BlackRock Inc.’s (BLK) Daniel Rice, who helped manage five energy and natural resource mutual funds for the world’s largest asset manager, is retiring from the firm to avoid the appearance of a conflict of interest.
“BlackRock is committed to avoiding not only actual conflicts of interest, but even the appearance of a conflict,” Bobbie Collins, a spokeswoman for the New York-based firm, said today in an e-mailed statement. “As we have worked through with Dan Rice how to best avoid any perception of conflict involving his family’s energy company, Dan has decided to retire from BlackRock.”
Rice, the third high-profile departure for BlackRock this month, had been the lead manager for the $925 million BlackRock Energy & Resources Portfolio since it was created in 1990. He’s also one of the founders of Rice Energy, a company with a subsidiary that has a joint venture with one of the mutual fund’s top holdings, Alpha Natural Resources Inc. (ANR) The fund had raised its holding of Alpha Natural Resources since 2010, when the joint venture was created, the Wall Street Journal reported June 1.
Morningstar Inc. (MORN) placed the rating of the fund under review earlier this month.
Rice “could easily be subjected to future conflicts of interest,” analyst Rob Wherry wrote in a research note June 6. “Stewardship issues are overshadowing this fund’s merits.”
Separately, BlackRock said today that in January it changed the description of the investment process for three stock mutual funds run by Robert Doll, the firm’s chief equity strategist, to show the funds use models from third-party providers that are then adjusted. The prospectuses had previously described the model as proprietary, Reuters reported today.
The change was made in the regular process of keeping the fund board up-to-date on its management and to provide more detail about the investment model and methods used to construct the portfolio, Collins said in a separate statement.
Rice’s Energy & Resources Portfolio fund has lost 20 percent this year, trailing 99 percent of peers, according to data compiled by Bloomberg. Over the past five years, the fund has declined 4.5 percent on average annually, trailing 69 percent of rivals. Alpha Natural Resources represented 3.9 percent of the fund’s assets, making it the sixth-largest holding as of May 31, Morningstar data show.
BlackRock’s Denis Walsh and Dan Neumann, who already serve as lead or co-manager of the five funds, will continue to manage them, Collins said. Rice will work with BlackRock on a transition of the institutional private funds he oversees, to be completed no later than December.
BlackRock acquired Rice’s former employer, Boston-based State Street Research & Management Co., in 2005 and renamed the energy and resources fund.
Rice’s departure comes one day after BlackRock said founding partner Susan L. Wagner will retire from her role as vice chairman at the end of this month and join the company’s board of directors. Earlier this month, BlackRock said Doll would retire to devote more time to his family, faith and philanthropic interests.
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