Rainbow colored threads through needle eyelet, symbolizing diverse income sources

BlackRock Dynamic High Income Fund

Consistently seeking high income in an inconsistent world

  • IMPORTANT:

    i. The BlackRock Dynamic High Income Fund follows a flexible asset allocation policy that seeks to provide a high level of income. In order to generate high levels of income the Fund will seek diversified income sources across a variety of asset classes

    i. The BlackRock Dynamic High Income Fund follows a flexible asset allocation policy that seeks to provide a high level of income. In order to generate high levels of income the Fund will seek diversified income sources across a variety of asset classes, investing significantly in income producing assets such as fixed income transferable securities, including corporate and government issues which may be fixed and floating and may be investment grade, sub-investment grade or unrated, covered call options and preference shares. The Fund will use a variety of investment strategies and may invest globally in the full spectrum of permitted investments including equities, equity-related securities, fixed income transferable securities, units of undertakings for collective investment, cash, deposits and money market instruments. Currency exposure is flexibly managed.

    ii. The Fund follows a dynamic asset allocation strategy and may incur greater transaction costs when rebalanced periodically. The Fund may invest in debt securities that are subject to actual or perceived ratings downgrade. An increase in interest rates may adversely affect the value of the bonds held by the Fund. The Fund may invest in non-investment grade and unrated bonds that may be subject to higher default, volatility and liquidity risks. The Fund invests in bonds issued or guaranteed by governments or authorities, which may involve political, economic, default or other risks. The Fund's investments in equities could incur significant losses due to higher fluctuation of equity values. The Fund invests in asset/ mortgage backed securities that may be subject to greater credit, liquidity, and interest rate risks and are often exposed to extension and prepayment risks. The Fund's income-generating investment strategy may reduce the potential for capital growth and future income of the Fund.

    iii. The Fund is subject to risks associated with preference shares , currency risk, emerging market risk, securities lending counterparty risk, currency conversion risk including Renminbi denominated Classes, foreign investments restrictions risk and contingent convertible bonds risk.

    iv. Class 5(G) Shares pay dividends gross of expenses. Class 6 Shares pay dividends gross of expenses and/or from capital at the Directors’ discretion. Class 8 Shares pay dividends gross of expenses and/or from capital at the Directors’ discretion and include interest rate differentials arising from share class currency hedging. Negative interest rate differentials may decrease the dividends paid. Paying dividends gross of expenses may result in more income being available for distribution; however these shares may effectively pay dividends from capital – may amount to a partial return or withdrawal of an investor’s original investment or capital gains. All declared dividends result in an immediate reduction in the NAV price of the share class on the ex-dividend date.

    v. The Fund may use derivatives for hedging and for investment purposes. However, usage for investment purposes will not be extensive. The Fund may suffer losses from its derivatives usage.

    vi. The value of the Fund can be volatile and can go down substantially within a short period of time. It is possible that a certain amount of your investment could be lost.

    vii. Investors should not make investment decisions based on this document alone. Investors should refer to the Prospectus and Key Facts Statement for details including risk factors.

Think Differently About Income

Faced with unprecedented market conditions, we need to think differently about how we are investing for income.
Ratio
Focus on generating higher income
Low volatility
Use volatility to your advantage
Choice
Stay nimble and be diversified

BlackRock Dynamic High Income Fund

The fund is uniquely positioned to help investors “think differently about income”.

The BlackRock Dynamic High Income Fund is a global multi-asset strategy that aims to provide investors with the potential for high income and positive total return. The Fund achieves this outcome by investing across stocks, bonds and “complementary income asset classes”. Complementary asset classes are often more difficult to access for retail investors and are less commonly found in existing income strategies. Their lower correlation to traditional income sources can help to complement what investors already own. 

Complementary asset classes can be complicated. Investing in them requires expertise and flexibility. Our team has the flexibility to dynamically adapt the Fund’s asset allocation, adjusting the portfolio based on current market opportunities and conditions. 

With the right amount of risk management, complementary asset classes can offer compelling opportunities to investors today. The BlackRock Dynamic High Income Fund seeks to deliver a compelling combination of high income, capital appreciation, and diversification, and is exactly what investors should be looking for today.

The BlackRock Dynamic High Income Fund is a global multi-asset strategy that aims to provide investors with the potential for high income and positive total return. The Fund achieves this outcome by investing across stocks, bonds and “complementary income asset classes”. Complementary asset classes are often more difficult to access for retail investors and are less commonly found in existing income strategies. Their lower correlation to traditional income sources can help to complement what investors already own. 

Complementary asset classes can be complicated. Investing in them requires expertise and flexibility. Our team has the flexibility to dynamically adapt the Fund’s asset allocation, adjusting the portfolio based on current market opportunities and conditions. 

With the right amount of risk management, complementary asset classes can offer compelling opportunities to investors today. The BlackRock Dynamic High Income Fund seeks to deliver a compelling combination of high income, capital appreciation, and diversification, and is exactly what investors should be looking for today.

Why invest in the Fund?

1. Go-anywhere high income solution 2. Potential for high income amid volatility 3. Flexibility to adapt
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1. Taps into a full range of markets to generate high income

The Fund invests dynamically across an incredibly wide opportunity set including both traditional and complementary asset classes, allowing it to go where opportunities might be. Today, that means the Fund can focus its attention on the higher yielding areas of markets.

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Recent dividend: 6.9% p.a. (A6 USD share class as of 30 September 2024)

(A6 share class aims to pay a dividend on a monthly basis. Dividend Payment is not guaranteed. The Fund may effectively pay dividend from capital. See important information iv)1

Latest 6 months dividend table – A6 USD share class1

Month Annualized yield
9/30/2024 6.98%
8/30/2024 7.03%
7/31/2024 7.11%
6/28/2024 7.18%
5/31/2024 7.26%
4/30/2024 7.30%

2. The other side of volatility is higher income potential

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The Fund takes advantage of heightened market volatility to earn higher income through a covered call strategy. 

Market volatility has also led to much higher yields and capital appreciation potential in many other income asset classes. The Fund’s active approach can tap into these opportunities to generate higher income and upside.

3. Adapt to thrive in the new market regime

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The Fund invests flexibly in over 10 income asset classes globally and over 1,000 individual stocks and bonds.2 This diversification and flexibility can help investors prepare for the inevitable ups and downs in markets, and capture new opportunities as they emerge.

In addition to top-down tactical asset allocation, the Fund taps into the expertise of over 10 flagship investment teams across BlackRock for individual security selection in equities and bonds, aiming to identify the names best positioned for tomorrow’s market environment.

Explore complementary income asset classes

Complementary income asset classes have the potential to deliver higher yields, as well as capital appreciation, and their low correlation3 to more traditional asset classes can provide meaningful diversification to your portfolio.

A covered call strategy is commonly used to generate additional income in a portfolio. It is achieved by holding a stock position and selling or “writing” a call option on that same stock.

A call option is a contract that gives the buyer the right to buy a stock at a pre-arranged price, or the strike price, on or before the option expiration date, depending on the terms of the contract. On the other side of the contract, the seller of a call option is required to sell the stock at the strike price if the buyer wishes to exercise the option. In return, the seller receives a payment or a premium upfront from the buyer of the call option. 

Let’s look at an example. Say we bought shares of XYZ Company at $100. While we like its long-term prospects, we feel the stock won’t appreciate sharply in the near term. How can we still generate a return in the meantime? This is where a covered call strategy may add value. By selling a call option worth $2 at a strike price of $105, we earn the $2 premium from selling the call option today, but one of these scenarios is going to play out before the option expiration date::

a) XYZ stock trades above $105. The buyer of our call option will exercise it, meaning we need to sell our stock to the buyer at $105. In this case, we still get to keep the $2 option premium but we lose out on any capital appreciation beyond $105.

b) XYZ stock trades between $100 to $105. The call option expires worthless. Because the stock did not trade above the strike price of $105, the buyer did not exercise the option, we get to retain ownership of the stock, earn the $2 in option premium and capture the full upside of the stock.

c) XYZ stock trades below $100 at maturity. The call option expires worthless. Because we own the stock, we would incur a loss that equals the stock price decline less the income earned from the premium. In other words, the option premium can provide some protection against modest stock price declines.

While it is important to be aware of the risks involved, a covered call strategy can help investors achieve additional income in a portfolio and provide some downside protection from stock price movement.

A covered call strategy is commonly used to generate additional income in a portfolio. It is achieved by holding a stock position and selling or “writing” a call option on that same stock.

A call option is a contract that gives the buyer the right to buy a stock at a pre-arranged price, or the strike price, on or before the option expiration date, depending on the terms of the contract. On the other side of the contract, the seller of a call option is required to sell the stock at the strike price if the buyer wishes to exercise the option. In return, the seller receives a payment or a premium upfront from the buyer of the call option. 

Let’s look at an example. Say we bought shares of XYZ Company at $100. While we like its long-term prospects, we feel the stock won’t appreciate sharply in the near term. How can we still generate a return in the meantime? This is where a covered call strategy may add value. By selling a call option worth $2 at a strike price of $105, we earn the $2 premium from selling the call option today, but one of these scenarios is going to play out before the option expiration date::

a) XYZ stock trades above $105. The buyer of our call option will exercise it, meaning we need to sell our stock to the buyer at $105. In this case, we still get to keep the $2 option premium but we lose out on any capital appreciation beyond $105.

b) XYZ stock trades between $100 to $105. The call option expires worthless. Because the stock did not trade above the strike price of $105, the buyer did not exercise the option, we get to retain ownership of the stock, earn the $2 in option premium and capture the full upside of the stock.

c) XYZ stock trades below $100 at maturity. The call option expires worthless. Because we own the stock, we would incur a loss that equals the stock price decline less the income earned from the premium. In other words, the option premium can provide some protection against modest stock price declines.

While it is important to be aware of the risks involved, a covered call strategy can help investors achieve additional income in a portfolio and provide some downside protection from stock price movement.

To find out more, please speak to our distribution/business partners below:

 

Bank of China (Hong Kong) Ltd. The Bank of East Asia Limited China Citic Bank Intl Ltd
China Construction Bank (Asia) Chong Hing Bank Limited Dah Sing Bank/ Nom
Fubon Bank (HK) Ltd HENG AN STANDARD LIFE (ASIA) iFAST Financial (HK) Limited
Nanyang Commercial Bank Ltd OCBC Wing Hang Bank Limited OnePlatform Asset Management
Shanghai Commercial Bank - HK

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