TECHNOLOGY AND THE PORTFOLIO MANAGER
Technology: A powerful tool for index PMs
Rachel Aguirre, discusses how Aladdin - our proprietary technology platform - enables us to assess risks and costs across several dimensions. As our index portfolio managers seek to engineer the precise return of an index while minimizing costs, our integrated technology platform helps them achieve this in a way that's both efficient and scalable.
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At BlackRock, we employ a disciplined approach to managing index portfolios, one that carefully balances return, risk, and cost in every decision that we make. And we're making hundreds of those decisions on our portfolios. At BlackRock, risk management is of the utmost importance. It's foundational to everything that we do. And we look at risk in a multi-dimensional way.
With our technology, we have the ability to assess risk across multiple dimensions from currencies, to countries, to tracking error. We look at this all and we take this into consideration in our portfolios. When it comes to cost, technologies woven throughout our approach. Specifically, we leverage internal proprietary trading cost models that are integrated within our technology platform. We look at factors like liquidity to develop optimal trading strategies, really with the end goal of wanting to minimize impact, and ultimately lowering costs to our clients.
There is a common misconception out there that index portfolio managers don't really think about return, but the reality of the fact is is that we do care about return. The only difference is that we are looking to engineer a precise return of a given index. And that's actually a very difficult and challenging task to accomplish. Many of our clients are facing increasingly complex challenges. And it's technology that is giving us the ability to meet those challenges, and to do so in a scalable way.
BlackRock is a global firm, and we have clients all over the world. All of our tools are built on an integrated technology platform, which is known as Aladdin. And so what Aladdin gives us is a singular language to speak. So whether I'm developing trading strategies with a trader in Hong Kong or I'm working through a complex client challenge out of London, we're all speaking the same language. And that is an informational advantage that is huge. That ultimately benefits our end investors.
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