As the investment outlook becomes less and less certain, multi-alternative funds are gaining appeal. Both stocks and bonds are at historic highs, while commodities struggle due to weak global demand, and the U.S. appears poised to hike interest rates amid less-than-stellar domestic growth. In order to generate returns going forward, investors may need exposure to alternative strategies spread across global markets and asset classes – and that’s precisely what BlackRock intends to deliver with its newly launched BlackRock Alternative Capital Strategies Fund (BIMBX).
The fund, which debuted on May 19, pursues total returns regardless of market direction. These returns are derived from a combination of capital appreciation and current income, and the fund is designed to perform well during bull markets and periods of market stress.
The BlackRock Alternative Capital Strategies Fund pursues its investment objective by combining three broad strategies:
- Core allocation across fixed-income and equity markets – allocate across the fixed-income markets, including investment grade and high yield debt securities, agency mortgage-backed securities, government bonds and emerging market debt securities.
- Long/short macro strategies – tactically allocating among several fixed-income asset classes, such as U.S. and non-U.S. government and corporate bonds, including investment grade, high-yield and emerging market bonds, and agency and non-agency mortgage-backed securities, including to-be-announced (“TBA”) commitments.
- Long/short alpha strategies – seek attractive investment opportunities in U.S. and non-U.S. equity securities and equity derivatives, primarily total return swaps. Through a systematic approach, BlackRock will identify opportunities by evaluating predicted returns relative to risk for each security in the investment universe.
The fund is unconstrained with regards to the geographic location and credit rating of its investments, and it may invest in non-dollar-denominated assets with or without currency hedging. This is the kind of flexibility that advocates of multi-alternative investing suggest may be necessary to generate meaningful returns in the current environment.
Separate divisions of BlackRock serve as the fund’s advisor and sub-advisor, with day-to-day portfolio management handled by Tom Parker and Scott Radell. Mr. Parker and Mr. Radell are both Chartered Financial Analysts and managing directors at BlackRock.
Mr. Parker has been Deputy Chief Investment Officer of BlackRock’s Model-Based Fixed Income Portfolio Management Group since 2010, and Mr. Radell has been Head of US Fixed Income Portfolio Solutions within BlackRock’s Model-Based Fixed Income Portfolio Management Group since 2009. The two men worked together at Barclays Global Investors (BGI) from 2003 to 2009, prior to BlackRock’s purchase of BGI.
Shares of the BlackRock Alternative Capital Strategies Fund are available in A, C, and institutional shares. The A and C shares require a $1,000 initial investment, and have respective net-expense ratios of 1.45% and 2.2%. The institutional-class shares have a $2 million minimum initial investment, and a net-expense ratio of 1.2%, inclusive of a 0.95% management fee.
For more information, read the fund’s prospectus.