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    2014 is a good time for them to rethink their strategy, if they haven't already done so in 2013. I think a lot of investors learned valuable lessons from the big selloff. In 2012 and 2011, in the low-yield environment, we saw many investors really move out of their comfort zone in terms of risk. They either took on additional duration risk or additional credit risk. And you can see what the impact has in a big selloff on investor portfolios. We saw that last summer. So I think this is the time to rethink that.

    Where we are in the interest-rate cycle is very important. It's unlikely rates will go down dramatically, unless we really go into a global slowdown or a big U.S slowdown in the economy, which isn't necessarily ours or most people's view. At the same time, we do think rates will stay low for longer. We're not looking for a dramatic backup. But you need to be very tactical, where on the curve you need to be positioned, how you want to take risk. So, for instance, we're advocating a 20-year position. But we want to hedge back some of that position, as well, to get to a more overall duration-neutral position.

    Now, the other aspect is high yield. A year ago we were advocating paring back high yield. Credit spreads were tight. We were worried about liquidity. Now, a year later, since credit spreads have widened and there's more value in that part of the market, and we want more income, we're advocating a more neutral position to high yield. We are being a little bit cautious there.

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Bond values fluctuate in price so the value of your investment can go down depending on market conditions. Fixed income risks include interest-rate and credit risk. Typically, when interest rates rise, there is a corresponding decline in bond values. Credit risk refers to the possibility that the bond issuer will not be able to make principal and interest payments. The market for municipal bonds may be less liquid than for taxable bonds. The opinions presented are those of Peter Hayes, Portfolio Manager, member of BlackRock's Fixed Income Portfolio Management Group, as of January 21, 2014 and may change as subsequent conditions vary. Individual portfolio managers for BlackRock may have opinions and/or made investment decisions that may, in certain respects, not be consistent with the information contained in this presentation. This is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The information and opinions contained in this presentation are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all inclusive and are not guaranteed as to accuracy. Past performance does not guarantee future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the viewer.

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