Systematic investing

Q1 2025 DTM: Navigating the (new) conundrum 

JEFFREY ROSENBERG: Hi. I'm Jeff Rosenberg, Senior Portfolio Manager, BlackRock Systematic and in Systematic Fixed Income. I am joined this quarter by Raffaele Savi, Jeff Shen, and Andrew Huzzey will be our special guest to help you navigate through the new conundrum. That is our title for this quarter. It's the title of our outlook piece. And I and Raff and Jeff will go through the macro and market outlook, and then Andrew and I will dig a little bit deeper into some systematic techniques we're using to help model and invest through some of these key policy uncertainties. With that, let's kick it off with our first slide, Navigating the New Conundrum. There are really three conundrums here that we're talking about. The first is the interest rate conundrum. That's really where the name comes from. It's a reference back to 2006 and Greenspan. Then he was raising interest rates and long-term interest rates were falling. Today the new conundrum is Powel is cutting interest rates. And as you can see on that lower left-hand chart, longer-term interest rates are going up. And so there's a lot in the macro space around interest rates and interest rate management. I'll cover a bit of that. Raff will come on and talk a little bit more. But the second big conundrum is really the shift that we're seeing in the outlook moving away from kind of a focus around macroeconomics as the source of uncertainty, much more towards policy and policy uncertainty. And obviously that has to do a lot with the new administration in the United States, but not just the new administration in the United States. Global politic changes in the post-COVID environment, disaggregation in terms of how central banks are behaving. All creating a much more uncertain policy environment. And the third conundrum—and Jeff Shen will join us later to talk more in detail about this, is really what we've seen around one of our mega forces, mega trends in investing. And that is of course the AI boom. DeepSeek and some of the changes that we've seen in the investment landscape more recently highlighted here on the right-hand chart. A bunch of our policy baskets associated with various AI themes. Certainly have seen some differential performance relative to last year. And a lot of that around some of the questions surrounding the outlook going forward on AI. Jeff will join us to give us a really insightful look on how we look at that as both AI investors and AI contributors. Turning to the next slide, on the macro policy and fixed income outlook, a big part of this is really navigating the macro environment as we are now finding ourselves in the pause. The Fed is clearly in no hurry to further cut interest rates. And a lot of that has to do with this debate over how restrictive monetary policy is. And kind of two perspectives here are highlighted. The left-hand chart is a perspective we've been making a lot of focus on, which is the disconnect between financial conditions. That's the yellow line. It's been easing. And interest rates, real interest rates on the orange line. There's a disconnect here because financial conditions have been much easier or what the disconnect is highlighting is that financial conditions are much easier than the interest rates themselves would otherwise say. And I think a lot of that has to do with our other topic around this incredible wealth creation that we've seen coming out of this mega force in AI, the expansion of equity wealth. And in the United States in particular, that becomes a very powerful driver of confidence and fueling consumption, reducing the transmission of monetary policy tightness that the right-hand chart, and much of what the Fed has been arguing, that policy on more traditional measures—this is looking at tailor measures, of policy rates. They show that policy is still very restrictive. This disconnect here, my take, our take on this, is that the financial conditions are really much more operative in the transmission of monetary policy, therefore much less restrictive than the Fed thinks it is, and so therefore a lot less in terms of Fed cuts than even the Fed was planning, and maybe even than what the market is expecting. Let's move ahead one slide and some of the other implications of this for portfolio construction. We look on the left-hand chart here about the other reason why we hold fixed income in a portfolio. Portfolio completion, ballast, the defensive or diversification characteristics of fixed income. And one of the things this chart on the left-hand highlights is that that has been evolving depending on where you hold your fixed income by maturity. It used to be when we were in this zero interest rate QE forward guidance world environment. The front end of the curve was kind of pinned at zero. And so flight to quality 

[00:05:00]

was the backend. And you wanted to own the backend for diversification. That helped to flatten term premiums. And you saw the strongest hedging efficacy in the longest maturities. Now we have short-term interest rates well off of that zero bound. Instead of QE, we have QT. Forward guidance is no longer guiding to perpetual zero interest rates. So it's a very different environment, and it's a little bit of a return to a pre-GFC type environment where flight to quality is led by the front end. You can see this here in some of the more recent risk-off episodes where the strongest hedging efficacy here measured. In terms of stock/bond correlations, you want the lower number there. The short end is providing you the more negative stock/bond correlation, i.e., the better hedging efficacy. As you see flight to quality manifests itself in yield curve steepening. The right-hand chart is a systematic way of approaching this. This uses some of our elastic net regression techniques to model the attractiveness of two's, ten's. The measure here is a Z score, but it's really pulling in signals from policy growth, inflation, and option metrics to assist the value of where you want to be on the curve. And that's moved into steepening territory. A systematic way of looking at one of the key themes we've seen in fixed income where you hold your duration matters as much as how much duration you hold. And where you want to hold that right now for ballast and for value purposes is more in the steepening type of the approach. So let's move to the next slide. And let me introduce Raff to take another systematic perspective here on the macro outlook. Over to you, Raff.

RAFFAELE SAVI: Thank you, Jeff. As Jeff said, we like this framing of the conundrum. We talked about interest rate conundrum. Jeff Shen will cover the AI side. I'm sandwiched in the middle of the three conundrums, talking to you today about economics and policy uncertainty. And I thought a good way to do it was to start from what we know, and then maybe venture in some forecasting territory. Let's look at the situation on the economic side and the strength that we've been seeing and calling for, for a while now, is still, I would say, the first dimension of what we see when we aggregate all our economic data and forecasts. Here we see that consensus has been coming our way in calling for lower and lower probability of recession. Whether you're looking at traditional data, whether you're looking at alternative data, I think what you see is a healthy economic backdrop in the U.S. An economic backdrop that makes us think that there's no immediate risks of a slowdown. Moving to the next slide, and sort of looking at the inflation side again, the second dimension of economic outlook, that's maybe a little bit more interesting and nuanced. So we see definitely what we've seen is that since the peaks of post-COVID supply, shock, and we've seen inflation coming down. And by and large, the indicator that during the last three years has been the most useful to us has been mostly looking at wage growth, and trying to understand on half of the picture is goods and we are very much aligned with consensus that that phenomenon is by and large behind us. And we've seen in a lot of indicators that this is the way this is playing out. And there's a question around wages. And with inflation pressure moving from goods to services, what's happening to wages has been a good leading indicator for us in terms of future trends. What we are seeing here is that our now cost of wage growth is telling us that while we've seen continued normalization in the bottom half of the wage scale, the highest wage brackets have seen a pretty strong showing. And the deceleration that we've seen in the other part of the labor market does not seem to be impacting the highest turn or the highest 50% earners in the cohort. And so I'd say on this one the argument that we see—the position that we have more affinity with is the one that says yes, inflation has definitely come down, but maybe this deceleration is slowing down, and maybe in the near-term future will be—there's a new state that is above that 2% Fed target, maybe sort of 3%, 

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2.5-3% is a more realistic range for the near-term future. That's what the data says. Again, I think pretty interesting to see that unlike in previous episodes of the DTM, in this case we see a pretty strong convergence between alternative data and more traditional data. If we move to the next slide, now we can start scratching at this conundrum that we've been talking about. The way I like to think about it is that in most circumstances, when there is a political election in the United States or in other countries, usually one can still use what I define as a partial equilibrium analysis. You can safely assume that most things in the economic equilibrium that we've been sort of living in as investors will stay the same, and that the new administration might bring in marginal changes in one or two particular areas of focus. Most times that's what happens. Both because of some inertia in the political process, but also because of institutions and inertia in the system. There are a few times, of course people have been mentioning [INDISCERNIBLE 00:11:20] in the U.K. or Reagan or the Foundation of the European Monetary Union with the euro. There are moments in which from the perspective of an investment manager, the equilibrium, how different forces interact, and how forecast models work, it really moves a lot. It's not an incremental, marginal move, but it's a completely new equilibrium point that sort of markets gravitate around. And I think we're going through a transition like that. And so what we're trying to do here is we're trying to measure all the components as best as we can using third-party information [INDISCERNIBLE 00:12:02] brokers, using heavily large language models in trying to identify sectors and companies that might react very strongly one way or another to some of the new policies that the Trump Administration is implementing. And we're trying to figure out where is the market in terms of pricing, both the likelihood and the impact of these policies and how far away from the previous equilibrium we've moving in terms of investment decisions. Here you see something that I find really interesting. For example, if we go back at what we just discussed, what is the data telling us about economic growth and what is the data telling us about inflation, of course one big question is, well, what if there's an aggressive tariff regime that gets implemented? What does it do to growth? What does it do to inflation? Or the same thing is what if the deregulation efforts that the Trump Administration is promoting are going to be impactful sooner than people expect? What does it do to growth? What does it do to inflation? The point is you can see that they might have very different impact, and it's very hard to know the combined impact, what it will be. And so in this sense, we're really trying to rely a lot—keep our positions sort of tactically light, and also relying quite a bit on a data-first approach. We try to be absolutely not bound by theory or by the past. And we're really looking at what the data is telling us. So what is the data telling us? You'll see two conclusions that we have, two preliminary conclusion. On the left-hand side you see how did the market react to some of these baskets. And some initiatives have already been priced in quite a bit. Deregulation has been sort of a very strong, positive contributor to performance. Companies that we identified as benefiting from deregulation have massively outperformed since the Trump election. Interestingly, tariffs have not been priced in as a big driver, until a couple of weeks ago. So we've seen that in the first couple of months and the first couple of weeks in the year, in 2025, this was not a theme that the market has been reacting to. And we're seeing now that that basket has sort of picked up quite a bit. But as you see, there's a lot of cross currents. Once you aggregate everything up, that's something that also Andrew Huzzey will go into some more detail. We see that the sum total of this policy seemed to us to indicate a potential shift favorable to companies like financials and energy, and may be a bit less favorable to capital goods and durable. If we're going to the next slide, and that's sort of where I want to try and conclude on this conundrum between economic uncertainty as the major driver. 

[00:15:00]

We've seen growth numbers [INDISCERNIBLE 00:15:03] inflation seem all and all settled on a new level. And again, pretty stable, but a lot of policy uncertainty. If we're trying to go back to some of the framing we've been using over the last few years, what does it tell us in terms of what markets are pricing in? And I would say that markets are pricing in definitely, not surprisingly, based on what we discussed so far. Soft landing is the most likely outcome. And so I'd say that is by and large, especially in the U.S., the strong consensus. I think that there's much more uncertainty as to what economic regime would be dominant in Europe. And I think that there's a lot of good reasons for that. But in the U.S. again, I think that the soft landing has become the core of the consensus. And so both any form of hard landing or also like a world we call no landing where both growth accelerates and inflation accelerates, they don’t seem to be in the card in terms of where the market is pricing today. Is there any surprise that it's possible there? Lately we've seen a couple of very strong releases that made us think that maybe the no landing scenario should have a higher implied probability. But so far, say when you look at the data, strong soft landing consensus in the U.S. and a bit more of a murky mixed picture for Europe. With that, Jeff, why don’t you go on the third and last conundrum for the day, the AI conundrum?

JEFF SHEN: Alright. We are on to the third conundrum. So clearly the news of DeepSeek has been all over the internet and there is a lot of discussions already out there. You can certainly think about there's a CapEx potentially debate given how effective and also how cheap DeepSeek models are, especially in relation to some of the larger, more expensive $100 million, $1 billion type of spend on some of its foundational model. So there's a CapEx discussion. And clearly there's also a geopolitical story here; U.S. versus China in this overall AI race. So these are two very interesting dimensions, and unfortunately these are not two dimensions I'm going to go into. I'm going to go a little bit inside of systematic investment framework and really go a little bit, if you will, into inside a couple of interesting dimensions that I think hopefully will be relevant from an investment angle. I think the first one is really to try to think about open source in relation to proprietary. So clearly the DeepSeek model is open sourced, similar to the LLaMA model for Meta. Then there are actually quite a few models from OpenAI, from Google, from Entropic that are actually more proprietary large language models. In the AI world, there's this big debate between open source versus more proprietary. I think the interesting thing here is actually we've been using both open source and also some of the proprietary models over the years. I would say that the open source clearly has a benefit of flexibility, transparency, and also ability to develop things on top of it in a pretty straightforward way. But some of the proprietary models are also becoming much more powerful and potentially world-leading. I think there is a clear tradeoff between open source versus proprietary. And the jury is still out, but I think at least—and also there's clearly the natural security or security issue. But also within the academic development, I think this open source release is a big deal that could potentially change the evolution and potentially speed up the development in large language model on a forward-looking basis. I think that's open source in relation to the proprietary. I think there's also the second dimension here, which is the different learners. DeepSeek actually uses reinforcement learning. And it's a reasonably pure reinforcement learning type of stack versus if you take ChatGPT, it's actually got what we call the supervised, fine tuning with a lot of human input. So when you're using ChatGPT, when you're saying you like this or you cut and paste the answer into your other applications, that's essentially providing human feedback to the deep learning stack. And that's certainly quite helpful. Versus DeepSeek is using a bit more of a pure reinforcement learning without too much of a human interventional input. And in our mind, from a learner perspective, there's certainly a benefit of having multiple learners, especially for important development like large language model. So I think there is actually—we think about this actually as a positive development 

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in the sense that there could be competing learners and different learners. And our own systematic investment process, you can even think about the basic linear regression that we all have learned to use during graduate school is actually one form of learner. And fast forward today, in systematic, we certainly have 20-30 different learners. I think learner diversification is actually very important so we see that certainly as a positive development for the AI development on a forward-looking basis. The third but not least is from a model architecture perspective. This one is also interesting in the sense that DeepSeek uses a mixture of expert approach. So the overall model that they have is about 600-700 billion parameters. You can think about these parameters as essentially knowledge base. And at any moment, if there's a particular topic that's of interest coming through the chat bot, you essentially activate a subset of these parameters. Could be 30. Could be 40 billion parameters. So essentially, you have this mixture of experts that's ready to help when the moment arises. Versus compared to the transformer type of architecture for ChatGPT that one is pretty much, if you will, the knowledge base is on all the time. You have consistency. You have general knowledge. But at the same time, it's pretty expensive to do. So from a model architectural perspective, there is this tradeoff between the consistency of ChatGPT, alongside with this kind of, if you will, efficient way of using a mixture of experts from DeepSeek. So from that perspective, I think the tradeoff here is domain knowledge versus a general super agent. I think again, there is a bit of a tradeoff in our own systematic process. We also certainly have things that are actually domain-specific. We also have plenty of learners and architecture that's actually reasonably general that can cut across the general set of knowledge. These are, if you will, some of the comparisons; open source versus proprietary, different architecture and also different learners. If I had to zoom out, I will conclude to say that I think this moment of DeepSeek is really a moment to show that there actually could be different architecture, different learner, different ways of developing AI and large language model. I think to a great extent, if you really think about it, it's a potential broadening of opportunities both from application, from an architecture, and also from a learner perspective. I think I would take this as a broadening of the AI opportunity. And that could potentially be a positive for the overall trend over the long run. And you can certainly go into some of the winners and losers aspect of it, but I will say that the first principle component here is certainly a potential broadening of the opportunity. And we view that as a reasonable positive development for this secular trend.

JEFFREY ROSENBERG: Thanks very much, Jeff. That was a very interesting decoupling of the issues around DeepSeek and the implications it has on the development of AI. I found that very fascinating, and I'm sure our investors did as well. Let me thank Jeff and Raff for their contributions to the quarterly DTM. Raff talked a bunch about the migration from macro uncertainty to policy uncertainty, what it means for our macro outlook, highlighting some of the measurements that we've taken from some of our baskets on these policy environments. At this point, I want to turn to our special guest, Andrew Huzzey. Andrew Huzzey runs our tactical team and comes up with a lot of these thematic baskets and signals to help us navigate this key policy uncertainty environment that we're in today. Andrew, look forward to having our discussion. Over to you.

ANDREW HUZZEY: Fantastic. Thank you, Jeff. Yes. We've been thinking about a second Trump presidential term in the context of nine pillars of policy. And these pillars are all unique. They cover a diverse range of topics. And they're all, to a much extent, independent of one another. And so what unites them, for us at least, is our ability to combine alternative data and large language models to identify the relative winners and losers in the cross section of global equity markets. And in the interest of time, let me dig in deeper to a few of these pillars, starting with deregulation. What defines deregulation for us is how intangible it is to actually understand what could happen there. It's a perfect case study for using our tactical robot, which combines large language models with earnings call transcripts 

[00:25:00]

and granular revenue segmentation data to identify the potential business models that could win or lose from a generalized increase in deregulation activity. And the robot identifies a variety of firms within the banking and crypto sector, but this is not a theme that's specific to financials. For example, you also identify traditional energy stocks in response to Trump's desire to relax permitting rules. And healthcare stocks in response to Trump's desire to amend the Affordable Care Act. As with every theme on this slide, there are relative losers to these pillars as well. And for this theme, we think it's the E in ESG. In other words, we think renewable energy firms may struggle here in response to Trump looking to scale back many of the regulatory polices as regards to the environment that were implemented under President Biden.

JEFFREY ROSENBERG: Andrew, that's super interesting. I love the discussion about how we're using the tactical robot. We featured that a number of times in the Decoding the Markets. Tell me about another one of the pillars that you're focused on.

ANDREW HUZZEY: Yeah. The unique part about reshoring here is that this is not a theme that's necessarily new to President Trump. In fact, we see this really emerging from the end of COVID. Again, it's a theme that we use our tactical robot to identify the potential winners and losers from an increase in domestic production. And the robot finds long positions within the construction, consulting, and electrical equipment sectors. And these are the sectors that can benefit from an increase in demand for axillary services; companies building new factories or needing to source new avenues of labor supply. What is interesting about this theme is the robot does not want to go long at the companies involved directly in reshoring their factors of production. It actually wants to short offshore manufacturing based upon the notion that these companies will either stay put and potentially incur the threat of tariffs, or have to reshore their factors of production from a low-cost country to a higher-cost country in the United States.

JEFFREY ROSENBERG: Super interesting. Number one on this list is trade. We're going to get to trade in just a second. But the other big story recently has been the focus on migration and some of the changes in policies with the new administration. Tell us what you're doing, what you're seeing on that theme.

ANDREW HUZZEY: Yeah. It's a fantastic theme for us to think about. We're thinking about three specific attributes at the corporate level. Firstly, occupational mix. Secondly, state level exposures. And thirdly, realized wage growth dynamics. In terms of occupational mix, we ask a large language model to consider 97 stock-three level occupations, and to score those occupations on a score of one to five, based upon the likely wage growth impact from a reversal of Biden era migration policies. And we interact these scores with company level occupation percentages and find companies that have high levels of hiring activity within the agriculture, hospitality, and construction sectors. These are the kind of companies that will face the biggest headwinds as migration trends start to revert. In terms of state-level exposures, we look at new immigration court filings as a way to proxy for the number of net new unauthorized immigrants at the state level. If we look at the peak of the Biden era relative to when Biden first became president, nationally there's been a 25-fold increase in the number of unauthorized immigrations with a high of 89 in Utah. So there's been quite some dispersion at the state level. We can obviously use this dispersion to identify the kinds of companies exposed, based upon the combination of geo location data, i.e., what portion of your facilities are exposed to which state. But also occupational data, i.e., what percentage of your employees have been hired within each state. And this helps us to identify the companies most exposed to the states that may have experienced the biggest immigration under Biden. For example, Florida, California, and Texas rank very highly within our data.

JEFFREY ROSENBERG: Super interesting. Let's pivot to trade. It's obviously the focus of markets. Give us some thoughts on what you're seeing there.

ANDREW HUZZEY: Trade is a very interesting topic because it's one that we can make some historical comparisons with Trump's first presidency. 

[00:30:00]

So if we turn to the next slide, we can see a variety of developments through 2018. And what is interesting here is that it actually took some time for trade policy to come to the fore during Trump's first presidency. This culminated on the third of April 2018 where Trump decided to tariff more than $50 billion worth of Chinese imports at 25%. And what followed for the rest of the year was essentially a variety of tit for tat escalations between China and the U.S., which ultimately did culminate in an eventual de-escalation of tensions in December of that year where the two countries agreed not to impose any further tariffs for a period of 90 days. What we can also do is look at investor attention to the topic. So what we show here on the bottom exhibit is the number of mentions of the word tariff as sourced from our Dow Jones news wires. The clear observation here is that investor attention to this topic now is significantly higher than it was at any point in 2018. So this is clearly a theme that is gaining traction with investors. It's also a theme where we can use our alternative data to build investment insights across two key dimensions. Firstly, geo location. By looking at the percentage of a company's manufacturing facilities that may be sourced in different countries. This is an important thing to note because it's very difficult for the average investor to obtain good, quality data on manufacturing activity relative to something like country of sale. The second item of data that we can use here is shipping data, which allows us to identify for each company in our investment universe the approximate dollar value of imports and ultimately the origin country where those imports have come from. So any changes to trade policy that may include the imposition of new tariffs can be attributed through our data into a direct point estimate as to the percentage cost impact that we think that will have for every company within our universe.

JEFFREY ROSENBERG: So clearly this data is showing what we're seeing, a lot of attention, a lot more attention on trade and tariffs at the beginning of the administration. What are you seeing in terms of market performance, dynamics when you compare the current environment back to 2018?

ANDREW HUZZEY: It's a great question. It's important to remember on the next slide that this period of trade tensions in 2018 was an extremely difficult time for quantitative strategies. We saw [PH 00:32:45] beater under perform. We saw growth under perform. And we saw value under perform. If we compare on the right-hand side what has happened since Q4 of 2024, the market reaction has been somewhat different. In particular we've seen beater out perform and growth out perform. And what appears to be happening here is investors seem to be focusing on other dimensions of those policy pillars that I mentioned earlier. For example, some of the more risk on elements such as deregulation and the strive for government efficiency. We can also see this by looking at the second panel of exhibits on this slide, which shows a couple of our insights that we've constructed to bet on the relative winners and losers from an increase in trade attention activity. So on the left-hand side, we can see that those insights gain significant traction through 2018, particularly around the April escalation of trade tensions. If you compare what's happened again since Q4 of 2024, those insights have struggled for traction. So whilst there has been a very significant increase in investor attention to the topic, it's much less clear to us that this has come through in investors actually pricing the impact of tariffs. And it looks to us that investors have interpreted the threat of tariffs as merely that, a threat to obtain concessions along other policy dimensions, and not necessarily something that investors expect to be implemented in earnest or for a long period of time. Whilst we do sympathize with that notion, we think this is an important risk factor that we need to control for in our portfolios. For example, if 25% tariffs were to be imposed on Mexico, Canada, and then a 10% tariff on China, we think that could have between a 5-10% earnings impact for the average U.S. company, with significant dispersion in the cross section. And perhaps more importantly, that could challenge some of the risk on sentiment that we've seen in markets since Q4 of 2024.

JEFFREY ROSENBERG: Thanks, Andrew. Well, it would certainly have an issue in that cross section. It would certainly have a macro issue as well. So we will be watching that very carefully. Let me thank Andrew for joining us for this quarter's DTM, and providing us some of the insights the tactical team is putting into client portfolios. And let me thank the investors, clients, partners who've joined us in this quarters Decoding the Markets. You can find more information by reaching out to your relationship manager at BlackRock, or visit us at BlackRock.com/Systematic. And we'll see you all next quarter. Thank you very much for joining.

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For investors in Central America, these securities have not been registered before the Securities Superintendence of the Republic of Panama, nor did the offer, sale or their trading procedures. The registration exemption has made according to numeral 3 of Article 129 of the Consolidated Text containing of the Decree-Law No. 1 of July 8, 1999 (institutional investors). Consequently, the tax treatment set forth in Articles 334 to 336 of the Unified Text containing Decree-Law No. 1 of July 8, 1999, does not apply to them. These securities are not under the supervision of the Securities Superintendence of the Republic of Panama. The information contained herein does not describe any product that is supervised or regulated by the National Banking and Insurance Commission (CNBS) in Honduras. Therefore any investment described herein is done at the investor’s own risk. In Costa Rica, any securities or services mentioned herein constitute an individual and private offer made through reverse solicitation upon reliance on an exemption from registration before the General Superintendence of Securities (“SUGEVAL”), pursuant to articles 7 and 8 of the Regulations on the Public Offering of Securities (“Reglamento sobre Oferta Pública de Valores”). This information is confidential, and is not to be reproduced or distributed to third parties as this is NOT a public offering of securities in Costa Rica. The product being offered is not intended for the Costa Rican public or market and neither is registered or will be registered before the SUGEVAL, nor can be traded in the secondary market. If any recipient of this documentation receives this document in El Salvador, such recipient acknowledges that the same has been delivered upon their request and instructions, and on a private placement basis. In Guatemala, this communication and any accompanying information (the “Materials”) are intended solely for informational purposes and do not constitute (and should not be interpreted to constitute) the offering, selling, or conducting of business with respect to such securities, products or services in the jurisdiction of the addressee (this “Jurisdiction”), or the conducting of any brokerage, banking or other similarly regulated activities (“Financial Activities”) in the Jurisdiction. Neither BlackRock, nor the securities, products and services described herein, are registered (or intended to be registered) in the Jurisdiction. Furthermore, neither BlackRock, nor the securities, products, services or activities described herein, are regulated or supervised by any governmental or similar authority in the Jurisdiction. The Materials are private, confidential and are sent by BlackRock only for the exclusive use of the addressee. The Materials must not be publicly distributed and any use of the Materials by anyone other than the addressee is not authorized. The addressee is required to comply with all applicable laws in the Jurisdiction, including, without limitation, tax laws and exchange control regulations, if any.

IN MEXICO, FOR INSTITUTIONAL AND QUALIFIED INVESTORS USE ONLY. INVESTING INVOLVES RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THIS MATERIAL IS PROVIDED FOR EDUCATIONAL AND INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE AN OFFER OR SOLICITATION TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SHARES OF ANY FUND OR SECURITY.
This information does not consider the investment objectives, risk tolerance or the financial circumstances of any specific investor. This information does not replace the obligation of financial advisor to apply his/her best judgment in making investment decisions or investment recommendations. It is your responsibility to inform yourself of, and to observe, all applicable laws and regulations of Mexico. If any funds, securities or investment strategies are mentioned or inferred in this material, such funds, securities or strategies have not been registered with the Mexican National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores, the “CNBV”) and thus, may not be publicly offered in Mexico. The CNBV has not confirmed the accuracy of any information contained herein. The provision of investment management and investment advisory services (“Investment Services”) is a regulated activity in Mexico, subject to strict rules, and performed under the supervision of the CNBV. These materials are shared for information purposes only, do not constitute investment advice, and are being shared in the understanding that the addressee is an Institutional or Qualified investor as defined under Mexican Securities (Ley del Mercado de Valores). Each potential investor shall make its own investment decision based on their own analysis of the available information. Please note that by receiving these materials, it shall be construed as a representation by the receiver that it is an Institutional or Qualified investor as defined under Mexican law. BlackRock México Operadora, S.A. de C.V., Sociedad Operadora de Fondos de Inversión (“BlackRock México Operadora”) is a Mexican subsidiary of BlackRock, Inc., authorized by the CNBV as a Mutual Fund Manager (Operadora de Fondos), and as such, authorized to manage Mexican mutual funds, ETFs and provide Investment Advisory Services. For more information on the Investment Services offered by BlackRock Mexico, please review our Investment Services Guide available in www.blackrock.com/mx. This material represents an assessment at a specific time and its information should not be relied upon by the you as research or investment advice regarding the funds, any security or investment strategy in particular. Reliance upon information in this material is at your sole discretion. BlackRock México is not authorized to receive deposits, carry out intermediation activities, or act as a broker dealer, or bank in Mexico. For more information on BlackRock México, please visit: www.blackRock.com/mx. BlackRock receives revenue in the form of advisory fees for our advisory services and management fees for our mutual funds, exchange traded funds and collective investment trusts. Any modification, change, distribution or inadequate use of information of this document is not responsibility of BlackRock or any of its affiliates. Pursuant to the Mexican Data Privacy Law (Ley Federal de Protección de Datos Personales en Posesión de Particulares), to register your personal data you must confirm that you have read and understood the Privacy Notice of BlackRock México Operadora. For the full disclosure, please visit www.blackRock.com/mx and accept that your personal information will be managed according with the terms and conditions set forth therein. .
In Peru, this private offer does not constitute a public offer, and is not registered with the Securities Market Public Registry of the Peruvian Securities Market Commission, for use only with institutional investors as such term is defined by the Superintendencia de Banca, Seguros y AFP.
In Uruguay, the securities are not and will not be registered with the Central Bank of Uruguay. The Securities are not and will not be offered publicly in or from Uruguay and are not and will not be traded on any Uruguayan stock exchange. This offer has not been and will not be announced to the public and offering materials will not be made available to the general public except in circumstances which do not constitute a public offering of securities in Uruguay, in compliance with the requirements of the Uruguayan Securities Market Law (Law Nº 18.627 and Decree 322/011).
This material is for distribution to Professional Clients (as defined by the Financial Conduct Authority or MiFID Rules) and should not be relied upon by any other persons.
This document is marketing material.
For investors in the UK and Non-European Economic Area (EEA) countries: this is issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: + 44 (0)20 7743 3000. Registered in England and Wales No. 02020394. For your protection telephone calls are usually recorded. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock.
For investors in the European Economic Area (EEA): this is issued by BlackRock (Netherlands) B.V. is authorised and regulated by the Netherlands Authority for the Financial Markets. Registered office Amstelplein 1, 1096 HA, Amsterdam, Tel: 020 – 549 5200, Tel: 31-20-549-5200. Trade Register No. 17068311 For your protection telephone calls are usually recorded. 
In Italy, for information on investor rights and how to raise complaints please go to https://www.blackrock.com/corporate/compliance/investor-right available in Italian.
For qualified investors in Switzerland.
This document shall be exclusively made available to, and directed at, qualified investors as defined in Article 10 (3) of the CISA of 23 June 2006, as amended, at the exclusion of qualified investors with an opting-out pursuant to Art. 5 (1) of the Swiss Federal Act on Financial Services (FinSA). For information on art. 8 / 9 Financial Services Act (FinSA) and on your client segmentation under art. 4 FinSA, please see the following website: www.blackrock.com/finsa.
For investors in South Africa, please be advised that BlackRock Investment Management (UK) Limited is an authorised Financial Services provider with the South African Financial Services Board, FSP No. 43288.
For investors in Israel, BlackRock Investment Management (UK) Limited is not licenced under Israel's Regulation of Investment Advice, Investment Marketing and Portfolio Management Law, 5755-1995 (the “Advice Law”), nor does it carry insurance thereunder.
For investors in Dubai (DIFC) 
The information contained in this document is intended strictly for Professional Clients as defined under the Dubai Financial Services Authority (“DFSA”) Conduct of Business (COB) Rules.
 
The information contained in this document, does not constitute and should not be construed as an offer of, invitation or proposal to make an offer for, recommendation to apply for or an opinion or guidance on a financial product, service and/or strategy. Whilst great care has been taken to ensure that the information contained in this document is accurate, no responsibility can be accepted for any errors, mistakes or omissions or for any action taken in reliance thereon. You may only reproduce, circulate and use this document (or any part of it) with the consent of BlackRock.
 
The information contained in this document is for information purposes only. It is not intended for and should not be distributed to, or relied upon by, members of the public.
 
The information contained in this document, may contain statements that are not purely historical in nature but are “forward-looking statements”. These include, amongst other things, projections, forecasts or estimates of income. These forward-looking statements are based upon certain assumptions, some of which are described in other relevant documents or materials. If you do not understand the contents of this document, you should consult an authorised financial adviser.
In Qatar:
The information contained in this document is intended strictly for sophisticated institutions. 
The information contained in this document, does not constitute and should not be construed as an offer of, invitation or proposal to make an offer for, recommendation to apply for or an opinion or guidance on a financial product, service and/or strategy. Whilst great care has been taken to ensure that the information contained in this document is accurate, no responsibility can be accepted for any errors, mistakes or omissions or for any action taken in reliance thereon. You may only reproduce, circulate and use this document (or any part of it) with the consent of BlackRock.
The information contained in this document is for information purposes only. It is not intended for and should not be distributed to, or relied upon by, members of the public. 
The information contained in this document, may contain statements that are not purely historical in nature but are “forward-looking statements”. These include, amongst other things, projections, forecasts or estimates of income. These forward-looking statements are based upon certain assumptions, some of which are described in other relevant documents or materials. If you do not understand the contents of this document, you should consult an authorised financial adviser.
In the Kingdom of Saudi Arabia:
This material is for distribution to Institutional and Qualified Clients (as defined by the Implementing Regulations issued by Capital Market Authority) only and should not be relied upon by any other persons.
The information contained in this document, does not constitute and should not be construed as an offer of, invitation or proposal to make an offer for, recommendation to apply for or an opinion or guidance on a financial product, service and/or strategy. Whilst great care has been taken to ensure that the information contained in this document is accurate, no responsibility can be accepted for any errors, mistakes or omissions or for any action taken in reliance thereon. You may only reproduce, circulate and use this document (or any part of it) with the consent of BlackRock. 
The information contained in this document is for information purposes only. It is not intended for and should not be distributed to, or relied upon by, members of the public. 
The information contained in this document, may contain statements that are not purely historical in nature but are “forward-looking statements”. These include, amongst other things, projections, forecasts or estimates of income. These forward-looking statements are based upon certain assumptions, some of which are described in other relevant documents or materials. If you do not understand the contents of this document, you should consult an authorised financial adviser.
For investors in United Arab Emirates
The information contained in this document is intended strictly for Professional Investors. 
The information contained in this document, does not constitute and should not be construed as an offer of, invitation or proposal to make an offer for, recommendation to apply for or an opinion or guidance on a financial product, service and/or strategy. Whilst great care has been taken to ensure that the information contained in this document is accurate, no responsibility can be accepted for any errors, mistakes or omissions or for any action taken in reliance thereon. You may only reproduce, circulate and use this document (or any part of it) with the consent of BlackRock.
The information contained in this document is for information purposes only. It is not intended for and should not be distributed to, or relied upon by, members of the public.
The information contained in this document, may contain statements that are not purely historical in nature but are 'forward-looking statements'. These include, amongst other things, projections, forecasts or estimates of income. These forward-looking statements are based upon certain assumptions, some of which are described in other relevant documents or materials. If you do not understand the contents of this document, you should consult an authorised financial adviser.
BlackRock Advisors (UK) Limited - Dubai Branch is a DIFC Foreign Recognised Company registered with the DIFC Registrar of Companies (DIFC Registered Number 546), with its office at Unit 06/07, Level 1, Al Fattan Currency House, DIFC, PO Box 506661, Dubai, UAE, and is regulated by the DFSA to engage in the regulated activities of ‘Advising on Financial Products’ and ‘Arranging Deals in Investments’ in or from the DIFC, both of which are limited to units in a collective investment fund (DFSA Reference Number F000738).
For investors in China, this material may not be distributed to individuals resident in the People's Republic of China (PRC, for such purposes, not applicable to Hong Kong, Macau and Taiwan) or entities registered in the PRC unless such parties have received all the required PRC government approvals to participate in any investment or receive any investment advisory or investment management services.
For investors in Hong Kong, this material is issued by BlackRock Asset Management North Asia Limited and has not been reviewed by the Securities and Futures Commission of Hong Kong. This material is for distribution to 'Professional Investors' (as defined in the Securities and Futures Ordinance (Cap.571 of the laws of Hong Kong) and any rules made under that ordinance.) and should not be relied upon by any other persons or redistributed to retail clients in Hong Kong. 
For investors in Singapore, this is issued by BlackRock (Singapore) Limited (Co. registration no. 200010143N) for use only with institutional investors as defined in Section 4A of the Securities and Futures Act, Chapter 289 of Singapore. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.
For investors in South Korea, this information is issued by BlackRock Investment (Korea) Limited. This material is for distribution to the Qualified Professional Investors (as defined in the Financial Investment Services and Capital Market Act and its sub-regulations) and for information or educational purposes only, and does not constitute investment advice or an offer or solicitation to purchase or sells in any securities or any investment strategies.
For investors in Taiwan, Independently operated by BlackRock Investment Management (Taiwan) Limited. Address: 28F., No. 100, Songren Rd., Xinyi Dist., Taipei City 110, Taiwan. Tel: (02)23261600.
For investors in Australia & New Zealand, issued by BlackRock Investment Management (Australia) Limited ABN 13 006 165 975, AFSL 230 523 (BIMAL) for the exclusive use of the recipient, who warrants by receipt of this material that they are a wholesale client as defined under the Australian Corporations Act 2001 (Cth) and the New Zealand Financial Advisers Act 2008 respectively. 
BlackRock Investment Management (Australia) Limited (“BIMAL”) is not licensed by a New Zealand regulator to provide ‘Financial Advice Service’ or ‘Keeping, investing, administering, or managing money, securities, or investment portfolios on behalf of other persons’. BIMAL’s registration on the New Zealand register of financial service providers does not mean that BIMAL is subject to active regulation or oversight by a New Zealand regulator.
This material provides general information only and does not take into account your individual objectives, financial situation, needs or circumstances. Before making any investment decision, you should therefore assess whether the material is appropriate for you and obtain financial advice tailored to you having regard to your individual objectives, financial situation, needs and circumstances. Refer to BIMAL’s Financial Services Guide on its website for more information. This material is not a financial product recommendation or an offer or solicitation with respect to the purchase or sale of any financial product in any jurisdiction. 
This material is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. BIMAL is a part of the global BlackRock Group which comprises of financial product issuers and investment managers around the world. BIMAL is the issuer of financial products and acts as an investment manager in Australia. BIMAL does not offer financial products to persons in New Zealand who are retail investors (as that term is defined in the Financial Markets Conduct Act 2013 (FMCA)). This material does not constitute or relate to such an offer. To the extent that this material does constitute or relate to such an offer of financial products, the offer is only made to, and capable of acceptance by, persons in New Zealand who are wholesale investors (as that term is defined in the FMCA). 
BIMAL, its officers, employees and agents believe that the information in this material and the sources on which it is based (which may be sourced from third parties) are correct as at the date of publication. While every care has been taken in the preparation of this material, no warranty of accuracy or reliability is given and no responsibility for the information is accepted by BIMAL, its officers, employees or agents. Except where contrary to law, BIMAL excludes all liability for this information.
Any investment is subject to investment risk, including delays on the payment of withdrawal proceeds and the loss of income or the principal invested. While any forecasts, estimates and opinions in this material are made on a reasonable basis, actual future results and operations may differ materially from the forecasts, estimates and opinions set out in this material. No guarantee as to the repayment of capital or the performance of any product or rate of return referred to in this material is made by BIMAL or any entity in the BlackRock group of companies.
No part of this material may be reproduced or distributed in any manner without the prior written permission of BIMAL.
The opinions presented are those of speakers as of the date of this scheduled webcast and may change as subsequent conditions vary. Individual portfolio managers for BlackRock may have opinions and/or made investment decisions that may, in certain respects, not be consistent with the information contained in this presentation. This is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The information and opinions contained in this presentation are derived from proprietary and non-proprietary sources deemed by BlackRock to be reliable, are not necessarily all inclusive and are not guaranteed as to accuracy. Past performance does not guarantee future results. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the viewer.
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THIS MATERIAL IS HIGHLY CONFIDENTIAL AND IS NOT TO BE REPRODUCED OR DISTRIBUTED TO PERSONS OTHER THAN THE RECIPIENT.
The information contained in this document is for information purposes only. It is not intended for and should not be distributed to, or relied upon by, members of the public. The information contained in this document, may contain statements that are not purely historical in nature but are “forward-looking statements”. These include, amongst other things, projections, forecasts or estimates of income. These forward-looking statements are based upon certain assumptions, some of which are described in other relevant documents or materials. If you do not understand the contents of this document, you should consult an authorized financial adviser.
Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy. 
This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer. 
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