BlackRock has launched a multi-currency bond fund that targets alpha through investment in macro-driven fixed-income opportunities across the globe.
The BlackRock Global Funds Strategic Global Bond Fund is set against a customised benchmark that consists of 80 per cent Barclays Global Aggregate Index (unhedged) and 20 per cent emerging markets exposure.
The five-strong portfolio management team will assess portfolio risk across 4,000 unique risk factors according to the fund house.
This new fund is the fifth entry in the firm’s flagship Global Bond fund range, which includes the BGF Fixed Income Global Opportunities fund (BGFFIGO), BGF World Bond fund (BGFWB), BGF Global Corporate Bond and BSF Global Absolute Return Bond fund (BSFGARB). When combined, these funds have more than $40bn (£30.38bn) in assets.
According to FE Analytics data, over five years from 22 July 2011, BGFFIGO and BGFWB funds returned 18.54 per cent and 19.40 per cent, respectively.
BGFGCB fund returned 24.86 per cent and the BSFGARB fund returned significantly less at 3.15 per cent.
In mid-July, BlackRock broadened the firm’s environmental, social and governance product offering with the launch of two sustainable equity exchange-traded funds in response to growing demand for these products.
The two new funds track indices consisting of companies with MSCI environmental, social and governance ratings level BB and above.
Provider view
Scott Thiel, deputy chief investment officer, fixed income at BlackRock, and one of the fund’s portfolio managers, said: “The challenges facing global bond investors are greater than ever. Highly accommodative monetary policy has artificially boosted bond markets with yields on higher-quality bonds continuing to decline. However, there are opportunities for active managers to identify sources of added value by capitalising on global opportunities and macroeconomic trends.
“We hear from many investors that they want global macro, liquid strategies that can take advantage of the divergence in performance across different markets. We’ve launched this fund in response to this demand.”
Adviser view
John Stirling, chartered financial planner at Essex-based Walden Capital, said: “A customised benchmark is nothing new. In fact, we have seen quite a lot of fund houses creating these, simply because indices that track their investments do not exist.
“The launch of the fund does not surprise because asset managers always launch funds when they are popular. The fund may not perform well in the first couple of years, which is by no fault of the provider, but because the current investment climate is challenging.
“Having a bit of exposure to emerging market debt makes sense because. It will serve to drive up returns.”
Charges
The annual management charge of the fund’s D share class is 0.50 per cent, and ongoing charge fee is 0.70 per cent.
Verdict
Bond funds are popular and increasingly so, but the performance of debts have not been particularly impressive over the past year. This is because the market has encountered almighty headwinds in the form of quantitative easing by central banks coupled with the threat of rises in interest rates.
Here, the ongoing charge figure is notably higher than those applicable to similar rival products. However, judging by the stellar performance performance of four funds within BlackRock’s Global Bond fund range over the past five years, the new product might just be worth the premium, although past performance is not an indicator of future outcomes.
