BlackRock’s UK-domiciled global multi-asset income fund is now available to investors following a shareholder vote to convert the balanced income fund to the global multi-asset income fund and strategy.
The fund contains a globally diversified portfolio that will invest in more than eight asset classes in over 40 different countries and with 20 or more different sectors.
The fund will invest in sectors ranging from property and infrastructure to structured credit and high yield bonds – an approach it believes will provide diversification and potentially higher sources of income. There is a greater geographical focus on developed markets and less on emerging markets.
Michael Fredericks, Justin Christofel and Peter Wilke will manage the UK-based fund, aiming to achieve between 4 and 6 per cent annual return. This estimate is based on the Luxembourg version of the fund which uses a similar investment strategy and has delivered an average income of around 5.54 per cent since its launch in June 2012.
The funbd carries a management charge of 0.75 per cent and a minimum investment of £500. The fund will pay investors on a quarterly basis and has daily liquidity adjustments.
From February, investors can opt to access the fund through the BlackRock Plan for Income tool, though platforms, or directly.
Comment:
As the pension reforms draw nearer it is likely that more people will be putting their savings towards multi-asset funds as a source of income in retirement. Although, however appealing multi-asset investment returns may look, investors need to remember that income is not guaranteed as it is in an annuity.
Multi-asset funds should act as a compliment to an annuity, not a replacement. Equity exposure through multi-assets could be a significant advantage, as is the ability to pass funds on to the next generation.
BlackRock’s launch of their new multi-asset vehicle then, is timely. The UK-domiciled fund provides a global exposure, but the UK aspect and focus on risk management is comforting to investors.
Justin Christofel, one of the managers of BlackRock’s new offering, stated that while exposure to both developed and emerging markets are included in the fund, he is leaning more towards developed markets as he currently feels a bit nervous about emerging markets due to slowing growth.
Investment in the US is one focus of the fund as it has been a strong past 12 months for America, although the managers are becoming more wary of whether this performance is sustainable.
As they become more cautious towards the US, a greater focus is put on Europe. The managers believe that quantitative easing is a positive move for the eurozone and that the region exhibits good growth prospects, though the policy will not likely prove as effective as it was for the US. High levels of regulation, such as in the labour market, could potentialy hinder Europe’s growth prospects.
Mr Christofel stated that uncertainty over interest rates will be a major source of volatility in 2015. It is expected that the Fed will raise rates around summertime as long as strong employment and wage reports continue, though low inflation could delay the raise. The UK faces similar problems as the US, but the Fed is more likely to raise interest rates first.
