BlackRock has launched a high yield fixed maturity bond fund, in response to investor demand for alternative sources of return and ways to build income-focused, diversified and efficient bond portfolios.
The BSF USD High Yield Fixed Maturity bond fund is a fixed term high yield bond strategy with an expected five-year maturity. Through employing a buy, hold and maintain strategy, it aims to deliver regular income while providing improved downside protection and mitigated volatility versus the broad US high yield market.
The fund invests in US dollar denominated high yield corporate bonds, with maturities predominately around five years and has the flexibility to invest across sectors and geographies. It is open for subscriptions as of January 8, 2018 and will remain open for approximately three months. It will subsequently be closed to new investors but offers daily liquidity to existing ones, subject to swing pricing. Note, investors should anticipate holding their investment for the life of the fund to ensure income and return outcomes are fully harvested.
Mitchell Garfin, CFA, senior US High Yield portfolio manager will manage the fund.
Commenting on the launch, Garfin, said: “Investors are diversifying the ways in which they access the bond markets. Fixed maturity portfolios are gaining traction as their hybrid structure allows investors to enjoy the diversification benefits of investing in a mutual fund while mitigating the risks of a concentrated portfolio of individual bonds. Given their unique structure, fixed maturity portfolios may provide stability in income with a reasonable degree of predictability.”
The BSF USD High Yield Fixed Maturity bond fund is registered for sale in Austria, Belgium, Switzerland, Germany, Denmark, Spain, France, Ireland, Italy, Luxembourg, Netherlands, Norway, Finland, Sweden, UK and distributed in Latin America.