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Strategic Income Opportunities Fund Monthly Insight

Cautious, flexible and ready

March 23, 2020

We’re focused on managing risks and maintaining liquidity,
and we’re ready and able to pounce on opportunities.

The coronavirus outbreak is set to deliver a sharp and deep economic shock. Recent market moves are reminiscent of the 2008 crisis, but we don’t think this is a repeat. Stringent containment and social distancing policies will bring economic activity to a near standstill, but provided aggressive fiscal and monetary policy actions are taken to bridge businesses and households through the shock, activity should return rapidly with little permanent economic damage.

That policy action is starting to take shape as the outbreak and related containment measures propagate across the globe. The policy response has been swift – and we expect total fiscal stimulus to exceed that seen during the global financial crisis. We believe market volatility is distracting from the sheer amount of stimulus being put in place – and there is more to come.

Through the early part of 2020, our balanced positioning in the BlackRock Strategic Income Opportunities Fundproved beneficial as interest rates came down and spreads grinded tighter. This positioning helped insulate the fund in the early stages of the selloff. However, despite our diversified and more conservatively positioned credit exposure balanced with duration as a hedge, the outsized magnitude of the moves across credit markets combined with rates moving higher has driven challenging performance in March.

The market has moved sharply to price in the risk of recession and, although we find these price levels attractive, we have refrained from adding risk in the fund. We will continue to focus on managing risks and maintaining liquidity. As volatility continues to ripple through markets, we will assess valuations alongside of economic disruptions and the policy response from central banks. The breadth and scale of our global fixed income platform and the fund’s strong liquidity profile uniquely positions us to take advantage of opportunities as they emerge.

View fund commentary

Bob Miller
Head of U.S. Multi-Sector Fixed Income
Bob Miller, Managing Director, is head of the U.S. Multi-Sector Fixed Income team within BlackRock's Global Fixed Income group and a member of the Global Fixed Income ...
Rick Rieder
Chief Investment Officer and Co-Head of Global Fixed Income
Rick Rieder, Managing Director, is BlackRock's Global Chief Investment Officer of Fixed Income, and Co-head of BlackRock's Global Fixed Income platform, a member of ...
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Performance data quoted represents past performance and is no guarantee of future results. Investment returns and principal values may fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. All returns assume reinvestment of dividends and capital gains. Current performance may be lower or higher than that shown. Refer to blackrock.com for most recent month-end performance.

To obtain more information on the fund, including the Morningstar time period ratings and standardized average annual total returns as of the most recent calendar quarter and current month-end, please visit Strategic Income Opportunities Fund.

The Morningstar RatingTM for funds, or "star rating," is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.