Diversified strategies

Why BlackRock for global multi-asset portfolios?

BlackRock’s Diversified Strategies team invests in highly diversified portfolios incorporating a global universe of equities, fixed income, alternatives and cash. The team adopts a flexible approach to asset allocation in order to navigate different market environments. The team leverages the considerable in-house global research capabilities of BlackRock in individual asset classes, in addition to formulating its own asset class agnostic perspectives on the team.

Investment theory

The Diversified Strategies team focuses on delivering positive returns to clients through active asset allocation decisions. As such, the team focuses on establishing a ’top-down’ macro-economic view of the world and building portfolios that have a diversified set of research-driven investment ideas consistent with that view. The team fundamentally believes that there are better ways to gain exposure to asset markets than simply “buying the market”.

More robust ways of gaining ‘market exposure’ can include:

1. Developing more risk-efficient ways of getting the “market” exposure, or capturing the risk premium in market
2. Exploiting inefficiencies and mis-pricings within and between asset classes via active asset allocation decisions
3. A combination of the above

Our investment theory is based on the following fundamental beliefs:

Investment process

The Diversified Strategies team employs a robust and scalable investment process that is underpinned by the team’s expertise across a wide opportunity set in addition to leveraging insights from the breadth of BlackRock’s investment platform. The process has 3 distinct stages:

ESG integration

The team believes ESG considerations are a vital component of the investment process. Given ESG considerations point to risks that are often unaccounted for in traditional financial disclosures, the team believes ESG integration aids the construction of more robust portfolios, which have the ability to meet both the financial needs and sustainability goals of our clients.

The team believes climate risk is investment risk and will require the adaptation and resilience of companies world-wide. The team believes the green transition to a low-carbon economy, consistent with the Paris Agreement goals, will deliver an improved outlook for growth and risk assets relative to doing nothing. Active engagement with issuers on climate related issues is a critical part of our stewardship agenda.

The team’s approach to ESG integration within the investment process has 3 stages:

Capabilities

The Diversified Strategies team manages a range of outcome oriented and benchmark / peer group aware strategies and solutions for clients. All strategies feed from the same research inputs in the team’s process but implementation is tailored to meet specific outcomes, risk parameters, sustainable investing requirements and where appropriate, individual client guidelines. The team has a +20-year history managing assets on behalf of a range of clients across the retail, defined benefit and defined contribution pension funds, charities / endowments, sovereign wealth, and insurance company sectors.

As multi-asset investors, the team utilizes the best of BlackRock’s expertise across assets classes while anchoring ESG integration at the core of its process. To achieve the most optimal outcomes, the team incorporates the use of active, passive, bespoke and third party vehicles to accurately reflect research views. Utilizing a thematic equity basket strategy approach allows the team to maintain flexibility in determining the best structure and composition of a basket and diversify broadly across asset classes, regions, countries, currencies, and sectors.

The team has run ESG initiatives since 2012 and have begun implementing low carbon transition, biodiversity, and climate focused themes within their funds. The team continues to evolve their approach to ESG investing and targeting sustainable outcomes.