BlackRock Inc (NYSE:BLK) Q4 2014 Earnings Conference Call - Preliminary Transcript
Jan 15, 2015 • 08:00 am ET
in the fixed income and to be the leader in the ETFs in that area.
And one other point, fixing ETF utilization is far less than equity utilization and the opportunity for that to converge quite a bit.
Okay. Thank you very much.
Your next question comes from Dan Fannon with Jefferies.
Good morning. I guess kind of building upon that and just thinking about your comment about substantial momentum in the institutional business heading into 2015, outside of what we just talked about there with the fixed-income ETF can you get a little more specific about where you see that demand and kind of maybe a way to characterize it versus previous periods in terms of either size or opportunity?
Well, the momentum is as I said carrying on into 2015. We're seeing - I think much of it has to do with the continuation of performance that we have generated with some top decile performance in our core business, our leading performance in our unconstrained fixed income, our top quartile maybe top decile performance in high yield.
So across the board the performance in all the different fixed income products continues to be quite large and we're seeing more and more clients are just also using beta products for fixed income.
So, across the board we're seeing that but in terms of where we're seeing clients looking to put more money to work, we're seeing increased activity in the client contribution area where we've had some rather substantial wins. We continue to see in terms of insurance companies, always at the beginning of the year, they get big infusions of cash, this is one of the fundamental reasons why we thought that rates would be going down in the first part of the year, obviously we didn't expect some of the activities that occurred but fundamentally you always see some very large activities from insurance companies because of the beginning of the year. So, it's across the board and it's geographically diverse too. So we think this is going to continue but I must say with where rates are at this moment more and more clients are going to be looking for different types of expressions of exposure that I do believe with where rates are it's going to lead to more and more clients searching things like infrastructure debt, other activities like that and this is one of the reasons why we're so heavily invested in our infrastructure teams.
We will continue to see clients reaching for yield and high yield whether that's a good strategy or a bad strategy. I specifically believe, rates are going to stay lower longer and I think the activities that you're seeing in Europe whether the court's approval of the OMT for the ECB and the greater possibility of QE from the ECB but continual easing in Japan and importantly as Chairwoman Yellen has said, she's going to be very data-dependent related to what the Federal Reserve does.
So, I actually