Strategic Income Opportunities Fund Monthly Insight

The power and pain of low rates

July 21, 2020

The Fed’s accommodative policy is essential to
the recovery but challenging for income investors.

The Federal Reserve has been both bold and innovative in the development of its rescue programs responding to the economic fallout from the pandemic. Recent speeches and comments from the Fed as well as the minutes of its June meeting resound with determination to aggressively pursue a return to the pre-pandemic state of the labor market and the economic benefits of such robust levels employment.

The Fed has more tools it can deploy if needed, but for the time being, while the outlook remains highly uncertain and the Fed is gathering additional information, we at least expect that policy rates will remain low for a long time as the economy recovers from the exogenic shock. In this environment, income-seeking investors need to take on more risk to access meaningful yields.

The scarcity of high quality yield-generating assets combined with recent encouraging macroeconomic data has been driving strong demand for riskier assets, resulting in particularly strong performance across various credit sectors over the past couple of months.

The BlackRock Strategic Income Opportunities Fund generated positive performance for the month of June, with notable contributions from our securitized asset and global credit positions. There were no material detractors from the fund’s performance amid the broad rebound in risk assets.

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Bob Miller
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
Rick Rieder
Chief Investment Officer of Global Fixed Income and Head of the Global Allocation Team
Rick Rieder, Managing Director, is BlackRock's Global Chief Investment Officer of Fixed Income, Head of Global Allocation Team, a member of BlackRock's Global Operating ...

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.