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Total Return Fund Monthly Insight

The liquidity advantage

March 24, 2020

How the BlackRock Total Return Fund is positioned for today’s bond markets.

Global fixed income markets broadly weakened amid the recent risk selloff. A flight-to-quality saw 10-year Treasury yields pushing all-time lows. Credit spreads widened as market participants began to recognize the magnitude of the economic impact. We view the Fed’s recent actions as meaningful and critical. However, commensurate fiscal policy will be required to bridge the gap through the arc of the virus expansion.

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 BlackRock Total Return Fund. We will continue to focus on managing risks and maintaining liquidity. As volatility continues to ripple through markets, we will continue to assess valuations alongside of economic disruptions and policy response. 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.

The fund's diversified sources of return across fixed income asset classes

Chart: The fund's diversified sources of return across fixed income asset classes

Source: BlackRock as of 2/29/20. Quarterly return attribution is based on gross returns of the fund’s Institutional share class. U.S. Relative Value: The fund’s U.S. relative value strategies reflect the portfolio management team’s specific views on the mortgage market. Macro: The macro strategy is how the portfolio management team implements thematic and macro-economic investment views through duration, yield curve and foreign-currency positioning. Residual: This non-attributable portion of the fund’s total return is derived from trading and allocation effects across the fund’s investment strategies. For standardized performance, click here

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. Current performance may be lower or higher than that shown. All returns assume reinvestment of all dividend and capital gain distributions. Refer to blackrock.com/tr for current month-end performance.

The fund generated a positive return in February, although lagged its benchmark index due mainly to our U.S. high yield credit exposure. Our U.S. duration positioning (sensitivity to interest rate movements) contributed positively to returns, as did an allocation to securitized assets and an overweight to U.S. investment grade credit.

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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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 Total Return 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.