BlackRock has responded to investor demand for alternative sources of yield with the launch of a fixed maturity high yield bond fund, Citywire Selector can reveal.
This new approach, called the BSF USD High Yield Fixed Maturity Bond fund, will be overseen by Mitchell Garfin, a senior US high yield portfolio manager.
In this new fund, Garfin will invest with an expected five-year maturity. He will adopt a buy-and-hold strategy and aims to deliver regular income with downside protection.
It will invest in US dollar-denominated high yield corporate bonds and can invest across sectors and geographies. It formally launched on 8 January and is expected to remain open to investors for approximately three months.
BlackRock said the decision to launch a fixed maturity fund reflected wider popularity for these types of strategy, which have high diversification and low transaction costs.
Commenting on the launch, Garfin said: ‘Fixed maturity portfolios are gaining traction as their hybrid structure allows investors to enjoy the diversification benefits of investing in a mutual fund while mitigating the risks of a concentrated portfolio of individual bonds.
‘Given their unique structure, fixed maturity portfolios may provide stability in income with a reasonable degree of predictability.’
The BSF USD High Yield Fixed Maturity Bond fund is registered for sale in Austria, Belgium, Switzerland, Germany, Denmark, Spain, France, Ireland, Italy, Luxembourg, Netherlands, Norway, Finland, Sweden, UK and distributed in Latin America.