As explained in our recent communication regarding the ongoing format of monthly newsletters, this month there is a focus on one of the funds we recommend.
The chart representing Market growth will be produced quarterly with the Market summary rather than monthly.
BlackRock Corporate Bond
This month we are going to look into the BlackRock Corporate Bond fund which is used within our Harmonic 3 to 8 portfolios and represents between 4% and 8% of the portfolio exposure.
Firstly a brief explanation of what a Corporate Bond is;
A corporate bond is a loan issued by a company – rather than a Government loan, which is a Gilt – in order to raise financing for a variety of reasons such as to ongoing operations, Mergers & Acquisitions or to expand business.
Corporate bonds are divided into two main categories High Grade (also called Investment Grade) and High Yield (also called Non-Investment Grade, Speculative Grade, or Junk Bonds) according to their credit rating. Bonds rated AAA, AA, A, and BBB are High Grade, while bonds rated BB and below are High Yield.
Corporate bonds are deemed one of the less risky asset classes and are fundamental in any investment portfolio to help with diversification and to minimise risk.
BlackRock was established in 1988 and is one of the largest investment companies in the UK with over 3,300 employees, $8.67 trillion in assets and operates in over 30 countries. In 2009 BlackRock acquired iShares from Barclays and you will notice that within our portfolios we also have iShare funds.
The Corporate Bond fund was launched in June 2011 and currently holds around £1,281,300,000 of investors’ money.
85.58% of the fund is invested in BBB graded funds and above which indicates that the main focus on this fund is high grade/investment grade bonds.
72.94% of the bonds invested are in the Industrial, financial and utility companies’ sectors with familiar names such as Tesco Properties, Wells Fargo, Time Warner, Bupa Finance & Electricite de France.
Geographically, the UK holds the largest exposure followed by the US and Germany.
The annualised performance of the fund over the last 5 years is 5.14% and 3 year at 4.66%
Overall this fund is a well performing fund which is constantly producing returns close to and sometimes exceeding the Corporate bond Sector benchmark.
It offers diversification within our total exposure to Fixed Interest investments.
The information provided in this report is based on our own opinion and offers no guarantee that our expectations will be met. Past performance is no guide to future results. As always, should you have any concerns you wish to raise, please do contact us.
Due to the current Covid rules our office is now open, so please do contact us on 01803 873978.
Keep safe
