The proposition is built around 400 fixed income strategies that BlackRock researches globally and will feature Winship’s best ideas across global rates, emerging markets, investment grade credit, and high yield credit among others.
The BlackRock Absolute Return Bond Fund will also be able to use derivatives where appropriate and will be run on an absolute return basis in that it targets positive performance above sterling in both rising and falling yield environments.
It is not yet fully invested so it is not possible to see its current asset allocation though Winship confirmed the expected drivers of returns will be 50% interest rate and relative value strategies, 20% investment grade credit and 30% from elsehwere, including around 10% high yield and emerging market debt. These percentages are derived on a risk basis, not a percentage of NAV, and do not represent the asset allocation of the fund.
Tony Stenning, head of BlackRocks UK retail business, explained that the launch is a natural step given BlackRock launched the first absolute return fund in 2005 – Mark Lyttleton’s UK Absolute Alpha Fund – and is a logical move from equity into fixed income funds.
He added: “With interest rates at record low levels, high inflation and significant market volatility, investors are increasingly looking for outcome oriented solutions and the cost of doing nothing with your money has never been greater.”
Winship added: “The fund aims to provide positive absolute returns over the market cycle through finding the best risk adjusted returns available across the entire spectrum of fixed income markets and strategies.”
