Tech Innovation Disrupts Business Model of World’s Largest Money Manager

BlackRock, the world’s largest money manager with total assets of $5.1 trillion, is changing its investment strategy, driven by technological innovation. The firm is reducing its actively-managed equities business in which portfolio managers serve as stock pickers in favor of computer models that inform indexed investments via data and algorithims. This is good news by extension for the many new, exchange-traded funds (ETFs) that track ESG factors, such as the iShares MSCI KLD 400 Social and iShares MSCI EAFE index. These and other ETFs improve risk-adjusted returns over the long term, have lower fees, and provide validated investment “screens” to evaluate ESG and other socially responsible indicators for mission-minded investors. It’s another big step forward for the financial support of companies that include a purpose beyond profit in their strategy and practices.

John Howell, Editorial Director

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