- BlackRock will waive asset management fees on ETFs purchased on behalf of the Federal Reserve Bank of New York according to documents published Friday.
- The world’s largest asset manager has been engaged by the Fed on three separate programs designed to bolster the US economy amid the coronavirus pandemic.
- BlackRock may make up to $4 million a year for managing a different portfolio of commercial mortgage-backed securities, according to a final copy of the agreement that shows annualized fees.
- Read more on Business Insider.
The Federal Reserve Bank of New York is introducing guidelines to curb BlackRock, the world’s largest asset manager, from unfairly profiting from its contract to buy bonds from the US government as a part of monetary stimulus amid the coronavirus pandemic.
BlackRock will waive asset management fees on ETFs purchased on behalf of the Federal Reserve Bank of New York and will credit back the value of all underlying fees and income earned on its ETFs bought for the program, according to a document published Friday.
Earlier this week, the Fed engaged BlackRock to purchase tens of billions of bonds as part of the massive debt-buying program it rolled out to bolster the US economy during the coronavirus outbreak.
BlackRock will be an investment advisor and manage assets for three separate programs, according to a Tuesday statement from the New York Fed. That includes purchases of agency commercial mortgage-backed securities and two new facilities that the Fed announced Monday.
The asset manager is already the largest issuer of ETFs in the world, which has raised questions about its ability to remain objective. According to the documents released Friday, “BlackRock will treat BlackRock-sponsored ETFs on the same neutral footing as third-party ETFs.”
In addition, if the portfolio’s holdings of BlackRock-sponsored ETFs “exceeds or is expected to exceed the then-current market share of BlackRock-sponsored ETFs in the corporate bond ETF market on average over a given calendar month, BlackRock will notify the New York Fed for review and consultation. The New York Fed may direct portfolio adjustments at any time,” according to the statement.
BlackRock may also collect as much as $4 million per year for managing a different portfolio of commercial mortgage-backed securities, according to a final copy of the agreement that shows annualized fees.