BlackRock has launched the BGF Sustainable Global Allocation UCITS fund following demand from European based investors for an ESG version of the existing $15 billion BGF Global Allocation Fund. The Global Allocation Fund is one of the leading multi-asset portfolios in the EMEA market with a 25-year track record of delivering attractive risk-adjusted returns for clients.
The new Fund, designed to be a core sustainable holding in a client’s portfolio, incorporates a robust ESG framework throughout its investment process to meet key sustainable standards in Europe. The Fund will be managed in a manner consistent with the investment philosophy of the BGF Global Allocation Fund, offering a diversified, flexible, unconstrained multi-asset portfolio, seeking to maximize total return in a manner consistent with the principles of environmental, social and governance (“ESG”) focused investing.
The Fund meets Article 8 under SFDR and will seek to be compliant with the requirements set out by the AMF Category 1 label in France, Febelfin in Belgium, and BVI Target Market Concept in Germany.
The Fund’s sustainability objectives are achieved through the use of BlackRock’s proprietary externalities framework which evaluates and ranks underlying investments based on their positive and negative externalities. The Fund will invest at least 50% of its total assets in securities classified as having positive externalities (PEXT) and exclude securities with negative externalities (NEXT). The dynamic approach helps to incorporate impact from both financial and societal risks related to ESG practices. As a result, the portfolio is tilted both to issuers that have best in class management of E, S and G risk factors and those who have a positive impact on the environment and society as a whole. At least 90% of holdings within the Fund are ESG rated.
We have launched the Sustainable Global Allocation Fund in response to client feedback for an unconstrained multi-asset strategy that can help investors navigate extended periods of heightened volatility whilst also expressing their sustainability preferences. We have taken the principles from managing the existing Global Allocation Fund and leveraged BlackRock’s proprietary ESG framework to create a unique offering that will serve as a critical source of return for investors in the coming years. The new Fund satisfies client demand for a long-term sustainable investment approach from which, importantly, they can expect a similar risk and return profile to our legacy Global Allocation product.
Rick Rieder, BlackRock’s Chief Investment Officer of Global Fixed Income and Head of the BlackRock Global Allocation Investment Team
The Fund aims to achieve a lower carbon emissions intensity score for corporate issuers owned within the portfolio, compared to that of corporate issuers of the benchmark (60% MSCI All Country World Index / 40% Bloomberg Barclays Global Aggregate Index). The investment universe is further reduced through the exclusion by security count of the bottom 20% of each component of the benchmark based on MSCI scores and through the use of BlackRock’s EMEA baseline screens to limit exposure to investments in companies associated with fossil fuels, tobacco, controversial weapons, nuclear weapons, civilian weapons and violators of controversial business practises.
The portfolio management team use the principles of established Global Allocation and a best-in-class ESG framework to create a portfolio of high conviction fundamental equity holdings to drive alpha, supplemented by fixed income to provide diversification and yield as well as derivative strategies to manage risk. The investment team will partner with BlackRock’s Fixed Income and Global Allocation ESG Investment Team to drive the coordination of ESG integration, climate risk evaluation and sustainable investing efforts. The Fund’s focus on growth within a risk-controlled approach has been designed to help clients stay invested across markets, achieve their financial goals as well as meeting their sustainability objectives.
The Fund will be managed by the 30+ person Global Allocation Investment Team led by Rick Rieder, with experience managing unconstrained mandates and access to ESG experts across the firm to guide the investment framework. This expertise uniquely positions the Fund to capitalize on the numerous ESG opportunities in the market today.
The Fund’s base currency will be denominated in USD, with hedged and dealing share classes as required.
