients pulled $7.5 billion from BlackRock’s bond ETFs in 2013, compared with $28.8 billion in deposits in 2012. About one-third of BlackRock’s $4 trillion in long-term assets is in fixed income. Investors did deposit $10.4 billion in BlackRock’s active bond funds last year. Including stocks, multi-asset products, alternatives and institutional index funds, BlackRock attracted a net $117 billion into its funds last year.
Bond mutual funds across the industry in the U.S. posted record investor withdrawals of $83.4 billion last year, according to the Investment Company Institute.
“Tapering of the Fed’s bond-buying program has made it really difficult to make money in fixed income,” said David Fann, the CEO of TorreyCove Capital Partners LLC, which advises institutional investors. “So I’m not surprised to see capital flowing out of that asset class.”
Carlyle, the Washington-based private-equity firm led by William Conway, Daniel D’Aniello and David Rubenstein, had the lowest risk-adjusted return among alternative-asset managers, with 0.4 percent, according to Bloomberg’s ranking. The shares returned 11 percent on a cumulative basis in the past year, with volatility of 32, according to data compiled by Bloomberg.
Predictable Fees
The firm’s fee-related earnings fell 11 percent in 2013 from the previous year as Blackstone’s rose 6 percent and KKR’s gained 29 percent. Part of the decline was due to higher fundraising costs, Adena Friedman, Carlyle’s chief financial officer, said Feb. 19.
According to Matt Kelley, an analyst at Morgan Stanley in New York, Carlyle gets a lower portion of its earnings from predictable management fees than its peers, which can keep stock analysts and investors on the “sidelines.”
Bloomberg’s risk-adjusted return is calculated by dividing total return by volatility, or the degree of daily price variation, providing a measure of income per unit of risk. The returns aren’t annualized. Higher volatility means the price of an asset can swing dramatically in a short period, increasing the potential for unexpected losses.