High risk portfolios have lower fees

At least, at BlackRock they do, as an analysis of close to 10,000 advisor-held portfolios at the firm finds

Yan Barcelo 25 February, 2020 | 1:52AM

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It’s not often that one gets the chance to analyse 9,940 portfolios – but that’s just what BlackRock did. The company looked into the portfolios held by advisors, keeping an eye on the level of risk they exhibited. Many instructive lessons come out of the exercise, with one most unexpected finding: against all expectations, portfolio fees are inversely proportional to their level of risk. The lower the risk... the higher the fees!

In a study titled Factors and Advisor Portfolios, BlackRock authors write, “Regulatory authorities do not collect advisor portfolio information and there are no widely available centralized datasets on the holdings and risk characteristics of advisor portfolios.” That means BlackRock’s work, from its exclusive Aladdin database, offers unique insights.

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About Author

Yan Barcelo  is a veteran financial and economic journalist with more than 30 years of experience, writing for many publications in Toronto and in Montreal, including CPA MagazineLes Affaires and Commerce.

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