May, 2023
Key Contributions to Portfolio Outcome:
Mega-cap tech stocks helped drive the S&P 500 moderately higher for the month. However, slowing global growth and a less dovish rate outlook weighed on markets more broadly. The fund delivered a negative return.
Key contributors to portfolio income this month were high yield, covered calls, and floating rate loans. Currency management positions, floating rate loans, and emerging market equities were the largest contributors to total return this month offset by global ex-US equities, US equity positions (including hedges), and interest rate management positions which detracted from returns.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/blackrock-global-multi-asset-income-fund-aus-fund-update-en-au-24.pdfApril, 2023
Key Contributions to Portfolio Outcome:
A rally the last two trading days of April helped push U.S. stocks into positive territory after being relatively flat for the month. Global equities and bonds were generally higher, although emerging market equities lagged.
Key contributors to portfolio income this month were high yield, covered calls, and CLOs. Global ex-U.S. equities, high yield and covered calls were the largest contributors to total return this month offset by currency management positions and emerging market equities which detracted from returns.
Main Portfolio Changes:
We moderated equity risk again during the month, choosing to target a tech-oriented index which has strongly outperformed broader stocks year-to-date and may be more susceptible to downside at these levels. We also added back duration, closing out our reduction from March. We felt the potential for growth weakness has increased and wanted to add back some downside mitigation.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/blackrock-global-multi-asset-income-fund-aus-fund-update-en-au-23.pdfMarch, 2023
Key Contributions to Portfolio Outcome:
Broad markets delivered positive returns despite banking sector woes and additional interest rate hikes from developed central banksd. The fund delivered a positive return this quarter.
Key contributors to portfolio income this quarter were high yield, covered calls, and CLOs. High yield, global ex-U.S. equities, and interest rate management positions were the largest contributors to total return this quarter offset by U.S. equities, preferred stock, and global REITs which detracted from returns.
Main Portfolio Changes:
We have maintained a more cautious positioning and modestly reduced equity risk in light of the banking turmoil and the potential for broader contagion. We had already been managing the fund with moderate levels of risk but felt additional downside was possible.
Within equities, after shifting some exposure from the U.S. to EM earlier in the quarter, we have more recently reduced our EM exposure in favor of the U.S.
Early in February, we reduced exposure to preferred stock and high yield following less attractive opportunities after year-to-date rallies at the time, and increased exposure to covered calls, quality dividend stocks, investment grade fixed, and agency mortgages.
We also reduced duration after the rate rally and to adjust positioning for rates to potentially grind higher.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/blackrock-global-multi-asset-income-fund-aus-fund-update-en-au-22.pdfFebruary, 2023
Key Contributions to Portfolio Outcome:
Stocks fell and interest rates rose as higher than expected inflation and strong employment triggered concerns over further central bank tightening ahead. The fund delivered a negative return this month. Key contributors to portfolio income this month were high yield, covered calls, and CLOs. High yield, interest rate management positions, and investment grade were the largest detractors from total return this month offset by currency management positions and CLOs which contributed to returns.
Main Portfolio Changes:
We tactically added back duration after cutting it in January to capitalize on the spike in yields last month. We also reduced exposure to preferred stocks and high yield given less compelling valuations, choosing instead to own modestly more in covered calls, quality dividend stocks, investment grade bonds, and agency mortgages.
Positioning & Outlook:
Markets gave back some year-to-date gains as stocks experienced their worst week of the year in February. Weakness was relatively widespread with both stocks and bonds moving lower. The Core PCE price index – the Federal Reserve’s preferred measure of inflation – came in higher than expected in January, surging 0.6% in January from 0.4% in December. Meanwhile, the U.S. Labor Department said the number of Americans filing new claims for unemployment benefits unexpectedly fell, signalling tighter labor market conditions. In Europe, inflation was also higher driving Eurozone short- and long-rates to new cycle highs and raising European Central Bank terminal rate expectations.
Volatility has continued into March. Markets looked poised to claw back some of February’s losses, until Fed Chairman Powell’s comments during his semi-annual monetary policy testimony to Congress. He remarked the Fed may need to be more aggressive in its efforts to bring down stubbornly high inflation. Rate markets reacted quickly as additional interest rate hikes were priced-in and the terminal rate moved closer to 6%.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/blackrock-global-multi-asset-income-fund-aus-fund-update-en-au-21.pdfDecember, 2022
Key Contributions to Portfolio Outcome:
Key contributors to portfolio income this quarter were high yield, covered calls, and CLOs. High yield, covered calls, and global ex-US equities were the largest contributors to total return this quarter offset by currency and interest rate management positions and mortgages which detracted from returns.
Main Portfolio Changes:
Over the quarter, we added a position in short-dated treasuries. Investors can achieve compelling income today in many bond markets by taking only modest duration and credit risk and at an absolute level of yield of over 4% for 2-year treasuries (vs. less than 1% at the start of the year) looks compelling in our view, especially when factoring the uncertainty still plaguing markets.
Earlier in the quarter, we tactically added to equities to position for a potential short-term relief rally. We also reduced real estate investment trusts (REITs) after the bounce earlier in the quarter as well as shifted some high yield bond exposure into investment grade bonds.
In December, we modestly reduced risk. The rally seen earlier in the quarter left risk positioning exposed to potential downside, in our view, and we wanted to close the year with more conservative positioning. As such, we reduced exposure to U.S. equities and covered calls. Lastly, we tactically increased duration in December given we felt the back up in yields offered attractive diversification benefits.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/blackrock-global-multi-asset-income-fund-aus-fund-update-en-au-20.pdfNovember, 2022
Key Contributions to Portfolio Outcome:
Key contributors to portfolio income this month were high yield, covered calls, and CLOs. Global ex-US developed equities, high yield, and investment grade were the largest contributors to total return this month offset by currency management positions.
Main Portfolio Changes:
We tactically added equities at the start of the month to position for a potential short-term relief rally. We also reduced real estate investment trusts (REITs) after the recent bounce and shifted some high yield bond exposure into investment grade bonds.
Overall, we maintain a relatively cautious view as the recent rally may leave risk assets vulnerable to the downside.
Positioning & Outlook:
The recovery in global equity and fixed income markets continued in
November. Risk assets rallied amid further speculation that monetary tightening by global central banks is set to moderate, positive policy developments in China, and softer inflation data across key economies.
U.S. core bonds returned over 3% on the month for the best monthly return since 2008. Emerging market assets also saw a sharp reversal after a prolonged period of weakness.
Notably, numerous Fed members, including Chair Powell, indicated a step down in rate hikes in their upcoming meetings from the recent trend of 75bps hikes. However, inflation remains well above the Fed’s 2% target, and incoming employment and wage data are still too strong relative to their objectives. Somewhat surprisingly, financial conditions have moved back to the level seen before the
Fed started more aggressive rate hikes. So, while the Fed may soften their tightening grip, we believe recent data supports them getting to a terminal rate of near 5% and staying there for longer. Elsewhere,
Chinese authorities rolled out new measures to support the property market and incrementally relaxed zero-COVID policies which helped improve market sentiment.
October, 2022
Key Contributions to Portfolio Outcome:
Key contributors to portfolio income this month were high yield, covered calls, and CLOs. High yield, covered calls, and US equities were the largest contributors to total return this month offset by interest rate management positions, emerging market debt, and currency management positions.
Main Portfolio Changes:
We expect markets to remain volatile in the near-term and maintain a more cautious stance. That said, we recognize sentiment is very poor and investor risk appetite extremely depressed. Should inflation and jobs data weaken towards the Fed’s intended goals and the chances of a rate pivot increase, we could see the potential for a shorter-term relief rally.
Investors can achieve compelling income today in many bond markets by taking only modest duration and credit risk. With this in mind, we added a position in short-dated treasuries during the month. An absolute level of yield of over 4% for 2-year treasuries (vs. less than 1% at the start of the year) looks compelling in our view, especially when factoring the uncertainty still plaguing markets.
Positioning & Outlook:
Global equities staged an impressive rebound in October after a gruelling September. Speculation that central banks are nearing a policy pivot helped spark the turnaround. All in all, developed global stocks returned over 7% on the month while interest rates continued their upward trend. An exception to the rally in stocks was technology related names which saw extreme moves from weaker earnings. Asian and broader emerging markets assets also struggled as the conclusion of China Communist Party congress resulted in more concerns around the direction of future policy in the world’s second largest economy.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/blackrock-global-multi-asset-income-fund-aus-fund-update-en-au-18.pdfSeptember, 2022
Key Contributions to Portfolio Outcome:
Key contributors to portfolio income this quarter were covered calls, high yield, and CLOs. Currency management positions were the largest contributors to total return this quarter offset by global ex-US developed market equities, covered calls, and global infrastructure equites.
Main Portfolio Changes:
Over the quarter, we continued to take down portfolio risk. We increased the Fund’s duration to add more ballast in the portfolio. We believe current treasury yields offer more portfolio protection than what was available at the start of the year. We also further reduced exposure to equities.
August, 2022
Key Contributions to Portfolio Outcome:
Key contributors to portfolio income this month were covered calls, high yield, and CLOs. Currency management positions, CLOs, and emerging market equities were the largest contributors to total return this month offset by high yield bonds, global ex-US developed market equities, and covered calls.
Main Portfolio Changes:
We expect markets to remain volatile in the near-term and additional downside is possible given the uncertainty over growth and inflation. That said, we continue to believe many areas of fixed income offer investors attractive yields and longer-term opportunities, but we took advantage of the market rally to modestly reduce risk and capture profits in high yield bonds, after increasing exposure in July.
July, 2022
Key contributors to portfolio income this quarter were high yield, covered calls, and dividend equities. High yield, covered calls, and preferred stock were the largest detractors from total return this quarter, offset by currency management positions.
We reduced risk at various points over the quarter as soaring inflation, slowing growth, and tighter central bank policy weighed on investor sentiment leading to one of the most volatile quarters on record.
Within equities this quarter, we moved away from European and EM equities in favor of the U.S given the ongoing concerns surrounding Russia/Ukraine and slowing growth in China.
Within fixed income this quarter, we reduced exposure to Asian credit as the asset class remained under pressure from the slowdown in China. We also sought to modestly reduce our overall credit exposure given heightened economic uncertainty.
June, 2022
Key contributors to portfolio income this quarter were high yield, covered calls, and dividend equities. High yield, covered calls, and preferred stock were the largest detractors from total return this quarter, offset by currency management positions.
Main Portfolio Changes:
We reduced risk at various points over the quarter as soaring inflation, slowing growth, and tighter central bank policy weighed on investor sentiment leading to one of the most volatile quarters on record. Within equities this quarter, we moved away from European and EM equities in favor of the U.S given the ongoing concerns surrounding Russia/Ukraine and slowing growth in China. Within fixed income this quarter, we reduced exposure to Asian credit as the asset class remained under pressure from the slowdown in China.
We also sought to modestly reduce our overall credit exposure given heightened economic uncertainty. Additionally, recognizing today’s uncertain outlook includes both upside and downside scenarios, we added some optionality into the Fund to help protect on the downside (index puts) and potentially participate on the upside (index calls). We also have increased cash in the fund, seeking to take advantage of some of these dislocations as things develop. Lastly, we tactically added duration (interest rate sensitivity) at different points during the quarter to capitalize on the spike in interest rates.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/blackrock-global-multi-asset-income-fund-aus-fund-update-en-au-14.pdfMay, 2022
Key Contributions to Portfolio Outcome:
A market rally late in the month aided returns, but weakness amidst elevated volatility earlier in the month weighed on performance and the fund delivered a negative return in May.
Key contributors to portfolio income this month were high yield, covered calls, and dividend equities. Global infrastructure, high yield, and investment grade were the largest contributors to total return this month, offset by CLOs, global REITs, and covered calls.
Recognizing today’s uncertain outlook includes both upside and downside scenarios, we added some optionality into the Fund to help protect on the downside (index puts) and potentially participate on the upside (index calls). We also sought to modestly reduce our credit exposure given heightened economic uncertainty.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/blackrock-global-multi-asset-income-fund-aus-fund-update-en-au-13.pdfApril, 2022
Key contributors to portfolio income this month were high yield bonds, covered calls, and global ex-US equities. Asset class returns were broadly challenged for the month with high yield bonds, covered calls, and US equities as the largest detractors from total return, partially offset by positive contributions from cash and currency management positions.
We reduced risk in April as the market tone worsened after the March rally. Within equities, we took our overall equity weight down and remain more favorable on the U.S. over Europe and emerging markets. Within fixed income, we reduced our emerging market debt exposure. We also increased the fund’s duration during the month as we believe much of the rate move is behind us and longer interest rate exposure may add ballast should a growth slowdown materialize. Lastly, we have increased cash in the fund, seeking to take advantage of some of these dislocations as things develop.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/blackrock-global-multi-asset-income-fund-aus-fund-update-en-au-12.pdfMarch, 2022
Key contributors to portfolio income this quarter were high yield bonds, covered calls, and preferred stocks. Asset class returns were broadly challenged for the quarter with high yield bonds, emerging market debt and global equities as the largest detractors from total return, partially offset by duration and cash management positions, and global infrastructure equities
Russia’s invasion of Ukraine, accelerating inflation, and the start of another hiking cycle by the Federal Reserve contributed to a volatile quarter for markets. Most major asset classes ended the first quarter in negative territory aside from commodities. Bonds continued to struggle in March weighed down by higher inflation and the prospect of more aggressive tightening by central banks. Conversely, global stocks started the month on weaker footing but managed to stage an impressive rally off their lows as hope around a potential ceasefire in Ukraine helped buoy stock prices.
Looking ahead, we expect the environment to stay choppy given the number of uncertain macro risks at play. We see the Federal Reserve addressing the risk of higher inflation by raising rates more aggressively in the coming months which markets have started to price in. What’s not yet known is how much the Fed intends to tighten beyond the perceived “neutral” rate. Doing so could spell more trouble for economic growth and market returns. Ultimately, we expect the Fed to remain data dependent and measured in their approach to tightening policy, but it’s becoming clearer that they are likely to move faster than previously anticipated.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/blackrock-global-multi-asset-income-fund-aus-fund-update-en-au-11.pdfFebruary, 2022
Key contributors to portfolio income this month were high yield bonds, covered calls, and preferred stocks. Asset class returns were broadly challenged for the month with emerging market debt and equity and high yield bonds ending as the largest detractors from total return, partially offset by cash and duration management positions.
The Russia/Ukraine conflict has deteriorated quickly. A full-scale invasion by Russia, previously thought unlikely by most investors, has further amplified market volatility. We expect the conflict to keep volatility elevated in the short-run and anticipate a drawn-out standoff between Russia and the West.
Yet, we continue to hold a more constructive medium-term view on risk assets. History suggests geopolitical events, such as this one, typically do not have a lasting effect on financial markets, though we acknowledge the current situation presents a great deal of uncertainty and will have larger implications for certain markets and sectors. To the extent this does have a lasting impact, it will likely be through the growth, inflation, and policy channels and Europe will be more adversely impacted than the U.S. In particular, the impact of rising commodity prices on inflation, consumer sentiment, and company margins will be a critical factor to monitor.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/blackrock-global-multi-asset-income-fund-aus-fund-update-en-au-10.pdfJanuary, 2022
Key contributors to portfolio income this month were high yield bonds, covered calls, emerging market debt. Duration and currency management positions and collateralized loan obligations (CLOs) were the largest contributors to total return this month, offset by exposure to high yield bonds, covered calls, and global ex-U.S. developed equities.
Market expectations have adjusted sharply in recent weeks to reflect upcoming rate hikes, making us more comfortable holding a little more duration which we increased during the month. We also added to U.S. equities to capitalize on the selloff as we expect the outlook to remain broadly favorable for risk assets.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/blackrock-global-multi-asset-income-fund-aus-fund-update-en-au-9.pdfDecember, 2021
Evidence of less severe symptoms and lower rates of hospitalizations and deaths caused by the new Omicron strain led to a strong risk-on rally into year-end. This helped push global equities to new all-time highs and capped off a stellar year for developed stocks. Emerging market stocks and bonds also rebounded during the month but – consistent with the rest of 2021 – lagged developed markets. A more hawkish tone from global central banks, notably the Fed, pushed interest rates up towards the end of the month. This weighed on U.S. core bond returns, which experienced the first negative calendar year return since 2013. Looking ahead to 2022, our base case calls for attractive yet moderating growth. A pause in reopening activity driven by the Omicron surge may weigh on first quarter GDP but could help extend the recovery later into the year. Regardless, growth is likely to grind lower by year-end as economic activity normalizes back towards pre-pandemic levels. Furthermore, we expect inflation to stay elevated before eventually moderating as supply/demand imbalances abate and the more volatile inflationary drivers weaken as the recovery matures. Against this backdrop, we think the environment remains broadly favorable for stocks and lower quality fixed income while remaining more challenging for higher quality bonds, similar to what we saw in 2021.
However, we do anticipate a year of heightened volatility alongside more muted returns. In addition to virus uncertainty and elevated valuations, one of the biggest themes for 2022 will likely be how different assets react to central banks paring back monetary policy support. Already in the early parts of the new year, we have seen a spike in volatility as investors adjust to less accommodative policies.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/blackrock-global-multi-asset-income-fund-aus-fund-update-en-au-8.pdfNovember, 2021
Across all major asset class, we continue to believe that equities offer investors the best risk-reward opportunities. We believe stocks are likely to churn in the very near-term given uncertainty over the Omicron variant and a faster removal of accommodative monetary policy. That said we think a combination of still strong, abovetrend growth, low rates, and significant liquidity suggest stocks ending the year moderately higher. That said, supply bottlenecks will likely persist in select parts of the economy. This suggests not only a longer period of elevated inflation but a challenge for many business models and thus something the team is continuing to closely monitor.
Within fixed income, we believe that above average U.S. economic growth is likely to cause U.S. real interest rates to continue to follow a modestly upward trajectory. Any backup in longterm rates is likely to be contained given the insatiable appetite for yield. As a result, we remain significantly underweight duration via exposure to developed market government bonds. Our preference is to keep positioning in less duration sensitive assets, such as high yield, securitized assets, and emerging market debt. In-line with the fund’s risk aware mandate, we look to balance exposure to risk assets with portfolio hedges, expressed through an increasing reliance on cash, an overweight to the U.S. Dollar and derivatives given diminished efficacy of traditional hedges such as duration and gold in the current environment. Staples and REITs as a continued rise in interest rates could cause these slower growing, less economically sensitive sectors to lag the broader market.
Over the month, we pared back exposure to software platform companies by selling covered calls against a portion of the existing positioning. Overwrites were focused on individual stocks where the team believed we could harvest an attractive premium. This allowed us to capture some additional premium amidst higher volatity as well as manage exposure in the near term to areas that have historically been more interest rate sensitive.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/blackrock-global-allocation-fund-aust-fund-update-en-au.pdfOctober, 2021
Key contributors to portfolio income this month were covered calls, high yield bonds, and preferred stock. Covered calls, global ex-U.S. developed market equities, and U.S. equity positions (including hedges) were the largest contributors to total return this month, offset by exposure to emerging market debt, high yield bonds, and currency management positions.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/blackrock-global-multi-asset-income-fund-aus-fund-update-en-au-7.pdfSeptember, 2021
Key contributors to portfolio income this quarter included covered calls, high yield bonds, and emerging market debt. Covered calls, high yield bonds, and mortgages were the largest contributors to total return this quarter, offset by exposure to emerging market debt and equity, and global ex-US developed market equities#
Global equities sold off in September, ending an impressive streak of positive returns. The initial catalyst was an escalating liquidity crisis at one of the largest property developers in China and the largest issuer of Asian high yield debt. Fears of contagion triggered a global selloff, but markets eventually stabilized in anticipation of Chinese authorities stepping in to prevent it from becoming a systemic issue. Unsurprisingly, Asian credit and equity markets felt the brunt of the selloff while developed markets fared better. This development comes on the heels of tightening regulatory policy and slowing growth in China, further clouding the outlook for the world’s second largest economy and leading us to maintain our more cautious view on emerging markets
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/blackrock-global-multi-asset-income-fund-aus-fund-update-en-au-6.pdfAugust, 2021
Key contributors to portfolio income this month included covered calls, high yield bonds, and emerging market debt. Covered calls, emerging market equity, and high yield bonds were the largest contributors to total return this month, offset by exposure to investment grade bonds. We broadly maintained our positioning during the month but chose to modestly reduce exposure to U.S. equities given strong market returns and our expectation for higher volatility ahead. Additionally, we increased an allocation to collateralized loan obligations (CLOs) as we expect yields to move up in the coming months.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/blackrock-global-multi-asset-income-fund-aus-fund-update-en-au-5.pdfJuly, 2021
Key contributors to portfolio income this month were covered calls, high yield bonds, and EM Debt. Covered calls, U.S. equity positions, and global ex-U.S. developed market equities were the largest contributors to returns this month, offset by allocations to emerging market equity and debt, and duration management positions.
Markets started the second half of 2021 on mixed footing. U.S. and European equities posted relatively strong results in July as robust earnings and reopening momentum pushed stocks up. Likewise, U.S. high yield posted its tenth consecutive month of positive returns. In contrast, emerging market assets saw much weaker returns as growing concerns over the Delta variant and a regulatory crackdown in China weighed on investor sentiment.
Treasury yields continued to confound investors by falling once again despite higher inflationary pressures. We would attribute the drop in yields to a confluence of factors including excessive liquidity in the system, fears over peak growth levels, and ongoing virus uncertainty. Our base case still calls for longer-term yields to move up in the second half of the year
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/blackrock-global-multi-asset-income-fund-aus-fund-update-en-au-4.pdfJune, 2021
Key Contributions to Portfolio Outcome: Key contributors to portfolio income this quarter were high yield bonds, covered calls, and global ex-U.S. equities. High yield bonds, covered calls, and global ex-U.S. equities were the largest contributors to returns this quarter, offset by allocations to duration management positions.
Main Portfolio Changes: We have maintained the Fund’s pro-risk positioning in recent months given a constructive outlook for markets, preferring stocks and credit over higher quality fixed income and cash. We modestly increased exposure to high yield during the month by spending down cash.
Positioning & Outlook: Equity markets rallied to fresh highs capping off a strong run for risk assets in the first half of 2021. Notably the Fed took its first step in moving away from crisis-level policy support at its June meeting. While continuing to emphasize more progress is needed, the Fed acknowledged higher inflation and firming growth could allow them to achieve their objectives earlier than previously anticipated. Thus, the door is open for the Fed to begin tapering later this year and rate hikes in 2023. Importantly, we do not view this move as tightening policy but rather as a positive and gradual start to removing extreme accommodations.
Somewhat surprisingly, interest rates trended lower in the weeks following the meeting. The 10-year treasury ended the month 0.4% below its March peak. Several factors are contributing to this including an insatiable global demand for income and a massive amount of liquidity sloshing around the system. Nevertheless, our expectations are for interest rates to move up in the coming months as the recovery persists. Consequently, we are maintaining a historic low in duration.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/blackrock-global-multi-asset-income-fund-aus-fund-update-en-au-3.pdfMay, 2021
On the surface, May was a relatively benign month for markets but a closer look under the hood reveals a much choppier environment. The release of April’s elevated U.S. inflation print prompted fears of overheating and Fed tightening. Minutes from the most recent Fed meeting also suggested several FOMC members are now talking about tapering. Surprisingly, longer-term treasury yields were mostly unchanged. This may suggest bond markets have priced in, at least partially, higher expected inflation. Elsewhere, cyclical stocks again outperformed growth stocks while high yield bonds posted the eighth consecutive month of positive performance, underscoring our view on the space as a relatively consistent income and return driver in the current backdrop.
The strength of the reopening momentum in the U.S. coupled with supply chain bottlenecks means higher inflation may be with us for some time. Similar to April’s report, the May inflation print released June 10th showed that more volatile components of inflation – like airfares and used cars – again drove the bulk of the increase. However, we also saw a second consecutive jump in more stable ‘core goods’ and a small bump in owner’s equivalent rent, a measure of the rent homeowners would charge for their homes. Rents will likely take some time to filter through the reopening process, so we’ll be watching this measure over the coming quarters to see how housing costs may impact inflation.
We are also seeing signs of higher wage inflation, in part from an inability of companies to fill open jobs. We will be monitoring how this trend develops as more states pull back from additional stimulus benefits
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/blackrock-global-multi-asset-income-fund-aus-fund-update-en-au-2.pdfApril, 2021
Key contributors to portfolio income this month were covered calls, high yield bonds, and global ex-US developed equities. Covered calls, global ex-US developed equities, and global REITs were the largest contributors to total return this month, offset by negative returns in currency and duration management positions.
We spent down some of our cash positioning in favour of high yield bonds, which we continue to view as an attractive source of income in a low-yielding world.We continue to believe cyclical exposures can benefit from an improving recovery and we remain focused on these areas within covered calls. An acceleration in vaccine-led reopening activity and firming inflation support the case for higher yields. Thus, we further reduced portfolio duration during the month, taking it down to a historic low
April was a strong month for markets with virtually all asset classes posting a positive return. A decline in U.S. Treasury yields and strong corporate earnings provided support to most markets and helped technology retake its leadership across equities. During the month, the Federal Reserve confirmed their incredibly accommodative policies are at no risk of reversing in the near-term.
The weaker headline jobs number in the U.S. also likely reduces the odds the Fed tapers its asset purchases in 2021, even though there remains underlying strength in jobs data. President Joe Biden also revealed his $4 trillion spending plan on infrastructure and social services with a portion of this expected to be paid for by higher taxes. Despite a relatively risk-on tone, April served as a stark reminder that much of the emerging world is still fighting the virus. Notably, a surge in new cases and fatalities in India, evidence of a new variant, and slower vaccine rollouts remain risks to an otherwise supportive economic backdrop.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/blackrock-global-multi-asset-income-fund-aus-fund-update-en-au.pdfJanuary, 2021
Key Contributions to Portfolio Outcome: Key contributors to portfolio income this month were covered calls, high yield bonds, and EM debt. Emerging market equities, currency management positions, and mortgages were the largest contributors to total return this month, offset by negative price returns in global ex-US developed equities, global infrastructure equities, and covered calls which detracted from performance.
Main Portfolio Changes:
We are selectively taking profits in areas with lower yields and less upside potential. We continue to see opportunities in dividend stocks, covered calls and areas of higher yielding credit fixed income and are putting cash to work. That said, the fund’s positioning did not change meaningfully over the month and we maintain our moderately pro-risk stance.
Positioning:
Markets were exciting in January, as the public battle over a small set of stocks that have been popular targets of short sellers helped fuel a rise in volatility and saw the S&P 500 experience its worst decline in three months. While this makes for good headlines, we think it’s a relatively isolated incident and there are more fundamental issues shaping our views. Earnings season supports the recovery narrative, with over 80% of companies reporting beating expectations. Meanwhile, the Federal Reserve used its January meeting to assure investors of their longterm plan for easy monetary policy and low rates, despite rising speculation that their bond purchase program may begin to taper and rates move off the zero bound earlier than expected. Finally, President Biden appears determined to push through a large fiscal package regardless of lackluster support from moderate Republicans. All this is to say, our base case of lower rates for longer and a continued economic recovery aided by easy monetary and fiscal policy remains in place. The pick-up in volatility highlights the need to be measured in adding risk to portfolios, but we still feel the risk/reward of owning stocks and riskier parts of the fixed income markets is justified, albeit less so than last year given the rebound in prices. While stock valuations certainly aren’t cheap when viewed in a silo, opportunity remains for longer-term investors when comparing equities to lower yielding, conservative bonds. This “risk premium” will likely shape our positioning until a time when high quality bond yields become more attractive and/or our conviction in the recovery wanes. For now, with recent virus data improving, vaccine optimism still justified, and conviction in policy makers, we are comfortable maintaining a moderately pro-risk stance.
asset_class: Multi-Asset
asset_category: Multi-Asset Income
peer_benchmark: Multi-Asset - Multi-Asset Income Index
broad_market_index: Multi-Asset Growth Investor Index
manager_contact_details: Array
ticker: BLK0009AU
release_schedule: Monthly
commentary_block: Array
factsheet_url:
https://www.blackrock.com/au/individual/products/276489/blackrock-global-multi-asset-income-fund
…… fund update
fund_features:
The aim of the BlackRock Global Multi Asset Income Fund is to provide an above average income without sacrificing the benefits of longterm capital growth by following a flexible asset allocation policy. Investment may be made in a global portfolio of equities and fixed income securities, as well as permitted money market instruments, permitted deposits, cash and near cash and units in collective investment schemes. In order to achieve the investment objective and policy the Fund will invest in a variety of investment strategies and instruments.
structure: Managed Fund