Selecting the Right Strategy for Growth



Katie Bird



by Katie Bird

Finding opportunities to create growth for your funds can be as frustrating as waiting for spring weather to arrive. This is especially true if your efforts aren’t reaching the right audience.

For example, BlackRock recently announced its intention to double their retail business by 2014. While that may seem overly ambitious, BlackRock’s US retail boss Frank Porcelli explains their strategy, which is specific and channel-oriented. Just because BlackRock is the world’s largest asset manager doesn’t mean they can afford not to be choosy in marketing efforts.

BlackRock aims to double fund assets

In an interview with Reuters’ Aaron Pressman titled BlackRock aims to double U.S. retail funds by 2014, Porcelli says the firm has “identified U.S. retail as a strategic priority” and plans to double the existing retail business, which currently stands at roughly $300 billion. To accomplish this, Porcelli goes on to explain that instead of introducing new funds, the firm will increase his staff by 15 percent, along with boosting sales efforts to brokers and advisors.

According to an article in Investment News by Jessica Toonkel called BlackRock starts to flex retail muscles, BlackRock believes they will be successful because “advisory firms are looking to do business with fewer partners and the company can provide services across the board.”

Additionally, MutualFundWire’s Armie Margaret Lee explains that other tactics include enhancing their presence in the 401(k) market and creating customized investment products geared towards investors interested in separately managed accounts in How BlackRock Plans to Double its Retail Business.

Even though Porcelli is confident in his plan, it forces the firm to acknowledge their weaknesses. For instance, Toonkel’s article explicates that historically, BlackRock sticks to its benchmarks which hurts fund performance. As Morningstar analyst Kevin McDevitt says, “When you manage funds that way, it's hard to shoot the lights out.” The firm has also brought in new expertise to strengthen and maintain performance. It is this flexibility and self-awareness that is setting BlackRock on the path to success.

This scenario demonstrates a very important lesson for mutual fund companies seeking growth. To increase sales, you must identify your company’s strengths and weaknesses, as well as the distribution channels that are relevant to you. Figure out what sort of increased expertise would best help your channels, whether it’s bringing in new people or altering your marketing strategy. Picking and choosing specific strategies that are applicable to your fund style will bring you more growth than trying a blanket approach—techniques that work for big firms won’t necessarily have the same effect for boutique companies.