UK asset manager BlackRock has launched an emerging markets short-duration bond fund that it says will allow investors seek to “access asset classes with higher return potential, while aiming to mitigate interest rate risk”.
A combination of short-duration bonds and emerging markets should offer higher yields, while helping to provide some “downside protection” from continuing interest-rate rises.
The BlackRock Emerging Markets Short Duration Bond Fund, said BlackRock in a statement today, will be investing in a mixed range of short duration bonds “across different sectors and countries”.
The fund will have the flexibility to allocate between “sovereigns, corporates and local currency bonds” with an average duration of three years.
BlackRock’s head of emerging markets fixed income Sergio Trigo Paz, pictured above, lead portfolio manager, said that the firm’s clients say that emerging market exposure has gone from “being a nice-to-have to a must-have for the modern portfolio”.
Pad added, “Historically seen as an opportunistic asset class, emerging market debt is increasingly being used by investors as a long term strategic allocation due to improving fundamentals and strong diversification benefits.
“This fund is a great addition to the range we have built, to help investors achieve greater income potential and diversification from a higher-yielding asset class.”
Along with Michal Katrencik and Michal Wozniak as co-managers, Paz will lead a 19-strong emerging market debt (EMD) team that oversees £18bn (US$24bn, €20bn) in EMD assets around the world.