Summary of Investment Objective
The World Income Fund seeks to maximise total return, a significant portion of which may be derived from income. The Fund invests globally at least 70% of its total assets in fixed income transferable securities denominated in a variety of currencies. The Fund may invest in the full spectrum of available fixed income transferable securities, including noninvestment grade. Currency exposure is flexibly managed.
Fund Manager's Report (as at Jul 31, 2010)
The Fund underperformed its benchmark over the month.
The main detractor from performance was the portfolio’s overweight to the US dollar versus the euro. The US dollar fell as the market experienced a recovery in risk assets and the euro continued to recover as a muted reaction to the release of the bank stress tests paved the way for investors to adjust positions and reduce their shorts. The portfolio’s short duration position in the US as well as the US yield curve flattening position also detracted from performance as yields rallied, most notably in the belly of the curve. As risk assets rallied, the portfolio’s long positions in high yield, emerging market debt, and corporate credit, most notably capital securities, aided performance.
We reduced the overall duration of the portfolio. We increased our duration underweight in the US and reduced our overweight in Canada. We moved from a long to neutral duration position in the euro bloc, most notably reducing our overweight duration position in Germany. We did, however, close our duration underweight in Spain as we saw a continuation in improvement in European peripheral spreads. In emerging markets, we reduced some of our exposure to Peru as well as to Brazil, via the reduction of our position in Petrobras. In currencies, we closed our short in the Australian dollar and reduced our yen exposure in favour of the US dollar.
The continuation in the moderation of underlying economic data in June confirms the weaker trajectory for global growth, to which the data had been previously alluding. We continue to believe the rally in global government yields is overdone and we are biased to be underweight duration overall and maintain a significant yield curve flattening stance as we expect inflation to be lower than the market thinks. In risk assets, we continue to look for opportunities to buy assets that look attractive on a relative value basis, while maintaining an up in quality bias.
Fund Fact (as at Jul 31, 2010 )
| Status | Sub-Fund of Luxembourg SICAV |
| Fund Manager | Andrew Gordon/Imran Hussain/Jimmy Keenan |
| Launch Date | Nov 30, 2005 |
| Base Currency | USD ($) |
| Additional Dealing Currencies | EUR (€) |
| Benchmark | JPMorgan Glbl Govt Bd Broad |
| Morningstar Sector | Fixed Income Global USD Based |
| Total Fund Size (m) | USD ($) 507.4 |
| Average Yield to Maturity (%) | 3.60% |
| Average Maturity (years) | 9.9 |
| Average Duration (years) | 3.6 |
| EUSD Fund Attributes | |
| EUSD Fund Status | in scope, distributions and redemptions |
| Information Source | Portfolio Composition |
| Application Threshold | >40% |
| Holding in Debt Claims | 92.96% |
| Grandfathered Bonds Held | 1.48% |
| 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) | 0.90 |
| Initial Charge (A shares) | 5 |
| Codes | |
| ISIN | LU0230590456 |
| Swiss Valoren Number | 2328295 |
| CUSIP | L1049M687 |
| Fund Risk Statistics | |||
|---|---|---|---|
| Name | 3 Years | 5 Years | Since Launch |
| Beta | 0.82 | - | 0.84 |
| Volatility (Annualised Standard Deviation) | |||
| World Income Fund | 8.5% | - | 7.7% |
| JPMorgan Glbl Govt Bd Broad | 8.9% | - | 7.8% |
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.
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 may make distributions from capital as well as income or pursue certain investment strategies in order to generate income. Whilst this might allow more income to be distributed, it may also have the effect of reducing capital and the potential for long-term capital growth. The fund invests in economies and markets which may be less developed. Compared to more established economies, the value of investments may be subject to greater volatility due to increased uncertainty as to how these markets operate. The fund typically invests in smaller company shares which can be more unpredictable and less liquid than those of larger company shares. Certain developing countries are especially large debtors to commercial banks and foreign governments. Investment in debt obligations (sovereign debt) issued or guaranteed by developing governments or their agencies involve a high degree of risk. Past performance is not a guide to future performance and should not be the sole factor of consideration when selecting a product. All financial investments involve an element of risk. Therefore, the value of your investment and the income from it will vary and your initial investment amount cannot be guaranteed. .
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.