Insights from the portfolio manager’s office

Why now for the
Dynamic High Income strategy?

Dec 22, 2017

Dynamic High Income Fund has delivered attractive risk-adjusted yield and strong total returns since its inception on Nov. 03, 2014. Hear from Michael Fredericks as he discusses the investment process at Dynamic High Income strategy and why now may be the time to consider an income strategy that seeks high income and attractive total return from non-traditional sources to complement your core portfolio.

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    Question: What makes BlackRock Dynamic High Income Strategy unique?

    Michael: The BlackRock Dynamic High Income Strategy aims to deliver a unique solution for investors seeking additional sources of consistent high income. We aim to provide an attractive balance of consistent high income and attractive total return in a risk controlled manner, sourced from asset classes that many investors have difficulty accessing within their existing portfolios.

    Asset classes such as mortgage-backed securities, floating rate loans, preferred stock and equity covered call writing offer compelling opportunities to investors today. Not only can investors potentially earn attractive levels of income but we also see the potential for capital appreciation and diversification.

    The challenge is these investments require expertise and flexibility and are often difficult to access for many investors. Our approach aims to not only provide exposure to these opportunities but to do so tactically, adjusting our allocations based on changing market conditions.


    Question: Why now for the Dynamic High Income Strategy?

    Michael: We expect today’s ‘lower for longer’ interest rate environment to persist. As such, generating a high investment income will likely remain a primary objective for many investors around the world.

    Traditional income producing asset classes such as dividend paying stocks and high yield bonds have experienced rapid inflows over the past few years, causing many investors to seek new sources of income to complement what they already own.

    BlackRock Dynamic High Income Strategy provides a unique solution to these investor demands. The Strategy provides exposure to asset classes that are often more difficult to access and therefore less commonly held in existing income strategies. We believe this combination of high income and portfolio diversification is exactly what many investors are looking for today.

    Since its inception, the fund has been able to deliver strong yields and total return and we think, there are wider set of opportunities beyond traditional income sources that offer the potential to provide higher yields and meaningful diversification.


    Question: Why invest with BlackRock?

    Michael: These markets can be complex & difficult to access, requiring time, deep resources and expertise to invest effectively. Expertise not only in asset allocation and security selection, but also in risk management. BlackRock is a global leader in income investing. Our dedicated Multi-Asset Income team is responsible for over US$28bn in assets under management globally*. We have the benefit of working closely with experts from around BlackRock aiming to identify the most attractive investment opportunities in each asset class.

    We believe this expertise, combined with our risk-first approach to income investing provides a unique framework for delivering consistent high income and attractive total returns to investors in today’s market environment.

    * Source: BlackRock, as at 30 September 2017. Subject to change.

Michael Fredericks
Head of Income Investing for BlackRock Multi-Asset Strategies Team
Michael Fredericks, Managing Director, is head of Income Investing for the Blackrock Multi-Asset Strategies group and lead portfolio manager for the Multi-Asset ...