BlackRock hires JPMorgan veteran as stock investment chief

Mar 17, 2014 @ 2:04 pm

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(Bloomberg News)

BlackRock Inc. hired JPMorgan Chase & Co.'s Christopher Jones as chief investment officer for stocks in the Americas as the world's biggest money manager seeks to bolster its active equity business.

Mr. Jones, who was CIO for JPMorgan Asset Management's growth and small-cap U.S. equity team, will join BlackRock in a few months as head of the active stock unit in the Americas, according to an internal memo provided by BlackRock and sent today to the firm's employees. He replaces Chris Leavy, who went on medical leave in June of last year. He will also serve as global co-head of fundamental equity, alongside Nigel Bolton, head of BlackRock's European equity team.

Chief executive Laurence D. Fink, who built BlackRock through a series of acquisitions to manage $4.3 trillion, is seeking to improve fund performance in the stock unit to attract assets amid a five-year rally in equities. A push by Mr. Leavy to replace managers and focus on returns helped BlackRock's active U.S. stock funds beat 54 percent of rivals last year.

“We have a great opportunity to take market share in many areas of the actively managed business over the next few years,” Quintin Price, global head of active strategies, said in the memo. “I am sure Chris Jones's arrival will help us maximize our impact,” said Mr. Price, who had been filling in for Mr. Leavy on an interim basis.

IMPROVED PERFORMANCE

Mr. Jones managed strategies including JPMorgan's $15.5 billion Large Cap Growth Fund and $1.2 billion Small Cap Growth Fund. The retail shares of the large cap fund returned an annual 23% a year over the past five years, ahead of 82% of similarly managed funds, according to data compiled by Bloomberg. The small cap one delivered 29% annually over the past five years, beating 83 percent of peers.

Mr. Leavy joined BlackRock in 2010 from OppenheimerFunds Inc. and in 2012 added oversight of the large-capitalization stock funds, previously led by former equity chief investment strategist Robert Doll. Tasked with improving performance, he brought in money managers such as Bartlett Geer from Putnam Investments and UBS AG's Lawrence Kemp. During his tenure Mr. Leavy replaced managers at strategies that represented about 40% of the division's $115 billion at the time.

While performance has picked up, BlackRock's active U.S. stock funds still trail 62% of peers on an annualized basis in the three years ended Dec. 31, according to Morningstar Inc.

Clients pulled $15.4 billion from BlackRock's active stock funds last year, while depositing $74 billion into its exchange-traded funds, according to a company filing. Industrywide, investors put $161 billion into equity mutual funds in 2013, based on data from the Investment Company Institute.

Mr. Price said in the memo that Mr. Leavy, who left in June to treat his diabetes and a related cardiovascular condition, won't be returning to BlackRock this year. He has been aware and supportive of the plan to identify a new CIO if he couldn't return to his role, Mr. Price said.

In January, BlackRock said Mr. Bolton, also the CIO of international fundamental equity, was facing a civil proceeding by an Italian securities regulator alleging he used nonpublic information to avoid losses for clients last year. A BlackRock spokesman at the time said the firm had fully cooperated with the regulator and conducted its own investigation and found no evidence to support the regulator's allegations.

Peter Stournaras will continue to oversee BlackRock's large-cap funds, such as the $1.8 billion BlackRock Large Cap Core Fund and the $864 million BlackRock Large Cap Value Fund, which he had co-managed with Mr. Leavy.

REPLICATE SUCCESS

Mr. Fink has said he hopes the equity unit can replicate the success of BlackRock's bond unit in improving performance and attracting deposits. In 2012, the firm reorganized its bond business to give unit heads Rick Rieder and Kevin Holt greater autonomy and accountability. In 2013, BlackRock's active bonds attracted $10.4 billion, as fixed-income rivals such as Pacific Investment Management Co. faced redemptions amid investor fears of rising interest rates.

“We see a huge market for us in the active equity space,” Mr. Fink said during a conference call with analysts in January. “You have to start with performance before you can get involved.”

(Bloomberg News)

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