Wall Street Journal Blogs – Are hedge-fund managers making a comeback with investors?  The great recession hammered the hedge-fund industry in 2008. Returns tumbled, redemptions soared and investors began questioning the very underpinnings of the industry. Active managers promise to beat, rather than match, the market’s overall returns and charge fees that can be at least 10 times higher than those of index funds.

The WSJ reported in June that an increasing number of big investors are concluding that stock and bond pickers failed to add any value in the market turmoil and are shifting to index funds. A survey by Greenwich Associates at the time found that about one in five institutional investors said they recently had shifted money away from active managers and into passive index strategies. That was up from just 4% who expected to make that shift when asked from July to October 2008.

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West Palm Beach (HedgeCo.net) – BlackRock, Inc. announced the purchase agreement to acquire Barclays Global Investors, including its market-leading ETF platform, iShares, from Barclays PLC.

“We are incredibly excited about the potential to significantly expand the scale and scope of our work with investors throughout the world. The combination of active and passive investment products will be unsurpassed, and will enhance our ability to offer comprehensive solutions and tailored portfolios to institutional and retail clients,” said Laurence D. Fink, BlackRock Chairman and CEO. “People are at the heart of successful firms, and the depth of talent in BlackRock Global Investors will be tremendous. The thought leadership and intellectual capital of the combined firm ensure we will remain at the forefront of addressing key investment issues and trends that have emerged over the past decade and are now accelerating dramatically, including globalization of capital markets, a greater focus on asset allocation, multi-asset class solutions, fiduciary management, risk management and advisory services.”

The combination of BlackRock and BGI would bring together market leaders in active and index strategies to create the preeminent asset management firm operating under the name BlackRock Global Investors. The transaction would create an independent and fully integrated asset management firm with combined assets under management of over $2.7 trillion.

The firm’s products will include equities, fixed income, cash management and alternatives, and will offer clients diversified access to global markets through separate accounts, common trust funds, mutual funds, ETFs, hedge funds, and closed-end funds.

BlackRock has received commitments from a group of institutional investors to purchase 19.9 million shares at the closing of the transaction for a total of $2.8 billion.

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