BlackRock has boosted its global bond product suite with the launch of its Global Funds (BGF) Global Bond Income fund, part of the group's multi-sector fixed income platform that includes aggregate, government, corporate and flexible bond strategies, Investment Week can reveal.
Seeded with $75m, the fund aims to deliver an attractive level of current income by investing across global bond markets, while achieving growth through capturing strong performance across the credit cycle.
The fund is managed by CIO of global fixed income, Rick Rieder, who will be supported by senior fixed income managers, all of whom have the ability to invest across the entire global bond universe. This includes difficult to access asset classes, countries and securities such as high yield and investment grade credit, securitised assets and EMD.
The flexibility of the fund means the managers will be able to actively maximise income, the group said, while managing interest rate and credit risk, thereby helping to mitigate losses at times of market stress. The typical duration of the fund is 2+ years with the broad duration flexibility of 0-10 years to allow for interest rate risk management when necessary.
The fund will target a yield of over 5% through a portfolio with a high percentage of exposure to triple-A and liquid assets.
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Speaking to Investment Week, Rieder said: "We are seeing a lot of demographic evolution as the whole world will need income for the next ten to 20 years and now they can get it without the same kind of risk attached to it previously.
"In an environment of low interest rates, investors have to work harder in their search for income. Applying a flexible, go any-where approach to fixed income and without the limitations imposed by a traditional broad-market benchmark, investors can access a more diverse opportunity set."
Though the new fund is currently in UCITs format, Rieder believes there will be high demand globally, including in the US, which the team may look at branching out into with this vehicle in due course.
"We have launched this bond fund because there have been some important events that have caused the economic environment to change 180 degrees," Rieder added.
"We have lived in a world of quantitative easing and tremendous liquidity and the way to generate returns was through price return. The value of assets is not that attractive now but we have the ability to generate income in a less risky way."
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Meanwhile, Michael Gruener, head of EMEA retail at BlackRock, said: "Globally, we are witnessing persistent investor demand for income - and demographic shifts suggest this need will only continue to grow.
"Through its flexible approach to fixed income investing and focus on higher yielding securities, the BGF Global Bond Income fund helps unlock the income opportunities that we believe investors are looking for."
Domiciled in Luxembourg and available to investors in Europe and Asia, the OEIC will have a management fee of 0.5% and estimated OCF of 0.74% for its D share class.
