Keeping close tabs on the US president’s social media presence has been one of many instruments used by the world’s largest asset manager in its 'toolbox of signals'. Credit - iStock
BlackRock teams are “very concerned” with capturing the tone of US President Donald Trump’s policy stance, to the extent that the asset management giant has spent time tracking the president’s use of capital letters in his social media.
"We are very concerned with capturing, as much as possible, the tone of Trump's messages," said Ahmed Talhaoui, head of BlackRock Systematic for EMEA and APAC.
Talhaoui explained that "in the past, for example, we would count the number of capital letters versus lowercase letters, which is a good indication [of Trump's tone]", when monitoring his posts on Truth Social.
However, now "the problem is he writes everything in capitals", the BlackRock Systematic head added.
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Keeping close tabs on the president's social media presence has been one of many instruments used by the world's largest asset manager in its "toolbox of signals".
"These signals are intuitive, and we are in a world of data, social media, AI, where we can harness a lot of these data. I do not have a very strong view in terms of the action of the market, but I can tell you last time I checked our signals giving us information on the job market, [they] were indicating that job postings were coming down a bit," said Talhaoui.
While these thousands of signals are not used as "a guiding principle", BlackRock utilise many of them to inform portfolio construction around equities in particular.
Macroeconomic turbulence has rocked equity and fixed income markets so far this year, with some fund managers opting to look through the noise and emphasise the importance of reliance on long-term fundamentals, while others have dealt directly with market volatility.
Seniors at BlackRock explained that they have become increasingly confident of the short-term rather than the long-term.
"Because of fundamental economic immutable laws, there is a limit to how fare things can change in the short run, and that actually gives us greater conviction in some of the key asset allocation calls we have," said Vivek Paul, head of portfolio research at BlackRock Investment Institute.
Ben Yearsley, founder of Fairview Investing, said he hopes that asset managers are not pivoting from their long-term investing process due to political noise.
"I do not want to buy into spivvy short-term trading funds," he said, but noted that active managers are having to "[look] for an edge and a way to beat passive investment strategies".
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Yearsley continued: "I want to buy funds for the long term - and I want fund managers to have a similar mindset - what I am not interested in is short-term trading. However, that is how lots of investment banks make their money."
He admitted that fund managers "cannot and should not ignore the macro noise", but they should refrain from trading on it.
"The trends over a number of months are things to watch out for," Yearsley said.
Despite the focus on short-termism, BlackRock Investment Institute's Paul argued that "this is an environmental where macro uncertainty is here to stay", and consequently "short-term outcomes are comparatively better bounded".
Darius McDermott, managing director at Chelsea Financial Services, added that "when assessing a fund, a key part is understanding their investment philosophy". "Some managers have a more trading mentality and others are very low turnover buy and hold."
He continued: "We do not judge that one is right and one is wrong, it is about making sure they stay true to their style."
McDermott expressed faith that, despite macroeconomic news driving market moves, "most fund selectors are able to take a longer-term view and not be so worried by short-term factors".
