Morningstar

BGF Global Multi-Asset Inc I2 USD

Analyst Report
Morningstar's Take
|03/05/2024
by Megan Pacholok
The duo managing BlackRock Multi-Asset Income, which includes a US mutual fund and its UCITs sibling, takes advantage of a flexible process and strikes the right balance between delivering income and managing the risks associated with combining higher income asset classes.

Justin Christofel and Alex Shingler serve as co-leads. Their experience and ample support from other investment teams at BlackRock make them well-equipped to manage this fund. They were appointed portfolio managers in 2011 and 2015, respectively, though they only took on the lead following previous lead manager Michael Fredericks’ departure in April 2023. Despite the managerial shift, they remain committed to the income-oriented approach that the three implemented together. BlackRock’s strong fundamental teams manage sleeves for this strategy and provide an edge compared with other peers. Around 17 distinct, well-regarded BlackRock teams run sleeves for the strategy. Here, they largely utilize customized fixed-income sleeves with guardrails in place to limit overlap. For example, the high-yield team includes bank loans in its mutual fund but only focuses on its best corporate credit ideas for this strategy. Another team runs a dedicated bank-loan sleeve.

The team’s emphasis on risk management helps this strategy stand out compared with other multi-asset income strategies. Rather than loading up on a mix of risky asset classes that tend to be correlated during stress periods, the team focuses on the correlation of its underlying sleeves to build well-diversified portfolios. As a result, the institutional share captured only 84.3% of the Morningstar Moderately Conservative Target Risk index’s downside, while delivering an average 12-month yield of 4.9% over the past three years through March 2024. That’s nearly double the yield of 2.5% for the average conservative peer, which captured 10 percentage points more of down markets versus the same benchmark.

To keep downside risk in check, Christofel and Shingler seek to keep the fund’s volatility below that of a blended benchmark of 50% MSCI World Index and 50% Bloomberg US Aggregate Bond Index but are not constrained to a strategic allocation. This gives the team a great amount of flexibility, but it has deliberately abstained from making quick and drastic allocation changes that could lead to a whirlwind experience for investors. Instead, the team, with input from the underlying sleeve managers, focuses on its medium- and long-term views to gradually tilt and adjust the portfolio’s composition.

 
Morningstar Medalist Rating™This is a balanced multi-asset income approach.
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Morningstar Pillars
PeopleAbove Average
ParentAbove Average
ProcessAbove Average
 
Morningstar Medalist RatingMorningstar assigns the Medalist Rating to funds that are qualitatively and quantitatively assessed through manager research and algorithmic processes. The assessment turns on three key “pillars” – People, Process, and Parent – that yield an estimate of how well a fund will perform before fees but after adjusting for risk.
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