Personal Pension  

BlackRock multi-asset fund offers low-cost AE compliance

Multinational investment management corporation BlackRock has unveiled a low-cost fund aimed at helping defined contribution schemes comply with the imminent auto-enrolment regulations around charge caps.

Called the Blackrock Dynamic Allocation Fund, it invests in a range of asset classes including – although not limited to – developed market equities, commodities, emerging market debt and corporate bonds, blending low-cost exposures within its multi-asset strategy.

It is managed by Adam Ryan, whose connection with the firm dates back to 1999, counting his years with Merrill Lynch Investment Managers, which merged with BlackRock in 2006.

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He will be supported by the diversified strategies team, which manages £18bn AUM globally, according to the firm.

Mr Ryan also manages the BlackRock Dynamic Diversified Growth Fund launched in 2001, on which the new proposition is based.

The fund is aimed at delivering a total return over the medium to long term, with less volatility than a standalone investment in equities, while adapting to changing market conditions, using its broad capabilities to access BlackRock’s multi-asset, index and risk management platform.

It employs various protection strategies, such as equity market hedging, and also provides a strong focus on capital preservation, according to the firm.

Provider view

BlackRock savings and pensions specialist Tony Stenning said: “The retirement landscape is changing and new freedoms and a greater focus on cost brings new challenges. DC members need innovative investment strategies to help them plan and live comfortably in their later years. They also need a solution designed to navigate today’s ever-changing markets that can help them achieve the outcome they desire while managing risk.

“The BlackRock Dynamic Allocation Fund is designed for this purpose. It is a low-cost, actively-managed, multi-asset fund that aims to grow individuals’ hard-earned nest eggs, while taking out some of the investment volatility and therefore delivering a smoother journey.”

Adviser view

Simon Torry, chartered financial planner at Essex-based SRC Wealth Management, said: “More and more active fund managers are offering simplified solutions which offer diversification, which I think most people are looking for.”

Commenting on the lack of innovation in the pensions market, he added: “I think the first thing is we have just gotten over the general election. There was an air of uncertainty and fear of what a Labour/SNP coalition would mean for businesses.

“Secondly, I think there is an element of waiting and seeing what happens in the market.

“I think many providers are asking themselves: ‘Why reinvent the wheel?’ when they already have a product which does the job.”

Charges

AMC of 0.42 per cent and an ongoing charge of 0.50 per cent.

Verdict

New financial products for the at retirement market are few and far between. This proposition’s most attractive aspect is its low cost, which complies with the upcoming regulatory changes to auto-enrolment capping management fees at 0.75 per cent.

Mr Ryan is the man responsible for managing the new fund. He has enjoyed some success as manager of the BlackRock Dynamic Diversified Growth Fund, which returned around 20 per cent over the past five years, according to FE Analytics. This will go some way to reassuring investors that their money is in safe hands (although impressive past performance does not guarantee success in the future).