Today’s market opportunities for client portfolios
Now’s the time to invest before the Fed cuts interest rates
Bloomberg, as of November 16, 2023. Total return analysis produced by iShares Investment Strategy. Historical analysis calculates average performance of the S&P 500 index, the Bloomberg US Aggregate Bond Index (bonds), and the Bloomberg U.S. Treasury Bills: 1-3 Months TR Index (cash) in the 6 months leading up to the last Fed rate hike, between the last rate hike and first cut, and the 6 months after the first cut. The dates used for the last rate hike of a cycle are: 2/1/1995, 3/25/1997, 5/16/2000, 6/29/2006, 12/19/2018. Dates used for the first rate cut are: 7/6/1995, 9/29/1998, 1/3/2001, 9/18/2007, 8/1/2019. Index performance is for illustrative purposes only. Index performance does not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results
We believe a Fed pause is finally here, and history shows that
1. Cash underperformed significantly when the Fed held rates steady.
2. Investing before the first cut may reap the most benefits. Now may be a good time to get your clients back into the markets.
Top ideas to get clients reinvested
Find products uniquely positioned to help clients meet their investment needs today.
BlackRock’s highest conviction ideas
Outsource to BlackRock’s top managers
BSIIX never lost money over any 3-year rolling period since the Great Financial Crisis of 2008. Only 5% of taxable bond funds can make that claim. It’s also the only Morningstar Gold Medalist rated fund.1
The first active ETF managed by Rick Rieder, a dynamic bond portfolio seeking attractive, long-term income across market cycles.
A high conviction, high active share strategy with 2nd percentile performance since PM inception. 2
1 Morningstar, as of 12/31/2023. Morningstar has awarded the Fund a Gold Medal. (Effective 2/14/2023).
The Morningstar Medalist RatingTM is the summary expression of Morningstar’s forward-looking analysis of investment strategies as offered via specific vehicles using a rating scale of Gold, Silver, Bronze, Neutral, and Negative. The Medalist Ratings indicate which investments Morningstar believes are likely to outperform a relevant index or peer group average on a risk-adjusted basis over time. Investment products are evaluated on three key pillars (People, Parent, and Process) which, when coupled with a fee assessment, forms the basis for Morningstar’s conviction in those products’ investment merits and determines the Medalist Rating they’re assigned. Pillar ratings take the form of Low, Below Average, Average, Above Average, and High. Pillars may be evaluated via an analyst’s qualitative assessment (either directly to a vehicle the analyst covers or indirectly when the pillar ratings of a covered vehicle are mapped to a related uncovered vehicle) or using algorithmic techniques. Vehicles are sorted by their expected performance into rating groups defined by their Morningstar Category and their active or passive status. When analysts directly cover a vehicle, they assign the three pillar ratings based on their qualitative assessment, subject to the oversight of the Analyst Rating Committee, and monitor and reevaluate them at least every 14 months. When the vehicles are covered either indirectly by analysts or by algorithm, the ratings are assigned monthly. For more detailed information about these ratings, including their methodology, please go to global.morningstar.com/managerdisclosures. The Morningstar Medalist Ratings are not statements of fact, nor are they credit or risk ratings. The Morningstar Medalist Rating (i) should not be used as the sole basis in evaluating an investment product, (ii) involves unknown risks and uncertainties which may cause expectations not to occur or to differ significantly from what was expected, (iii) are not guaranteed to be based on complete or accurate assumptions or models when determined algorithmically, (iv) involve the risk that the return target will not be met due to such things as unforeseen changes in management, technology, economic development, interest rate development, operating and/or material costs, competitive pressure, supervisory law, exchange rate, tax rates, exchange rate changes, and/or changes in political and social conditions, and (v) should not be considered an offer or solicitation to buy or sell the investment product. A change in the fundamental factors underlying the Morningstar Medalist Rating can mean that the rating is subsequently no longer accurate.
The Fund has an Analyst Driven % of 100 and a Data Coverage % of 100. Analyst Driven % is the analyst input into the overall rating assignment, including direct analyst coverage and inheritance of an analyst-rated pillar. Data Coverage % is available input data for rating calculation at the Pillar level.
2 Morningstar as of 12/31/2023. PM inception of 3/1/2022, the Fund was ranked 5/361 funds. Morningstar Category: Global Large Cap Growth. Rankings are based on total return excluding sales charges, independently calculated and not combined to create an overall ranking. Active Share measures the percentage of fund holdings that is different from the benchmark holdings at a point in time. It is calculated by taking the sum of the absolute value of the differences of the weight of each holding in a fund’s portfolio versus the weight of each holding in a benchmark index and dividing by two. Turnover and number of holdings are indicative and subject to change.
High conviction exposures
QUAL invests in resilient companies with high cash flows, low debt balance sheets and wider profit margins.
EMXC provides exposure to a carveout of EM countries with the most attractive earnings prospects (like Taiwan). Due to it being Ex China, it can help insulate a portfolio from potential headwinds that China may face.
Pursue today's higher yields
Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.
Source: BlackRock Investment Institute, Bloomberg and Thomson Reuters, 12/31/23. The bars show market capitalization weights of assets with an average annual yield over 4% in a select universe that represents about 85% of the Bloomberg Multiverse Bond Index*. U.S. treasury* represented by the Bloomberg U.S. Treasury index. U.S. agencies represented by Bloomberg U.S. Aggregate Agencies index. U.S. MBS represented by the Bloomberg U.S. Mortgage-Backed Securities index. U.S. CMBS represented by the Bloomberg Investment Grade CMBS index. U.S. municipal represented by Bloomberg Municipal Bond index. Global credit represented by the Bloomberg Global Aggregate Corporate index. Emerging market combines the Bloomberg EM hard and local currency debt indexes.
Bond losses in 2022 came off record low yields. But now that rates are higher, you need to reframe how you view bond risk and return, and how the “yield cushion” can potentially protect against losses even if rates rise.
Practice solutions that hold bonds until maturity to potentially lock in yields
Manage volatility and keep clients invested
Uses options to participate in the markets up to a pre-determined cap, while seeking to provide a targeted level of downside protection, helping you stay invested in volatile markets.
Seek high income from a monthly covered call strategy on treasuries.
Seek income and growth potential in a strategy that combines active, large-cap stock selection with an index covered call strategy.
A market neutral strategy seeking consistent returns with low correlations to broad asset classes through a technology-driven process.
How to consider investing cash
This information should not be relied upon as research, investment advice or a recommendation regarding the funds or any security in particular. This information is strictly for illustrative and educational purposes and is subject to change.
Each investor has a different time horizon for their cash needs. Understanding liquidity requirements can help investors segment their cash and identify when it makes sense to consider putting cash to work with short-term strategies.
Indexed-based exposure to floating rate U.S. Treasury securities. Coupons periodically reset using 3 month T-Bill rates.
Exposure to short-term cash strategies, commercial paper, government-related bonds, and investment-grade credit. Includes fixed and floating rate coupons.
Exposure to short-term bonds that seeks total return in excess of the benchmark. Includes investment-grade credit, treasuries and asset backed securities.
