With rates near all-time lows, many investors are seeking opportunities in new areas to derive more current income from their portfolios. One way is to make concentrated investments in areas like U.S. high yield. An alternative approach allocates across a range of less-traditional strategies like covered calls and emerging market credit to pursue a differentiated source and pattern of income while enhancing diversification.
Source: BlackRock, Bloomberg. As of 3/31/15. For illustrative purposes only. Data represents past performance and is no guarantee of future results. Index yields are shown for illustrative purposes only and do not predict or depict the yield of any BlackRock fund. Yields for the various asset class indices have material differences including investment objectives, liquidity, safety, guarantees of insurance, fluctuation of principal or return and tax features. Fixed income yields represented by yield-to-worst, equity yields by current dividend yield while MLPs yield may consist of return of capital and current income, the composition of which varies based on income, expenses, depreciation and tax elections made by the MLP based on each investor’s share of the MLP’s income, expenses, gains and losses.
Represented indices: Core bonds represented by the Barclays US Aggregate Index, comprising more than 5,000 investment-grade taxable bonds. Investment grade bonds represented by the Barclays Investment Grade Index, consisting of publicly issued, fixed rate, non-convertible investment grade debt securities. US dividend equities represented by the MSCI USA High Dividend Yield Index, reflecting the performance of the high dividend yield of large- and mid-cap stocks in the US. High yield represented by the Barclays HY 2% Issuer Capped Index, comprising issues that have at least $150 million par value outstanding, a maximum credit rating of Ba1 or BB+ (including defaulted issues) and at least 1 year to maturity. Each issuer is limited to 2% of the index. Convertible debt represented by Barclays US Convertibles Composite Index, reflecting the performance of the USD-denominated convertibles market and includes all four major classes of convertible securities (i.e., cash pay bonds, zeros/OIDs, preferreds, and mandatories). Global REITs represented by FTSE EPRA/NAREIT Developed Index, reflecting a composite of the existing EPRA Europe Index, EPRA/NAREIT North America Index, and EPRA/NAREIT Asia Index. The index contains publicly quoted real estate companies that meet the EPRA Rules in 21 countries throughout Europe, North America, & Asia. Covered calls represented by CBOE S&P 500 2% OTM Buywrite Index BXY. The CBOE S&P 500 BuyWrite Index (BXM) is a benchmark index designed to track the performance of a hypothetical buy-write strategy on the S&P 500 Index. The CBOE S&P 500 2% OTM BuyWrite Index (BXY) uses the same methodology as the widely accepted CBOE S&P 500 BuyWrite Index (BXM) but the BXY Index is calculated using out-of the-money S&P 500 Index (SPX) call options, rather than at-the-money SPX call options. European high yield represented by Barclays Pan Euro High Yield Index, reflecting the performance of the fixed-rate, Euro-denominated high yield corporate bond market. EM dividend equities represented by MSCI EM Dividend Masters Index, reflecting the performance of high dividend yielding EM equities within the MSCI parent index. EM debt represented by JPM EMBI Global Total Return Index tracking total returns for traded external debt instruments in the emerging markets including US dollar-denominated Brady bonds, loans, and Eurobonds with an outstanding face value of at least $500 million. MLPs represented by the Alerian MLP Index, a market-cap weighted, float-adjusted index composite of the 50 most prominent energy Master Limited Partnerships (MLPs). Preferred stock represented by the S&P US Preferred Stock Index measures the performance of preferred stocks listed in US with a market capitalization over $100 million.