BFM Fixed Income Global Opportunities Fund (FIGO)

Transcription

1 BFM Fixed Income Global Opportunities Fund (FIGO) A Flexible Fixed Income Product September 2015

2 % Yield % Yield Declining yields have driven returns in fixed income G3 Government 10 Year Bond Yields ( ) 14% 12% Even in Corporate Bonds, interest rates are dominant 8% 7% 6% 10% 8% 5% 4% 6% 3% 4% 2% 2% 1% 0% 0% iboxx Gilts iboxx Non-Gilts US 10 Year UK 10 Year Germany 10 Year Source: Bloomberg, as of 31 August 2015 Source: Markit iboxx as at 31 August 2015 For use with professional investors/qualified investors only proprietary and confidential 2

3 Weight in selected universe Finding a decent yield means taking a lot more risk Fixed income assets yielding over 4%, % 90% 80% 70% 60% 50% 40% 30% 20% Euro Core Euro Periphery US CMBS US MBS Emerging Market US Agencies Global High Yield Global Credit US Municipal US Treasury 10% 0% Sources: BlackRock Investment Institute, Barclays and Thomson Reuters, 31 March The bars show market capitalisation weights of assets with an average annual yield over 4% in a select universe that represents about 70% of the Barclays Multiverse Bond Index. Euro core is based on French and German government debt indexes. Euro peripheral is an average of government debt indexes for Italy, Spain and Ireland. Emerging markets combine external and local currency debt. For use with professional investors/qualified investors only proprietary and confidential 3

4 Market value (%) Marginal risk contribution (bps) The UK fixed income universe is not as diversified as you think iboxx sterling non Gilt index Sector profile (% market value) Risk profile (marginal risk contribution)* 100% Securitized % Corporate Spreads 60% 40% Municipal Corporates Provincial Rates (Duration) % Federal Government Related 0 Spreads 0% -100 Index duration: 7.64 years Index risk: 5.09% Source: BlackRock as of 31 August 2015; index shown: Markit iboxx sterling non Gilt index, * 1 year 1 standard deviation marginal contribution to risk (MCR). MCR takes into account the correlation of each sector and is able to incorporate diversification benefits. For use with professional investors/qualified investors only proprietary and confidential 4

5 For fixed income, this leads us to some principles for a new approach Deliver consistent, high risk-adjusted returns in all environments Be Flexible Remove benchmark constraints Retain the general risk profile of conservative fixed income investments Be Diversified Seek out best opportunities globally Seek a low correlation to traditional fixed income indices Retain Tail-risk hedge characteristics Mitigate Losses Aim to hedge tail-risk and control volatility to deliver attractive risk-adjusted returns For use with professional investors/qualified investors only proprietary and confidential 5

6 BFM Fixed Income Global Opportunities Fund (FIGO) BlackRock s flexible fixed income strategy is designed to: Generate consistent, attractive risk-adjusted returns across varied market environments Retain the general risk profile of traditional fixed income investments The strategy is designed with a focus on seeking: Flexible generation of fixed income alpha Invests in diversified portfolio of fixed income alpha sources Sector allocation flexibility and wide duration band of -2 to +7 years Consistent positive returns, with a target in excess of Libor Broad diversification, lower absolute risk and correlation Seeks to provide lower absolute risk through diversified alpha and risk exposures and less correlation to traditional fixed income indices Relative downside protection through dynamic risk budgeting Unique process aims to hedge tail risk and control volatility to generate attractive risk-adjusted returns Data as of 31 August 2015, Source: BlackRock For use with professional investors/qualified investors only proprietary and confidential 6

7 High degree of diversification in the strategy The Flexible Fixed Income Strategy is a diversified solution is designed to provide high diversification and perform in all rate environments. Sterling Non-Gilt Index** risk allocation BFM FIGO risk allocation Non-US Rates ABS EM IG Swap Spreads Sterling Non-Gilt Index US Rates Non-US Rates Vol FX Inflation CMBS ABS Mortgage Non-Agency EM IG HY Swap Spreads Equity BFM FIGO Duration 7.64 years 0.34 years Risk # 509 bps 139 bps More than 80% of the portfolio is concentrated in interest rates (i.e. duration risk) Flexibility and diversification results into attractive risk adjusted returns # The above pie charts show the distribution of Stand Alone Risk within the Markit iboxx sterling non Gilt index and BFM FIGO. Source: BlackRock Solutions (BRS); Ex-ante value-at-risk (1 standard deviation) based on the BRS Portfolio Risk model average contribution to risk All data as of 31 August Source BlackRock, **index shown: Markit iboxx sterling non Gilt index. For use with professional investors/qualified investors only proprietary and confidential 7

8 Flexible process invests in the most attractive global fixed income opportunities FIGO incorporates an optimal mix of traditional and non-traditional strategies Opportunity set Flexible strategy risk budgeting Traditional US fixed income Expands traditional Core Bond opportunity set 2013* US 2014* Core Government bonds Investment grade credit Agency MBS Municipal bonds Plus sectors High yield Securitised products Traditional global fixed income Tactically allocates risk more diversely throughout the world Global Global Sovereigns Asian credit European credit Emerging market Sovereigns Credit Non-traditional Fixed Income Implements macro hedges and long/short alternative strategies Non-traditional Macro Duration / Yield curve Sovereign / Credit FX Equity Absolute return Beta neutral Long, short relative value Capital structure arbitrage Systematic trading Source: BlackRock. *The above pie charts show the distribution of Stand Alone Risk within the BGF FIGO fund at the respective year ends. Source: BlackRock Solutions (BRS); Ex-ante value-at-risk (1 standard deviation) based on the BRS Portfolio Risk model average contribution to risk. Data as of 31 December 2013 and 31 December 2014 respectively. For use with professional investors/qualified investors only proprietary and confidential 8

9 Strategy duration (years) Flexible duration management is critical to generating return and controlling risk across different interest rate environments Active duration management guides interest rate and credit exposure in the strategy Typical duration range for the strategy spans the normal duration bands for most core and short duration funds Flexible duration management in action Strategy duration (Daily data: March 2010 August 2015) Duration band from -2 to +7 years, typical historic duration: 0 to +3 years Strategy iboxx sterling non Gilt BFM FIGO Source: BlackRock Solutions, Markit as of 31 August 2015 Data shown is for a representative account for illustrative purposes only. The representative account is the BlackRock vehicle with the longest tenure running the strategy. Strategy inception date March Strategy adopted by BGF FIGO UCITS strategy in June 2013, BFM FIGO in March For use with professional investors/qualified investors only proprietary and confidential 9

10 High level risk strategies Risk dashboard provides deep understanding of risk and return trade-offs Tracks multi-dimensional risk exposures and portfolio behavior enabling better decision making Reviewed by PM and risk teams, and serves as the foundation of daily investment meetings Helps PMs understand whether return generated is proportionate to the risks taken Portfolio dynamics and characteristics for all risk strategies are aggregated in the dashboard Alpha and macro strategies are show in one, consistent view Alpha Target/Carry Risk Budget Risk on P&L and SA Risk (bps.) Diversification Score Correlations Source: BlackRock As of 31 March 2015, for illustrative purposes only; Bulls eye represents the alpha target of the portfolio. The red box represents the carry of the portfolio based off the portfolio s current positions (subject to change). For use with professional investors/qualified investors only proprietary and confidential 10

11 Team & Process

12 FIGO investment team leverages the full power of BlackRock s resources Deep resources and specialised market insights enable unbiased focus on best investment opportunities FIGO Investment Team Risk Management Richard Flynn (9/25) Matthew Wang (12/12) Jacob Caplain (2/2) Miguel Rodriguez (8/19) Rory van Zwanenberg (3/3) Portfolio Management Team Lead Portfolio Managers Rick Rieder, CIO of Fundamental Fixed Income (4/25, NYC) Scott Thiel, Deputy CIO of Fundamental Fixed Income (12/26, LON) Bob Miller, Managing Director (3/26, NYC) Product Strategy Marilyn Watson (5/16) Joanna Langton (7/16) James Edwards (7/13) Meena Kanagasapay (3/4) David Oelker (1/1) BlackRock s Fundamental Fixed Income Platform Global sector specialists responsible for sector oversight, research, analysis, security selection, and trade execution Global Rates Strategy Rates Strategy Agency MBS Municipals Securitised Assets US IG Corporate Credit 16 sector specialists 11 sector specialists 34 sector specialists 13 sector specialists 18 sector specialists US Leveraged Finance European Credit Asia Pacific Emerging Markets 41 sector specialists 39 sector specialists 11 sector specialists 13 sector specialists As of 31 August 2015 (Years at BlackRock / Years in Industry) For use with professional investors/qualified investors only proprietary and confidential 12

13 Unique process integrates macro, sector and security selection insights Process employs best ideas across BlackRock s global fixed income platform to: Establish the macro investment regime Budget risk to the highest quality alpha sources that can provide diversified risk-adjusted returns Portfolio management Daily investment and risk dashboard review helps the team monitor and understand risk/reward trade-offs Lead PMs analyse level and trajectory of global economic growth and form macro view Regime identification Examine global growth, inflation, and implications on economic policy Identify regime associated with market conditions, as well as pace and direction of regime changes Build thesis from deep fundamental research across the platform, resulting in CIO Monthly Call Asset allocation Lead PMs determine asset allocation based on economic regime and expected risk-adjusted returns Identify what assets perform well in current and historical regime Assess current valuation of those assets Optimally allocate risk to sector specialists, based on conviction in different sectors Security selection Lead PMs direct sub-sector risk allocation with input from the sector teams Sector Specialists identify bottom-up opportunities based on extensive relative value analysis and local market expertise Sector Specialists implement trades for their sector based on assigned risk budgets Risk management Team leverages RQA and BlackRock s proprietary Aladdin system for risk and scenario analysis, attribution, and hedging For use with professional investors/qualified investors only proprietary and confidential 13

14 Trade examples

15 Sep 2014 Sep 2014 Oct 2014 Oct 2014 Oct 2014 Oct 2014 Oct 2014 Nov 2014 Nov 2014 Nov 2014 Nov 2014 Dec 2014 Dec 2014 Dec 2014 Dec 2014 Dec 2014 Jan 2015 Jan 2015 Jan 2015 Jan 2015 Feb 2015 Feb 2015 Feb 2015 Feb 2015 Mar 2015 Mar 2015 Mar 2015 Mar 2015 Apr 2015 Apr 2015 Apr 2015 Apr 2015 Apr 2015 May 2015 May 2015 Country Relative Value / European spread compression Portugal has completed c80% of its planned fiscal consolidation since 2009 Declining unit labour costs and increasing net exports as % of GDP create a favourable fundamental investment case Technical drivers make the strategy even more attractive: European QE will take up 95% of Portuguese gross issuance from March 2015 September 2016 Implementation: Short Italian government bond futures, Long Portuguese government bonds (targeting auctions where appropriate) Country Relative Value: Portugal vs. Italy Portugal outperforms Italy % % Spread (RHS) Portugal 15y Italy 10y Source: Bloomberg as of 13/05/2015. FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY. NOT FOR PUBLIC DISTRIBUTION 15

16 CDS price Spread (bps) Spread over bunds (basis points) European Credit: Financials UniCredit (Italian national champion bank) Trade 1: Relative Value via CDS Trade 2: Directional Exit Feb Entry Jan15 Exit Feb/Mar Spread (RHS) UniCredit 5yr. CDS Intesa Sanpaolo 5yr. CDS Market backdrop At the beginning of 2015 UniCredit underperformed on concerns about the bank s Russia / CEE and CHF exposures Fundamental rationale For UniCredit, Russia represents a decent contribution to the group s profit, however risks are concentrated to equity exposure. Additionally, loans to Russian customers account for only a small part of the group s total loans and Russia is actually a net lender to the group. UniCredit group s exposure to CHF is booked in the Austrian subsidiary and largely consists of legacy exposures. Asset quality is concentrated in mortgage loans to affluent individuals or public entities Entry Jan UniCredit LT bond spread over Bunds Scenario analysis (1) If there was a write-down on Russian exposure, it would not have a significant impact on UniCredit s Core Tier 1 ratio. (2) A 15% appreciation in the CHF would only have a negligible impact on UniCredit Bank Austria s capital base. Resulting trade ideas Trade 1 (Relative Value): Long UniCredit vs Intesa Sanpaolo (as proxy to hedge out Italian beta risk) via CDS Trade 2 (Directional): Long subordinated (LT2) UniCredit bonds Source: BlackRock, Bloomberg as of 29 May 2015 FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY 16

17 Performance & Summary

18 Total Return (%) BlackRock Fixed Income Global Opportunities Fund historical performance Total Return in GBP (%) to 31 August Month 3 Month YTD 1 Year 3 Year (ann.) 5 Year (ann.) BlackRock Fixed Income Global Opportunities Fund (Class A Acc, net of fees) BlackRock Fixed Income Global Opportunities Fund (Class A Acc, gross of fees) 3 Month GBP Libor During the period before the fund repositioned on 19th March 2015 the performance of the BlackRock Fixed Income Global Opportunities Fund was achieved under circumstances that no longer apply. The Fund was previously known as BlackRock Global Bond Fund. On 19 March 2015, the Fund adopted its present name and in addition changed its investment objective and policy. Since March 19th 2015, the Fund s performance is no longer measured against a benchmark. Prior to this it was measured against the Barclays Global Aggregate index, unhedged in GBP. Unit A Acc Class performance displayed in British Pound (GBP). Performance is shown on a bid to bid price basis, with net income reinvested, net/gross of fees. Past performance is not a guide to future performance. Source: BlackRock, as of 31 August Periods over 12 months are annualised. For use with professional investors/qualified investors only proprietary and confidential 18

19 Why BlackRock for flexible fixed income? The scale and complexity of global flexible fixed income investing demands the investment platform, infrastructure and multi-faceted risk management capability unique to BlackRock Unbiased focus on best global FI investment opportunities Leverages the deep resources and specialised insights from our global FI platform Distinct investment approach enhances decision making Relies on the reach of our unique platform and sophisticated risk tools Strategy track record illustrates our flexible investing skill Generated stronger returns over the longer term relative to core fixed income with lower volatility and low correlations Strategy adopted by BGF FIGO UCITS strategy in June 2013, BFM FIGO in March Past performance is no guarantee of future results. Performance as at 31 August 2015 For use with professional investors/qualified investors only proprietary and confidential 19

20 BFM FIGO current positioning

21 BFM Fixed Income Global Opportunities Fund Portfolio positioning as of 31 August 2015 Key rate yield curve positioning (years) to 2 3 to 5 7 to USD EUR GBP JPY Other EM Other DM Total Currency exposure (% notional value) 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% Duration contribution by country (years) % NOK MXN ZAR GBP* HUF IDR SAR BRL USD EUR * Deviation from 100% base currency. For use with professional investors/qualified investors only proprietary and confidential 21

22 % notional BFM Fixed Income Global Opportunities Fund Portfolio positioning as of 31 August % 40% 30% 20% UK Global ex UK 18.1% 28.3% 45.7% 10% 5.7% 0.8% 5.6% 2.7% 5.8% 0.6% 0% -10% -20% -13.1% Global Government* US Agency MBS US Municipals Global IG Bonds** Global HY Bonds** Emerging Market Debt Securitized Assets Equity/Other*** Net Derivatives**** Cash & Cash Equiv s# Global credit exposure (% notional exposure) Credit quality breakdown (% NAV) 8% 7% 6% 5% 4% 3% 2% 1% 0% -1% -2% Cash Bond Exposure 6.8% 1.4% Derivatives Exposure 1.3% -1.2% Inv. Grade Credit High Yield Inv. Grade CDS High Yield CDS * Global Government exposure also includes the effect of global interest rate derivatives. ** Note that this sector includes the notional value of CDX overlay positions. *** Equity contains equity related securities, convertibles and other non-classified securities. Keep in mind that FIGO is limited to 10% max exposure to equities. **** Net Derivatives represents the approximate net notional value of the longs less the short derivatives held in the fund. Derivatives held in the fund include, but are not limited to futures, options and swap contracts. # Includes cash, cash equivalents and the market value of short dated swaps (such as Eurodollar futures) with a maturity date of less than 1 year. Strategy adopted by BGF FIGO UCITS strategy in June 2013, BFM FIGO in March % 40% 30% 20% 10% 21% 4% 6% 12% For use with professional investors/qualified investors only proprietary and confidential 0% -10% 5% 2% 2% 0% 0% 1% 2% Source: Percentage calculation is a combination of S&P, Moody s and Fitch ratings when available. NR includes securities issued under rule 144A, Reg S, private placements, and other not rated securities. 46% AAA AA A BBB BB B CCC CCC C D NR Cash Derivs 0% 22

23 Appendix: BGF FIGO historical performance The inclusion of this material is presented by way of example only and is included to demonstrate the potential of the investment strategy to be employed by the BGF Fixed Income Global Opportunities Fund. However please note that the actual asset allocation and investment selection of these funds could differ which in turn could lead to differences in their performance.

24 Total Return (%) BGF FIGO historical performance Total Return in USD (%) to 31 August Month 3 Month YTD 1 Year Since Inception* (05/31/2013) BGF Fixed Income Global Opportunities Fund (Share class A2 USD gross) BGF Fixed Income Global Opportunities Fund (Share class A2 USD net) Libor 3 month USD The performance of BGF Fixed Income Global Opportunities Fund is included for illustrative purposes only. The inclusion of this material is presented by way of example only and is included to demonstrate the potential of the investment strategy to be employed by the BlackRock Fixed Income Global Opportunities Fund. However please note that the actual asset allocation and investment selection of these funds could differ which in turn could lead to differences in their performance. *Strategy adopted by BGF FIGO UCITS strategy in June 2013, BFM FIGO in March Historical performance displayed for an investment in the USD Class A2 shares of the BGF Fixed Income Global Opportunities Fund. Performance is shown as of 31 August 2015 on a NAV basis with income re-invested. Periods over 12 months are annualised. Past performance is not a guarantee of future results. Performance of individual shareholders may differ from the performance listed below due to fee and timing differences. Source: BlackRock For use with professional investors/qualified investors only proprietary and confidential 24

25 Biographies Rick Rieder, Managing Director, is BlackRock s Chief Investment Officer of Fundamental Fixed Income, Co-head of Americas Fixed Income and a member of the Executive Committee of the firmwide Alpha Strategy business, and is a member of BlackRock s Global Operating Committee. Before joining BlackRock in 2009, Rick was President and Chief Executive Officer of R3 Capital Partners. He served as Vice Chairman and member of the Borrowing Committee for the US Treasury. He is currently a member of the Federal Reserve Bank of New York s Investment Advisory Committee on Financial Markets and was recently elected as the 2013 inductee into the Fixed Income Analysts Society Fixed Income Hall of Fame. Scott Thiel, Managing Director, is BlackRock's Deputy Chief Investment Officer of Fundamental Fixed Income. He is Head of Global Bonds and has direct portfolio management responsibility for fundamental global bond portfolios, including BlackRock Global Funds World Bond Fund, Global Government Bond Fund and Fixed Income Global Opportunities Fund. Mr. Thiel is a member of BlackRock's Leadership Committee. Prior to joining BlackRock in 2002, Mr. Thiel was a Vice President at Goldman Sachs & Co. During his 13 years there, he was responsible for developing strategies in both US and international interest rate and derivative markets for institutional money managers. Bob Miller, Managing Director, is Head of the Multi-Sector Retail & Rates team within BlackRock s Americas Fixed Income Group and a member of the Americas Fixed Income Executive Team. He is a portfolio manager of BlackRock s Core Bond, Total Return, and Strategic Income Opportunities Funds. Prior to joining BlackRock in 2011, Bob was a co-founder and partner at the Round Table Investment Management Company, a multi-strategy, research-based investment company, where he managed a global macro strategy. For use with professional investors/qualified investors only proprietary and confidential 25

26 Biographies Ian Winship, Managing Director, is a portfolio manager for the Global Unconstrained fixed income team. He is the lead manager and chair of the Risk Allocation Committee responsible for the management of the BlackRock Absolute Return Bond Fund Strategy. Prior to joining BlackRock in 2010, Mr. Winship was with Brevan Howard where he was head of the Investment Team for the Global Absolute Return Bond Product. From 1997 to 2008, he was head of Global Rates at Deutsche/Aberdeen Asset Managers. Prior to this, Mr. Winship was head of Global Rates at Scottish Amicable Investment Managers. From 1995 to 1996, he was with Dunedin Fund Managers as a Global Rates Manager. Mr. Winship is a member of the Chartered Institute of Bankers in Scotland. He earned a BA degree, with honours, in economics and marketing from the University of Strathclyde in Joe Di Censo, CFA, CAIA, Managing Director, is a member of the Global Rates Investment Team within BlackRock Fundamental Fixed Income. Prior to joining BlackRock in 2011, Mr. Di Censo was a member of the Monetary and Capital Markets Division of the International Monetary Fund (IMF) in Washington D.C. He served as a financial sector expert to IMF teams working on the European sovereign debt crisis, and advised policymakers in India, Indonesia, Japan, and Korea. In addition, Mr. Di Censo was a lead author of the Global Financial Stability Report. Prior to his work at the IMF, Mr. Di Censo was a Senior Vice President at Lehman Brothers, where he spent nine years as a member of the global asset allocation research team. In that role, he contributed to fundamental and quantitative investment strategies across US, European, and Asia fixed income markets as well as the broader research platform. He was also an author of Lehman's flagship fixed income research publication, Daily and Weekly Global Relative Value. Mr. Di Censo has an MA degree in economics from the University of Pennsylvania and received a BS degree, magna cum laude, from Georgetown University's School of Foreign Service in Andreas Doerrenhaus, Director, is Head of the Global Unconstrained Credit strategies in Europe and a portfolio manager for the Global Unconstrained fixed income team. He is also co-manager of the BlackRock Absolute Return Bond Fund Strategy. Prior to joining BlackRock in 2010, Mr. Doerrenhaus worked as a Credit portfolio manager at Deutsche Bank Group - Deutsche Asset Management. Before joining Deutsche Bank he worked as a banker for Commerzbank AG and as a consultant for KPMG Consulting. Mr. Doerrenhaus earned a Diplom-Kaufmann degree in finance and international management from the Katholische Universitaet Eichstaett (WFI). For use with professional investors/qualified investors only proprietary and confidential 26

27 Global unconstrained team A dedicated team, under Scott Thiel, to focus on BlackRock s range of global unconstrained strategies Provide significant experienced investor resource to these critically important products Unconstrained Committee Scott Thiel Head of Global Bonds Ian Winship Absolute Return PM Andreas Doerrenhaus Credit & Absolute Return PM Joe Di Censo Macro Marilyn Watson Strategy Product Strategy Joanna Langton James Edwards Meena Kanagasapay David Oelker Portfolio Management Support Aidan Doyle For use with professional investors/qualified investors only proprietary and confidential 27

28 BlackRock global unconstrained fixed income platform Our global unconstrained fixed income team, employs the best ideas across BlackRock s global fixed income platform in order to provide investment products that can: Navigate the challenging fixed income market environment today, and in the future Benefit from an expanded opportunity set and increased diversification Provide consistent positive risk adjusted returns The team is headed by Scott Thiel, deputy CIO of Fundamental Fixed Income, supported by a team of global investors, including Ian Winship, head of our Absolute Return Strategy. BlackRock Global Unconstrained Fixed Income Team Daily investment and risk dashboard review helps the team monitor and understand risk/reward trade-offs Fixed Income Global Opportunities Fund Positive returns driven by beta and alpha return components with low correlation Global approach investing in fixed income assets enhanced by alpha strategies (-2/+7 years duration) Minimises capital losses Beta and alpha return components with low correlation Fundamental investment style Typical volatility 2-4% Total Return Absolute Return BlackRock Absolute Return Bond Fund Positive returns with an emphasis on alpha, targeting low/zero correlation with beta Long and short global strategies primarily implemented through derivatives (-2/+2 years duration) Aims to deliver capital preservation Emphasis on alpha, targeting low/zero correlation with beta Fundamental and model-based investment styles Typical volatility 1-3% Risk Management Team leverages RQA and BlackRock s proprietary Aladdin system for risk and scenario analysis, attribution, and hedging For use with professional investors/qualified investors only proprietary and confidential 28

29 Important notes This material is for distribution to Professional Clients (as defined by the FCA Rules) and should not be relied upon by any other persons. Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: Registered in England No For your protection telephone calls are usually recorded. BlackRock is a trading name of BlackRock Investment Management (UK) Limited. BlackRock Global Funds (BGF) is an open-ended investment company established in Luxembourg which is available for sale in certain jurisdictions only. BGF is not available for sale in the U.S. or to U.S. persons. Product information concerning BGF should not be published in the U.S. It is recognised under Section 264 of the Financial Services and Markets Act BlackRock Investment Management (UK) Limited is the UK distributor of BGF. Most of the protections provided by the UK regulatory system, and the compensation under the Financial Services Compensation Scheme, will not be available. A limited range of BGF sub-funds have a reporting fund status A sterling share class that seeks to comply with UK Reporting Fund Status requirements. Subscriptions in BGF are valid only if made on the basis of the current Prospectus, the most recent financial reports and the Key Investor Information Document, which are available on our website. Prospectuses, Key Investor Information Documents and application forms may not be available to investors in certain jurisdictions where the Fund in question has not been authorised. Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested. Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time. Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy. Fund Risks: The fund invests in high yielding bonds. Companies who issue higher yield bonds typically have an increased risk of defaulting on repayments. In the event of default, the value of your investment may reduce. Economic conditions and interest rate levels may also impact significantly the values of high yield bonds. The fund invests in fixed interest securities issued by companies which, compared to bonds issued or guaranteed by governments, are exposed to greater risk of default in the repayment of the capital provided to the company or interest payments due to the fund. The fund invests in fixed interest securities such as corporate or government bonds which pay a fixed or variable rate of interest (also known as the coupon ) and behave similarly to a loan. These securities are therefore exposed to changes in interest rates which will affect the value of any securities held. The fund(s) may invest in structured credit products such as asset backed securities ( ABS ) which pool together mortgages and other debts into single or multiple series credit products which are then passed on to investors, normally in return for interest payments based on the cash flows from the underlying assets. These securities have similar characteristics to corporate bonds but carry greater risk as the details of the underlying loans is unknown, although loans with similar terms are typically packaged together. The stability of returns from ABS are not only dependent on changes in interest-rates but also changes in the repayments of the underlying loans as a result of changes in economic conditions or the circumstances of the holder of the loan. These securities can therefore be more sensitive to economic events, may be subject to severe price movements and can be more difficult and/or more expensive to sell in difficult markets. The fund invests a large portion of assets which are denominated in other currencies; hence changes in the relevant exchange rate will affect the value of the investment. This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer BlackRock, Inc. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS, ishares, BUILD ON BLACKROCK, SO WHAT DO I DO WITH MY MONEY and the stylized i logo are registered and unregistered trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners. For use with professional investors/qualified investors only proprietary and confidential 29