An investment grade corporate bond fund with a flexible mandate. The approach typically incorporates a range of investment strategies, including off-benchmark opportunities. Within its sector, the fund features in our 'Dynamic' category.
The fund’s KIID Synthetic Risk and Reward Indicator (SRRI) is 4. This is a regulatory measurement that is, where possible, calculated from the volatility of its weekly performance over a five-year period. A score of 4 means the fund’s historic volatility is between 5% and 10%.
The fund’s five-year standard deviation is similar to mainstream investment grade credit benchmarks. We would expect the reasonably diversified nature of the manager’s approach to lead to a volatility outcome in keeping with the asset class over most five-year periods. Different share classes could have differing SRRI scores.
Fund manager, Ben Edwards, is a member of Simon Blundell’s Fundamental Sterling Fixed Income team. Mr Edwards joined BlackRock from Legal & General in 2010 and has been involved with the fund since May 2012. He benefits from BlackRock’s vast resource, encompassing a top-down Investment Strategy Group, an extensive global credit analyst team and government bond specialists.
The manager believes that successful bond investing is achieved through incremental outperformance from a range of strategies, combined in a risk-controlled manner. He believes he can benefit from BlackRock's significant resource to build a portfolio that adds value across a range of strategy types.
The core of the portfolio is constructed through issuer and sector analysis within sterling corporate bonds and incorporates significant relative value judgements and strategies against the benchmark. However, the manager has the flexibility to invest in overseas bonds, mostly hedged to sterling, and to invest up to 20% of assets in high yield issues. The fund has a neutral duration position of 6.5 years, but the manager has the flexibility to manage around this. Aladdin, an on-line trading and portfolio system designed by BlackRock, is used to support efficient portfolio construction.
In line with the philosophy of adding value across a range of different positions, the portfolio reflects the team's macro-economic analysis and credit analysis. The macro-economic and global market research is designed to analyse the economic outlook for key regions and to forecast market behaviour in this context. It is particularly important in driving the portfolio duration, a measure of sensitivity to interest rate movements, the regional preferences and the overall level of credit risk in the portfolio.
The top-down input can also direct the manager towards particular sectors of the credit market. However, the issuer selection is underpinned by the credit analysis undertaken by the team. The analysts are responsible for undertaking fundamental company research and making relative value recommendations within their sectors of expertise. Their research covers four factors: industry attractiveness, competitive position, financial position and management quality. The best ideas are incorporated in the portfolio with due regard for aggregate risk exposures.
Formal documentation, including the fund prospectus and the KIID, should be sought directly from the asset manager. For ease of reference, a link to the ASSET MANAGER WEBSITE can be found above.
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