First announced in December 2014, the firm took the decision to convert the fund in order to provide unit holders with a more unconstrained approach to fixed income it feels is better suited to current markets.
The new UK fund will complement the Luxembourg domiciled version that was launched in 2007 and will also be run by Rick Rieder, chief investment officer of fundamental fixed income; Scott Thiel, deputy chief investment officer of fixed income and Bob Miller, head of the multi-sector & rates team within, the firm’s Americas fixed income group.
Jeremy Roberts, Head of UK Retail Sales at BlackRock, said the firm has seen “overwhelming demand” for the strategy from clients across Europe “as they search for returns which outpace traditional bonds combined with income”.
“We know from the BlackRock Investor Pulse Survey* that almost 50% of Britons say it is important to earn an income from their investments. But with yields at historically low levels, investors need to be even more proactive about finding this income especially in bond markets. FIGO aims to address this need and seeks out these opportunities around the globe,” he added.
According to BlackRock, unlike its previous incarnation (The Global Bond Fund), the new version is free of benchmark constraints, and operates “within wide duration bands”. It will also hedge non-sterling denominated assets back to sterling.
According to the December letter to unit holders, the other main changes are a shift in its measurement of value at risk from Relative VaR to Absolute VaR
This is appropriate, BlackRock said because relative VaR measures a fund’s VaR against that of its benchmark – which it no longer has. Absolute VaR “allows the VaR of a fund to be measured in relative terms to that fund’s net asset value,” the firm explained.
It added: “The greater flexibility of the unconstrained strategy will enable the fund to be better equipped to adapt to and perform in a volatile interest rate and credit risk environment.”
