As fixed income loses the temporary sheen from 2008, Legg Mason bore the brunt of investor displeasure and lack of confidence losing $24 billion from fixed income schemes and close to $33 billion overall in the last quarter, 4 times more than the July – September Quarter. Most banks worldwide have reported losses in Fixed Income in the latest quarter as yields spike with China ready to go off the Charts from doubt in its banking system :lol
However that all seems to be passed as in after its results last week, news filtered in that new board member Nelson Peltz is selling an over 15% in H J Heinz ketchup worth $32 million and another $8 million in Tiffany’s Diamonds.
Interestingly, Legg Mason’s flagship Value fund is heavily invested in healthcare, read health insurers like Humana, Wellpoint and United Health who are celebrating after Scott Brown’s victory in Massachusetts! O What a tangled web we weave. Bill Miller, the fund’s Equities star also mentions of late his trust in the growing US GDP and in Equities. While we agree with the second, Obama’s latest belt-tightening measures may cloud America’s way on growing in double digits a year.
Fund Managers on Bills side in London and New York also feel more wary of heavily weighted China and India investments which we propose is heresy except that in China one must watch the for the bull entering the China Shop. And who’s invested in India? Not many more than 5 years ago..talk about oversimplification!!!
Note: From a September 09 flyer of the World #10 Asset manager, outflows of $33b would close out fixed income offerings in its entirety, leaving Bill Miller and $8 billion in equity that would be worth $800m, $40m seems at the top of the fair price range for 5%
zyakaira notes: Just more old wine..I just prefer all markets on ECNs with afterhours trading..you mean they need a platform to sit and match trades internally before going to market! UGGGHH!
BlackRock, the asset manager poised to become the world’s largest money manager with $3,000bn under management, is preparing to create its own global trading platform – a move that could challenge the business at the heart of many Wall Street groups.
BlackRock plans to develop a “new world-class global trading platform across the firm”, according to an internal memo seen by The Financial Times. It has appointed Minder Cheng, who is joining BlackRock as part of its acquisition of Barclays Global Investors, to oversee its development.
The platform will “fully realise the cost efficiencies and trading opportunities across all asset classes as we become one of the largest trading operations in the world”, the memo states.
Once BlackRock’s acquisition of BGI is completed sometime in December, the group will have about $3,000bn in assets under management.
The plan is still in its early stages, but its outlines are already clear. If some BlackRock clients are selling a security and others are buying, the group can “cross” those trades internally without going through Wall Street. BlackRock does not intend to take any fees for this service, since the whole point is to save its clients money, according to people familiar with the plan.
“Why pay such a large bid-offer spread?” another person familiar with the plan said, referring to the price gap between buyers and sellers. “The large volume gives BlackRock the opportunity to bundle trades.”
The plan will probably be first introduced for trading in stocks, where pricing is more transparent than in fixed income.
BlackRock executives have insisted that their plan is not meant to marginalise Wall Street, adding that the firm will still depend on banks to provide liquidity. But the new platform does serve as a sign that the buy side is increasingly flexing its muscles when it comes to paying fees to trade securities that often have very small margins and rely on large volumes to achieve profitability.
The high costs of developing new technology have hindered other attempts to develop such platforms. But BlackRock Solutions has been a pioneer in developing technology, which generally has been the province of the sell side. But now that is no longer an obstacle, these people add.