The BSF USD High Yield Fixed Maturity Bond fund will be managed by senior high yield manager Mitchell Garfin. It aims to deliver regular income, while providing downside protection and mitigated volatility versus the broad US high yield market, through employing a buy, hold and maintain strategy.
Investing in bonds with maturities of predominantly five years, the manager has the flexibility to invest across sectors and geographies. It opened for subscription on 8 January, and will remain open for approximately three months.
“Investors are diversifying the ways in which they access the bond markets,” said Garfin.
“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.”
Michael Gruener, head of Emea retail at BlackRock, added: “Generating returns in today’s fixed income markets remains a challenge. Clients continue to look for alternative ways to build income focused, diversified and efficient bond portfolios.
“Fixed maturity portfolio can provide investors with an opportunity to retain bond-like characteristics with greater certainty around outcomes. Having historically outperformed higher quality fixed income during rising interest rate environments, we expect investor appetite for investing in high yield assets to increase.”