BlackRock unveils lower-volatility EM fund for Jeff Shen

BlackRock has launched a multi-asset emerging market fund aimed at private banks and wealth managers.

The BlackRock Strategic Funds Emerging Market Allocation fund will attempt to give equity-like returns with lower volatility.

Run by BlackRock head of emerging markets Jeff Shen, it can invest in emerging and frontier markets and use alternative long/short techniques. Component weighting is formulated to mitigate the usual volatility of emerging markets.

BlackRock EMEA head of retail Alex Hoctor-Duncan notes that developing markets traditionally fluctuate more than developed economies – the falls of recent weeks a case in point.

“History has shown however, that having the conviction to stay the course throughout volatile periods can have a meaningful impact for investors,” he says.

“A £100,000 investment in both emerging markets equities and bonds since the turn of the century would have returned £329,317.”

“Missing out on the top 25 days during this period would have resulted in a return of £226,470, showing that when investing in emerging markets it really is ‘time’ not ‘timing’ that counts in the long term,” he adds.  

Shen, who will be supported by portfolio managers Seanna Kim and Rodolfo Martell, says the depth and variety of emerging markets is increasing with ever-changing risk and opportunity.

“It is becoming harder to talk about emerging markets as a group, with increasing country differentiation making it important to monitor countries on a fundamental basis,” he says.

“We believe the fund will be attractive to investors because it can move swiftly to seize the best opportunities for growth, but also reduce risk at times of market stress, meaning investors enjoy a smoother ride.”