Global deleveraging and government intervention have produced a challenging new fixed income environment that demands a higher degree of proactivity from investors, says Stephen Miller, BlackRock Australia’s head of fixed interest.
“In the current environment, fixed income investors can not afford to set and forget. They now need to be proactive about managing diversification risk, credit risk and geographic risk,” Mr Miller says.
Responding to this need, BlackRock has launched the Fixed Income Global Opportunities (FIGO) fund in Australia.
FIGO is a flexible global multi-sector fixed income strategy that seeks to achieve a positive total return. While the fund is not tied to a benchmark, it is managed to a target return of 4-6 percent per annum above the UBS Bank Bill Index, net of fees, over rolling three-year periods.
“FIGO was established in response to investors’ desire to diversify their bond portfolios away from traditional fixed income assets, in order to counter the risk to performance presented by a rising interest rate environment over the medium term,” Mr Miller says.
The fund does not focus on just one area of global bond markets. Instead, the underlying investments are a result of collaboration between portfolio managers and over 150 investment specialists globally within the BlackRock group who cover corporate, sovereign, municipal and structured bonds. The underlying strategy also takes active currency positions and can have exposure to equity markets.
“FIGO invests in a mix of traditional and non-traditional strategies that seek to provide superior risk adjusted returns and greater diversification than typical fixed income core or core plus strategies,” Mr Miller says.
“FIGO could appeal to investors looking to enhance return potential from their fixed income allocation without taking on too much risk.”
Although new to the Australian market, the FIGO strategy has been in place in a US mutual fund since 2010 and has a history of attractive returns.
“A modeled return profile for an AUD-hedged version of the US mutual fund strategy outperformed its performance target of the UBS Bank Bill index by 5.3 percent gross each year over three years, and 6.5 percent gross since inception in March 2010,” Mr Miller says.
The fund also showed positive performance during periods of rising bond yields, a consideration for fixed interest investors in the current environment.
“In eight out of 10 periods, the modeled return was positive despite rising US 10 year treasury yields,” Mr Miller says.
FIGO has a minimum investment of $50,000. The fund has no establishment fees, no contribution fees, no withdrawal fees, no switching fees and no exit fees. The annual management fee is 0.7 percent.
For more information, please contact:
Deb Johnson – Phone: 03 9657 3149 or 0401 372 588
Kari Arnison – Phone: 02 9272 2339 or 0434 560 652
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BlackRock Australia, its officers, employees and agents believe this information is correct at the time of compilation, but no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors or omissions (including responsibility to any person by reason of negligence) is accepted by BlackRock Australia, its officers, employees or agents, or any entity in the BlackRock Group. This is general information only and is not intended to represent general or specific investment or professional advice. The information does not take into account an individual’s financial circumstances. An assessment should be made as to whether the information is appropriate in individual circumstances and consideration should be given to talking to a financial or other professional adviser before making an investment decision. No guarantee as to the capital value of investments in the Fund nor future returns is made by BlackRock Australia or any entity in the BlackRock Group. Past performance is not a reliable indicator of future performance. No index provider makes any representation regarding the advisability of investing in the Fund.
29 September 2014