BGF Global High Yield Bond Fund - Class A
Summary of Investment Objective
The Global High Yield Bond Fund seeks to maximise total return. The Fund invests globally at least 70% of its total assets in high yield fixed income transferable securities. The Fund may invest in the full spectrum of available fixed income transferable securities, including non-investment grade. Currency exposure is flexibly managed.
Fund Manager's Report (as at Jul 31, 2010)
The Fund marginally underperformed its benchmark over the month.
An underweight to the banking sector as well as negative security selection to the home construction and wireless sectors all diminished returns. A small cash allocation also subdued returns as cash underperformed the high yield bond market during the month. Additionally, the portfolio’s underweight to European high yield debt was a detractor as European high yield issuers outperformed those of the US over the period. On the positive side, security selection in the non-captive diversified, chemicals, and packaging sectors helped performance. Positive security selection within BB-rated credits also added to portfolio results.
During the month, the portfolio participated in the high yield new-issue calendar, as the fund managers sought to purchase attractive higher quality deals illustrating strong risk/reward profiles, good fundamentals, as well as solid cash flows and earnings. Additionally, the portfolio continued to seek new senior-secured bond deals offering better relative downside protection. Over the period, the Fund increased its exposure to the media cable and airlines sectors, while reducing exposure to the electric sector.
At month-end, the portfolio held a large underweight to BB-rated paper, with a large overweight to B-rated credits, and an underweight to CCC-rated issues. As of month-end, the Fund was overweight the metals, packaging, and the media cable and non-cable sectors. It was underweight more consumer discretionary sectors such as banking, technology, gaming, and building materials. At the end of the period, the portfolio had an average credit rating of B1/B+ and a yield of 7.8%. Overall, we remain very constructive on high yield and believe that the asset class is attractively priced for a slow, structural recovery in 2010. The combination of solid corporate earnings, improving credit trends, and modest default expectations should bode well for non-investment grade debt and fuel further investor demand.
Fund Fact (as at Jul 31, 2010 )
| Status | Sub-Fund of Luxembourg SICAV |
| Fund Manager | James Keenan/Michael Phelps/Derek Schoenhofen |
| Launch Date | May 16, 2003 |
| Base Currency | USD ($) |
| Additional Dealing Currencies | EUR (€) |
| Benchmark | ML Glb High Yld Const USD Hdg |
| Morningstar Sector | Fixed Income USD High Yield |
| Total Fund Size (m) | USD ($) 508.2 |
| Average Yield to Maturity (%) | 7.80% |
| Average Maturity (years) | 6.4 |
| Average Duration (years) | 1.9 |
| EUSD Fund Attributes | |
| EUSD Fund Status | in scope, distributions and redemptions |
| Information Source | Portfolio Composition |
| Application Threshold | >40% |
| Holding in Debt Claims | 97.06% |
| Grandfathered Bonds Held | 0.53% |
| Application Start Date | Jan 1, 2010 |
| Application End Date | Dec 31, 2010 |
| TID | 0.000000000 |
| Last Distribution Date | Aug 19, 2010 |
| Fees | % |
| Annual Management Fee (A shares) | 1.25 |
| Initial Charge (A shares) | 5 |
| Codes | |
| ISIN | LU0171284937 |
| Bloomberg Equity Ticker | MEREHUI LX |
| Reuters Page Id | BLRKIF |
| Swiss Valoren Number | 1779704 |
| CUSIP | L1049J247 |
| Fund Risk Statistics | |||
|---|---|---|---|
| Name | 3 Years | 5 Years | Since Launch |
| Beta | 0.95 | - | 0.95 |
| Volatility (Annualised Standard Deviation) | |||
| Global High Yield Bond Fund | 16.7% | - | 16.5% |
| ML Glb High Yld Const USD Hdg | 16.9% | - | 16.7% |
Risk Grading
Low
High
Non-distributing
Important Information
The information on this website is available to Qualified Investors and Professionals in some jurisdictions on a limited private placement basis subject to applicable laws and regulations in the country of distribution. The information is confidential and should not be reproduced or distributed to persons other than the recipient.
The investment objective stated above is a summary of the main objectives of the Fund. Please refer to the BGF prospectus for full details.
A limited range of BGF sub-funds have a distributor status A share class that seeks to comply with UK Distributor Status requirements. Please contact the Manager for more information.
With effect from 1 June 2005, the benchmark was changed to the BlackRock Global High Yield Constrained Index (Euro Hedged) (previously BlackRock Global High Yield Index (Euro Hedged). The benchmark history is unchanged. Sources: Fund – BlackRock Investment Management (UK) Limited (BIM(UK)L), Indices – Datastream. Quartiles - Standard & Poor's. Performance is shown as at Jul 31, 2010 in USD on a NAV price basis with income reinvested. Fund performance figures are calculated net of fees.
The fund invests a large portion of assets which are denominated in other currencies; hence changes in the relevant exchange rate will affect the value of the investment. The fund invests in high yielding bonds. Companies who issue higher yield bonds typically have an increased risk of defaulting on repayments. In the event of default, the value of your investment may reduce. Economic conditions and interest rate levels may also impact significantly the values of high yield bonds. The fund(s) invest in fixed interest securities such as corporate or government bonds which pay a fixed or variable rate of interest (also known as the ‘coupon’) and behave similarly to a loan. These securities are therefore exposed to changes in interest rates which will affect the value of any securities held. The fund(s) may invest in structured credit products such as asset backed securities (‘ABS’) which pool together mortgages and other debts into single or multiple series credit products which are then passed on to investors, normally in return for interest payments based on the cash flows from the underlying assets. These securities have similar characteristics to corporate bonds but carry greater risk as the details of the underlying loans is unknown, although loans with similar terms are typically packaged together. The stability of returns from ABS are not only dependent on changes in interest-rates but also changes in the repayments of the underlying loans as a result of changes in economic conditions or the circumstances of the holder of the loan. These securities can therefore be more sensitive to economic events, may be subject to severe price movements and can be more difficult and/or more expensive to sell in difficult markets.
BlackRock Global Funds (BGF) is an open-ended investment company established in Luxembourg which is available for sale in certain jurisdictions only. BGF is not available for sale in the U.S. or to U.S. persons. Product information concerning BGF should not be published in the U.S. It is recognised under Section 264 of the Financial Services and Markets Act 2000. BlackRock Investment Management (UK) Limited is the UK distributor of BGF. Most of the protections provided by the UK regulatory system, and the compensation under the Financial Services Compensation Scheme, will not be available. A limited range of BGF sub-funds have a distributor status A sterling share class that seeks to comply with UK Distributor Status requirements. Subscriptions in BGF are valid only if made on the basis of the current Prospectus, the most recent financial reports and the Simplified Prospectus which are available on our website. Prospectuses, Simplified Prospectuses and application forms may not be available to investors in certain jurisdictions where the Fund in question has not been authorised.
Sources: Fund – BlackRock Investment Management (UK) Limited (BIM(UK)L), Indices - Datastream, BIM(UK)L. Quartiles - Standard & Poor's. BIM(UK)L Risk Grading: High Risk (on a scale of Low, Medium, Medium/High and High). This grading applies to Funds with emerging market, small capitalisation, or narrowly focused/concentrated equity mandates, which may restrict liquidity and increase the volatility of returns. It should only be used for comparison with other BlackRock Global Funds (BGF) and, in particular, should not be used in comparison with Funds not provided by BIM(UK)L. The grading is indicative of the level of risk of a particular Fund and is not supposed to be a guarantee of likely returns. If you are in any doubt as to the level of risk that you should take, you should seek Independent Advice. BIM(UK)L Risk Grading: Medium/High Risk (on a scale of Low, Medium, Medium/High and High). This grading applies to Funds which may be expected to have all, or at least a high proportion, of their assets invested in equities, or in bonds rated below investment grade. It should only be used for comparison with other BlackRock Global Funds (BGF) and, in particular, should not be used in comparison with Funds not provided by BIM(UK)L. The grading is indicative of the level of risk of a particular Fund and is not supposed to be a guarantee of likely returns. If you are in any doubt as to the level of risk that you should take, you should seek Independent Advice.Performance is shown as at Jul 31, 2010 in USD on a NAV price basis with income reinvested. Fund performance figures are calculated net of fees.