BlackRock has launched an emerging market (EM) short-duration bond fund in recognition of the growing need to mitigate interest rate risk.
Sergio Trigo Paz is named lead portfolio manager of the BlackRock Emerging Markets Short Duration Bond fund, with Michal Katrencik and Michal Wozniak as co-managers.
The fund will invest in a broad range of short-duration bonds spanning different sectors and countries globally.
It has been designed with the flexibility to allocate across sovereigns, corporates and local currency bonds with an average duration of no more than three years.
Trigo Paz, who is also global head of emerging markets fixed income at the group, said EM exposure has gone from a "nice-to-have to a must-have" for today's investors.
BlackRock said with rising interest rates, duration risk is a growing concern for fixed income investors.
It said the combination of short-duration bonds and emerging markets should provide investors with higher yields while maintaining some downside protection from rising interest rates across the world.
Trigo Paz added: "Historically seen as an opportunistic asset class, emerging market debt (EMD) is increasingly being used by investors as a long-term strategic allocation due to improving fundamentals and strong diversification benefits."
Trigo Paz, Katrencik and Wozniak will be supported by BlackRock's 19-strong EMD team, whose investment process is based on scenario analysis and thematic approach.
Currently the team oversees $24bn in EMD assets globally.
The fund is a sub-fund of BlackRock Strategic Funds, domiciled in Luxembourg.
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