Winners rationale

An extremely volatile 2020 benefited those alternative managers that managed to capture two streams of alpha — long and short — in the challenging market. Thanks to its strong strategic focus on being a liquid alternative provider, BlackRock had pioneering successes with the private banking distribution business.

In 2020, BlackRock’s liquid alternative strategies, backed by its two flagship funds — Emerging Companies Absolute Return Fund (ECAR) and BlackRock Emerging Companies Hedge Fund (EMCO) — resonated among private banking clients and raised decent assets, even through the March volatility.

Clients’ trust always runs parallel with an outstanding fund performance: ECAR was up 14.94% YoY and achieved an annualized return of 11.28% since inception, while EMCO jumped by 18.46% in 2020, with a three-year annualized return of 13.15%.

Adopting a fundamental long-short approach and focusing on exceptional opportunities created by the alpha-rich investment universe of emerging companies, the team defined emerging companies by their actions (not by their size) and held that dispersion (rather than mean reversion) was far more prevalent in the investment universe.

Worth mentioning, the firm’s liquid alternatives team exhibited strong capabilities in not only managing the long book, but also in constructing the short positions. For example, one of the top 10 alpha contributors since inception of ECAR actually came from the short book with a short position in a UK firm due to its aggressive accounting treatments and its inability to generate cashflow. This company fell 95% since inception of the UCITS fund.

The great success of liquid alternatives distribution could not have been achieved without a dedicated sales team. As BlackRock identified private wealth management clients as a key segment area for strategic growth, resources were added to provide the top-notch sales and client service experience for distributors. In 2H19, the private banking and wealth management distribution team expanded nearly two-fold, with experienced hires to bolster the team in both Hong Kong and Singapore.

For its strong distribution capability in liquid alternatives and for the outstanding performance of underlying strategies, BlackRock has been selected as Asian Private Banker’s Best Fund Provider – Liquid Alternatives.