BlackRock has launched a new absolute-return fund for its quantitative equity team.
The BlackRock Global Long/Short Equity fund will seek to achieve a positive absolute return regardless of market movements through long and short exposure to developed-market equities, including through synthetic positions.
It targets equity-like returns of 5-7% a year above three-month US Treasuries, after fees, with a volatility target of 7%.
The fund will be co-managed by Kevin Franklin, lead portfolio manager for global strategies within the scientific equities team at BlackRock, and Gearoid Neligan. Their wider team of 80 researchers, quantitative analysts and portfolio managers controls more than £50 billion of assets globally.
The team runs a similar product in the US, which launched in December 2012. Since then it has returned 15.9% compared with 27.3% from the MSCI World index, but with less than half of the volatility and a Sharpe ratio of 2.3.
Its positions include being long Japanese equities after the recent sell-off and going short in European exporters due to the strength of the euro.
The launch is BlackRock’s second in the absolute-return sector over the past month, following that of a multi-asset fund which will allocate across five underlying alpha-seeking strategies spanning equities, fixed income and global macro categories.
'There is an increase in demand from retail clients for absolute-return funds which have the opportunity to deliver consistent returns without exposing investors to the vagaries of the stock market,' said Alex Hoctor-Duncan, head of retail for Emea at BlackRock.
'We believe that over time the BlackRock Global Long/Short Equity fund could be a cornerstone of many portfolios.'
The fund's annual management fee will be 1.8% on its A share class.