A unique opportunity to access the ‘best of the best’: the BlackRock Multi-Manager Alternative Strategies Fund
There is no question over the appeal of a broadly diversified investment strategy in today’s environment.
Uncorrelated returns, access to a wider set of asset classes and more extreme concentration limits are just some of the reasons investors turn to hedge fund strategies to bolster overall performance.
Yet investors across the continent face limitations under the UCITS rules imposed by the European Commission.
The hedge fund universe comprises more than 10,000 funds and is worth almost $3trn, yet those falling within the UCITS framework represent just 7% of that total.
Perhaps more importantly, they have historically underperformed their non-UCITS peers - by 53% 2006, with an equity bias partly to blame. Further, many of the top-performing US-based hedge fund managers with high inflows have shown a broad indifference to engage with the UCITS rulebook, conversely, some of their substandard peers have been inclined towards Europe as they chase assets in the hope of standing out in a less competitive pool.
Given the significant disparity between high-quality and low quality managers and the number of niche managers who sit below the radar, BlackRock Alternative Advisors (BAA) relies on its 21-year track record to research and identify managers who are best-in-class for their six-pronged sub-advised strategy.
A blend of fundamental long/short, global macro, managed futures, relative value and event driven, investors in the retail and wealth management space can now harness the expertise once solely the domain of those institutional investors participating in the hedge fund world. Yet as sub-advisors running mandates in a UCITS fund, not only are the doors opened, but the fees are also controlled.
From an initial universe of more than 10,000 funds that exist, 8,000 of these are present on the hedge fund databases. We funnel these down to 140 managers that we use as building blocks across our various BAA strategies.
We assess on a number of factors: investment skill and expertise; opportunity set for each strategy; idea generation; portfolio construction methodology; risk management processes and systems; operational infrastructure; organisational stability and internal controls; alignment of incentives; and portfolio and performance review.
Only 50 managers will be categorised as top tier, who will then be interrogated qualitatively by the research team, quantitatively by the risk team, and go through a thorough background check and control carried out by operational and due diligence.
Once we establish the right ‘fit’ at group level, 6-12 individual managers are selected for their investment acumen, integrity, risk management capability, stability and how complementary their opportunity set is to that of the others selected.
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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.
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BlackRock Strategic Funds (BSF) is an open-ended investment company established and domiciled in Luxembourg which is available for sale in certain jurisdictions only. BSF is not available for sale in the U.S. or to U.S. persons. Product information concerning BSF should not be published in the U.S. It is recognised under Section 264 of the Financial Services and Markets Act 2000. BlackRock Investment Management (UK) Limited is the UK distributor of BSF. 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 BSF sub-funds have a reporting fund status A sterling share class that seeks to comply with UK Reporting Fund Status requirements. Subscriptions in BSF 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.
Fund Specific risks
Exchange rate risk –BSF Multi-Manager Alternative Strategies 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.
Emerging market risk – Compared to more established economies, the value of investments in developing Emerging Markets may be subject to greater volatility due to differences in generally accepted accounting principles or from economic or political instability.
Complex Derivative Techniques – The strategies utilised by the fund in this document involve the use of derivatives to facilitate certain investment management techniques including the establishment of both ‘long’ and ‘synthetic short’ positions and creation of market leverage for the purposes of increasing the economic exposure of a fund beyond the value of its net assets. The use of derivatives in this manner may have the effect of increasing the overall risk profile of the funds. Investors in these funds should understand that the funds are not guaranteed to produce a positive return and as an absolute return product, performance may not move in line with general stock market trends as both positive and negative share movements affect the overall value of the funds. The Managers employ a risk management process to oversee and manage derivative exposure within the funds.
Financial Markets, Counterparties and Service Providers – The BSF Multi-Manager Alternative Strategies Fund may be exposed to finance sector companies, as a service provider or as counterparty for financial contracts. Liquidity in the financial markets has been severely restricted, causing a number of firms to withdraw from the market, or in some extreme cases, become insolvent. This may have an adverse effect on the activities of the fund.
Unless indicated, the fund information displayed only provides summary information. 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 and 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. This material 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 strategy in any jurisdiction in which such offer, solicitation or distribution would be unlawful or in which the person making such offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make such offer or solicitation. It is your responsibility to be aware of the applicable laws and regulations of your country of residence.
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