Overview
01.
Flexible fixed income solutions have the potential to navigate nimbly across sectors to optimize for attractive yield and returns, while managing for downside risk. BlackRock's Flexible strategies use a flexible approach to seek consistent, attractive risk-adjusted returns across all market environments.
02.
Flexible strategies are not tied to a benchmark and have no constraints regarding maturity, sector, or geography. Thus, unlike traditional bond strategies, Flexible strategies have the flexibility to actively manage duration and access a broad fixed income opportunity set.
03.
Our flexible solutions seek attractive opportunities typically not found in traditional core bond funds, while retaining the general risk profile of traditional fixed income through diversification. Our strategies are built to navigate changing market environments, with capabilities to run a more defensive or opportunistic profile.
Our investment process
Portfolio construction
Flexible solutions are not tied to a specific benchmark. Instead, portfolio managers seek to build a portfolio of diversified exposures, dynamically adjusting positioning to help enhance returns and mitigate risk in constantly changing market environments. The flexibility allows the team to efficiently budget risk to the most robust risk-adjusted return sources. Portfolio construction involves implementing a top-down view that drives geographic and sector allocations as well as duration positioning. Sector specialists, in turn, draw on their knowledge and relationships to implement security selection decisions. The team can also implement macro hedges as well as relative value expressions to mitigate risks, provide uncorrelated sources of return, increase diversification, and smooth volatility.
Research
Flexible fixed income solutions, such as those utilized by Flexible strategies, allow for investment across the full spectrum of sector, quality, maturity, and geography while also having wide duration flexibility. Instead of seeking to outperform an index, flexible solutions pursue a more ambitious goal: consistent, attractive risk-adjusted returns across market environments over a market cycle. It takes significant resources to analyze the widest range of fixed income exposures on a risk-factor level, aggregate and manage them across the portfolio. With the requisite tools, people, and capabilities across the globe, it’s possible to navigate this much larger opportunity set to derive significant return and diversification benefits. BlackRock’s flexible approach combines top-down analysis coupled with bottom-up research and security selection. The team identifies the investment regime and macroeconomic environment to inform the risk budget and duration positioning. These views relate to a range of factors, including inflation, monetary policy, and financial conditions. Sector specialists across the globe conduct bottom-up research to inform security selection decisions. This includes analysis on a range of factors such as industry attractiveness, issuer competitiveness and other financial factors. Research analysts and sector specialists work together to assess the relative value of each potential investment.
Risk management
Risk management is central to the portfolio management process at BlackRock, and Flexible strategies are run through a disciplined and rigorous risk framework. A range of standard risk measures are monitored daily by Portfolio Managers and the Risk and Quantitative Analysis Group (“RQA”) using BlackRock’s proprietary technology. RQA provides independent oversight, running a daily Risk Dashboard customized for each strategy. The dashboard provides a highly-detailed view of each strategy's risk exposures with data on each position’s carry (or yield from coupon and other sources), liquidity and P&L contribution, among other attributes. Members of RQA meet with the portfolio management team daily to review risk positioning. A key contribution of the risk team—and a prominent feature on the dashboard—are the results of stress tests run daily to generate insights into what various market or macro developments might mean for different sectors and for the portfolio as a whole. RQA also helps to identify investment, counterparty, operational, regulatory and technology risks.
Why BlackRock for fixed income?
BlackRock offers a comprehensive fixed income platform, managing assets across the entire Fixed Income spectrum – from public to private, fundamental & systematic, active & index – to help deliver value to our clients.