BlackRock Inc, the world’s biggest asset manager, on Wednesday reported double-digit profit gains as investors plowed money into lower-cost index funds, but the company’s share price slipped as revenue fell short of analysts’ expectations.
A group representing large institutional investors has approached index providers S&P Dow Jones Indices and MSCI Inc, looking to bar Snap Inc and any other company that sells investors non-voting shares from their stock benchmarks. Both index providers have said they are reviewing Snap’s inclusion. Were Snap to be added to indexes such as the S&P 500 Index or the MSCI USA Index, managers of stock index portfolios would have to buy its shares, and other investors whose performance is tracked against such indexes would likely follow suit.
Billionaire Warren Buffett, whose stock picks over several decades have enriched generations of Berkshire Hathaway Inc shareholders, delivered a black eye to the investment industry on Saturday, urging ordinary investors to buy plain-vanilla index funds. “When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients,” Buffett said in his annual letter to shareholders. “Both large and small investors should stick with low-cost index funds,” he added.
The premium that institutional investors pay to trade emerging markets stocks rather than their peers in developed countries narrowed markedly in 2016, a Greenwich Associates survey showed on Wednesday. The rising popularity of exchange-traded funds (ETFs) could be one reason for the narrowing premiums, Greenwich said.
Oil traders for the last two weeks have shrugged off reports that U.S. stockpiles are brimming at their largest levels ever recorded, as the market continues to bet that crude prices will climb higher. Oil has maintained its buoyancy because the market is betting that cuts by the Organization of the Petroleum Exporting Countries (OPEC) will largely rebalance the oil market, despite continued production increases from shale formations in the United States.
European investors are piling into exchange-traded funds, favouring those that mimic active fund managers, in a market where traditional trading relationships between assets are breaking down. Investment in ETFs, securities which track an index or basket of assets, rose to more than half a trillion euros at the end of last year, a record. A combination of low costs and flexibility kept investors hooked even though this break-down of so-called correlations should favour actively-managed mutual funds.
China’s progress toward full inclusion of its stocks in global benchmarks could be halted if the world’s second-largest economy cracks down further on people moving money out of the country, index provider MSCI Inc’s top executive said on Monday.