Having been one of the original founders of BlackRock
some 26 years ago, Barbara Novick
, the firm's vice chairman, has a lot to say about regulatory changes, new products and marketing strategy in the asset management industry. While speaking at the Hedge Fund Association
event on April 23, she told attendees that regulation was a good thing, mostly, and suggested hedge funds, many of whom have been launching retail products, in part because of regulatory changes and the passage of the JOBS Act, get with the program. Her presentation was generously sprinkled with many industry lessons, insights and good humor. Here are some tid bits:
If you're going to advertise, it should be a targeted, ongoing ad campaign, not just one hit in a newspaper somewhere, Novick said. BlackRock had apparently tried that around the time of its start.
"If you only run one ad, the only person who notices is your mother," Novick said.
Aaaw. Mamma Novick must have been proud, though!
"We have to embrace regulatory changes, not just push them away," Novick asserted. She said BlackRock understood that things were going to change after the market crash of 2008 and made a decision to tackle those changes head on. She then created the Government Relations Steering Committee at BlackRock. It has 26 categories of issues, with five to 10 sub-categories, some with a U.S. and international component. As if Novick wasn't already busy enough vice chairing the firm and leading the global client group!
On Michael Lewis:
When she asked the audience who has read his books, most people (in a room of about 100-150) raised their hands. When she asked, "How much of what he says do you think is true?", almost no one did. She said his books are kind of like a "novel version of what really goes on." He takes liberties to change and embellish things to make it a better story.
"A novel is not a textbook," the BlackRock leading lady concluded.
On Alternative '40 Act Funds:
There has been a proliferation of new launches in this space of late, but Barbs, like the SEC
is skeptical so far.
"It's a business opportunity, but one you have to go into with your eyes open," she said.
Managers need to make sure they have the right risk controls, operations and infrastructure in place to be able to support the requirements of the fund structure.
She noted that the SEC was investigating these strategies on liquidity and leverage, to see if they meet the requirements. "I don't know what they're going to look at or find, but I'm sure they'll ind something," she said. "It's still too new of a product. There are a lot of unknowns," she said.
Speaking of unknowns, when someone in the audience asked whether BlackRock does anything in the SRI space, Novick said she's still not sure what SRI means. "It means very different things to different people," For some, it's about not investing in tobacco companies. For others, it's about not investing in certain third-world countries. For still others, it's about something else.
"It's a very confused category," she said.
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