Investment process at the
Multi-Asset Income Fund

Insights from the portfolio manager’s office

May 31, 2017 / by Michael Fredericks

May 18, 2017

Michael Fredericks talks about how the Multi-Asset Income Fund seeks out the best income opportunities around the world and across asset classes, carefully balancing the trade-offs between yield and risk.

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    Question: What is the investment process at the Multi-Asset Income Fund?

    Michael Frederick: Our process starts with the risk-first approach to portfolio construction. Risk-first means everything we do begins with our risk budget. We can never own more risk in the portfolio than a 50/50 mix of global bonds and global stocks. Using that risk budget, we work with almost two dozen teams around the world at BlackRock to build the best income-generating portfolio we can.

    We use traditional stocks and bonds as well as non-traditional strategies like equity covered all writing and securitized areas of the fixed-income market that are not as linked to the corporate credit cycle. We also employ hedging strategies to manage the broad risks around interest rates, equity sell-offs and currency fluctuations.

    We focus on balancing the trade-off between risk and yield; as a result, we do not target a fixed distribution or yield level for any given month. In an effort to manage the risk for investors, the yield of our portfolio will fluctuate slightly on a month to month basis.

     

Michael Fredericks
Head of Income Investing for BlackRock Multi-Asset Strategies group
Managing Director, Head of Income Investing for the BlackRock Multi-Asset Strategies group and lead portfolio manager for the Multi-Asset Income product suite.