MyMap’s Portfolio Manager and Chief Strategist discusses BlackRock’s unique combination of research and expertise
In times of volatility, multi-asset fund managers need to be nimble, flexible and well-informed to deliver returns to their clients.
Aiming for wide and dynamic asset allocation is one way of guarding against underperformance. But specialist understanding is required if managers wish to touch on other options – emerging market debt or commodities, for example – to fortify their funds in difficult times.
Fortunately, BlackRock MyMap’s fund managers can turn to the BlackRock Investment Institute (BII), which leverages the firm’s expertise and generates proprietary research to provide insights on the global economy, markets, sustainability, geopolitics and long-term asset allocation.
The BlackRock Investment Institute. Our best kept secret?
The BII comprises specialist investment and portfolio experts in different fields, supported by a global network of strategists. The team harnesses the full BlackRock platform through dialogue, research, and engagement with clients to establish our asset class views and to create intellectual and thought-provoking content.
The BII’s latest macro outlook is underpinned by the ‘mega forces’: big, structural changes that affect investing now – and far in the future. These key drivers of greater macroeconomic and market volatility change the long-term growth and inflation outlook and are poised to create big shifts in profitability across economies and sectors. This creates major opportunities – and risks – for investors.
The BII currently tracks five mega forces: the future of finance, digital disruption and AI, a fragmenting world, the low-carbon transition, and demographic divergence. It focuses on identifying catalysts that can supercharge these forces, and whether the shifts are priced by markets today.
At BlackRock, we rely on the BII’s insights to drive returns and stay within our volatility benchmarks. BII experts study asset class returns over timelines from five to 50 years. From this, we can identify assets that are underpriced, and consider adding them to portfolios with the aim of improving returns.
Take inflation-linked bonds, for example. The BII’s calculations told us that the expected return was higher than the market was pricing in. We were able to strategically allocate more to inflation-linked bonds against normal government bonds on that basis.
Keeping risk in check
As well as identifying opportunities, the BII’s insights contribute to how we manage risk at BlackRock. As we’ve recently seen, when the traditional inverse correlation between equity and bonds broke down, unexpected forces can create risk where we least expect it.
The BII allows us to model these shifting trends – identifying and mitigating risk from, for example, extreme weather events.
That’s good news for investors, who can use multi-asset funds to help meet their return objectives, doing so within their risk tolerance.
Macro and geopolitical factors bring a great deal of uncertainty to the coming years. BlackRock’s sophisticated infrastructure, combined with MyMap’s agile mandate, provides us with the information and tools to manage risk.
