Total Return Fund Monthly Insight

Risk assets climb back

July 22, 2020

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

The risk-asset rally continued in June, although the pace began to pull back as concerns over a second wave of coronavirus cases in the United States jeopardizes the improving macroeconomic data and gradual reopening of the U.S. economy.

The U.S. Federal Reserve reiterated its commitment to support the recovery and return the labor market to pre-pandemic levels. This suggests that policy rates are likely to remain low for some time, as the economy slowly reopens and recovers from this exogenic shock.

The BlackRock Total Return Fund outperformed the Bloomberg Barclays U.S. Aggregate Bond Index in June, due mainly to our U.S. inflation positioning and overweight exposures to securitized assets and credit sectors. There were no material detractors from performance as risk assets broadly performed well over the month.

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 6/30/20. 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.

We took a neutral stance on duration (interest rate risk) after trimming exposures on the long end of the yield curve. We slightly increased overweights in high yield and securitized assets, and reduced agency MBS and investment grade credit.

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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 ...

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.

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.

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.