BlackRock changes objective of Balanced Growth fund to improve performance

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BlackRock is changing the objective of the Balanced Growth portfolio, removing the focus on the UK in a bid to improve performance.

Previously the fund’s mandate stated that investment may be made “in any and all economic sectors” with “an emphasis on the UK under normal market conditions”, but with effect from 12 June the UK bias has been removed.

This has meant that the fund’s fixed income exposure – around 20 per cent of the portfolio – has moved from being 100 per cent invested in gilts and UK corporate bonds to taking a global aggregate position. The fund’s benchmark has changed from the Merrill Lynch 1-15 Year UK Gilts index to the Barclays Global Aggregate index.

The fund’s exposure to non-sterling currencies will continue to be hedged to mitigate non-sterling currency risk.

In a letter to shareholders the firm says: “We believe that the emphasis on the UK is a key reason for the fund underperforming against its peers in the sector. Based on our analysis, the close link between the UK and the fund’s returns has restricted the fund’s ability to benefit from greater exposure to global assets.”

The £189m multi-asset fund, run by Andy Warwick, aims to provide capital growth with the potential for income generation by investing in global equities, fixed income, collective investment schemes, currencies and money market instruments.

Over one year the BlackRock Balanced Growth fund has returned 22.7 per cent compared to the 20.2 per cent average of the IA Mixed Investment 40-85% sector, FE data shows.