BlackRock (BLK): Fiduciary Rule Should Improve Demand For Passive Products - UBS

According to BlackRock (NYSE: BLK), the DOL fiduciary rule is likely to accelerate the shift to passive investing and weigh on organic growth for underperforming active managers. BLK management also seems to share our concern that a fiduciary standard could be applied to taxable accounts as well. Notably, there seems to be a lot of internal debate within BLK as to the timing of the impact of the rule, though they suggested it might take 2 to 3 years (our expectation is that flow dynamics will begin to diverge in 1H17 - see our recent deep dive on the rule). Also, at this point it remains unclear how revenue sharing arrangements will change and what impact that will have on the marketplace. Nonetheless, we expect BLK's ETF liquidity and model penetration at wealth management platforms, combined with FutureAdvisor's white label solutions, to benefit BLK as the DOL rule's impact takes hold.

No change to Buy rating or price target of $415.00

For an analyst ratings summary and ratings history on BlackRock click here. For more ratings news on BlackRock click here.

Shares of BlackRock closed at $339.55 yesterday.

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