Exec: Pension Clients Rebalancing Portfolios

October 11, 2002 (PLANSPONSOR.com) - BlackRock's pension fund clients struggled to keep their asset allocation weightings following steep equity market declines, by moving $700 million from fixed income into equities.

That was the report from the investment company’s chairman and chief executive officer Laurence Fink in a third-quarter earnings conference call, according to Dow Jones.

Overall, according to Fink, US pension funds as a whole moved $30 billion into stocks from bonds as part of portfolio rebalancing – a smaller amount than he had expected, the Dow Jones report said.

“Because it was so little, I would argue (pension) plans are lowering their equity allocations,” Fink said, according to Dow Jones. “If they wanted to maintain their equity weightings at levels determined by their long-term asset allocation policies, the rebalancing activities would have been greater,” he explained.

Fink underlined that some of the $700 million withdrawn from the company’s US fixed-income accounts were invested in its own equity products. This was the first time the equity business of BlackRock, which has a heavy focus on fixed-income investing, benefited from institutional rebalancing, he told the conference call participants.

Despite the quarter-end rebalancing activities, BlackRock managed to attract a net $1.2 billion in new fixed-income business for the whole quarter, the executive said.

In Europe, however, BlackRock sees pension funds continuing to pull money from their equity portfolios as investors focused on protecting their assets from further stock market declines, rather than sticking with their long-term plans, Fink said, according to Dow Jones.