Strategies

Total Return

Philosophy

Total return is a core-plus strategy designed to seek consistent, attractive returns across all market cycles via a multi-sector approach, while remaining benchmark-aware and retaining the general risk profile of conservative fixed income investments.

Capital at risk. All financial investments involve an element of risk. Therefore, the value of the investment and the income from it will vary and the initial investment amount cannot be guaranteed.

The total return team invests in fixed income ideas from across the BlackRock platform, and uses a robust set of analytical and risk management tools to integrate them into the portfolio. The team invests primarily in investment grade fixed income securities, complementing them with a portion of higher yielding issues as it seeks a total return that exceeds that of the Barclays U.S. Aggregate Bond Index. The investment priorities are:

  • Seeking flexible generation of fixed income alpha, via investment in a broad, diversified portfolio of global alpha sources, complemented by an emphasis on flexible beta management.
  • Seeking greater diversification than the Barclays U.S. Aggregate, with the goal of achieving strong returns but with comparable risk.
  • Seeking downside mitigation through dynamic risk budgeting.

Investment process

Total return combines top-down direction-setting by our lead portfolio managers with bottom-up opportunity identification and security selection by our sector specialists around the world.

The managers seek to identify the most attractive opportunities throughout the fixed income universe. Before allocating capital to any investment, the team conducts a thorough analysis to evaluate the risk/reward trade-off and how the investment’s inclusion would impact the overall portfolio. The process:

  • Relies on the reach of our broad platform and proprietary risk tools to help portfolio managers determine the best risk-adjusted return opportunities.
  • Seeks alpha from three different sources — macro strategies, sector allocation and security selection — while remaining benchmark aware.
  • Employs a risk dashboard tool to track portfolio positions and behavior, and monitor the characteristics of the portfolio as a whole. Among other things, the dashboard enables the team to monitor overall duration and gauge the portfolio’s sensitivity to changes in interest rates.
  • Is supported by a dedicated team from BlackRock’s Risk and Quantitative Analytics unit, which helps generate insights into what various market or macro developments might mean for different sectors and for the portfolio as a whole.

Investors with the following objectives may find an allocation to the total return strategy worth considering:

  • Seeking to gain more flexibility in a fixed income allocation while remaining benchmarked to a traditional bond index.
  • Seeking to generate more attractive return in a fixed income portfolio without greatly increasing credit risk or greatly extending duration.
  • Seeking to allocate to sectors with the best risk/reward ratio as the market changes.

Leadership

Rick Rieder
Rick Rieder
Managing Director, Chief Investment Officer and Co-head of Global Fixed Income