BlackRock has launched an unconstrained total return bond fund, seeking income in global fixed income markets while keeping a UK bias. The BlackRock Sterling Strategic Bond fund will be managed by Ben Edwards and Simon Blundell and will not be constrained to any benchmark. The fund will aim to deliver “attractive” levels of income through opportunistic and conviction-driven investing.
The fund will have core holdings in sterling-denominated corporate bonds but with the flexibility to exploit a broader opportunity set. The fund will source income across the entire fixed income universe including emerging markets and high yield.
The A-class fund has a minimum investment of £500, with an annual management charge of 1 per cent and its ongoing charge figure will sit at 1.2 per cent.
This new fund, which will add to BlackRock’s already existing UK fixed income range, comes at an interesting time, particularly as bonds are not currently seeing massive returns.
Strategic bonds are designed to be as flexible as possible, allowing any type of bond to be invested, so this could benefit many investors. While it is a global fund, investing in areas including emerging markets, it is also very UK-focused, so it should also remain cheap for investors. It will have an unconstrained allocation to different global markets with no benchmark so will be able to move easily in various market cycles – an attractive strategy for investors who want some stability. It will also be using high yield and emerging markets which can boost the level of income that is sought after in today’s low yield environment.
When picking a fund, the manager can also play a large part in decision making. Potential investors may be swayed by the presence of Mr Edwards who also manages the Corporate Bond fund, which has outperformed the sector over the past year, as seen in Chart 1.
One thing to consider when investing in this fund is the others in its peer group. The Strategic Bond sector is very large and varied, so investors will need to look more into how this differs.