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BlackRock Consensus 85 - October 2020 fund update

Investments can go down as well as up so there is always a danger that you could get back less than you invest. Nothing here is personalised advice, if unsure you should seek advice.
  • BlackRock has been managing index portfolios since 1971
  • This fund provides a low-cost option for accessing multiple international markets in one investment
  • A fund with a diversified mix of investments including shares, bonds, property, commodities and cash
  • This fund is not on our Wealth Shortlist of funds chosen by our analysts for their long-term performance potential

How it fits into a portfolio

The BlackRock Consensus 85 fund offers a low-cost solution for tracking the average pension fund. The fund is referred to as ‘multi-asset’ meaning it’s a combination of shares, bonds, property, commodities and cash. This allows investors access to a variety of international markets with one investment. A mixture of assets spreads investment risk across multiple sectors, resulting in smaller up and down swings in performance over the longer term. We think this fund could help provide a starting point for a diversified investment portfolio.

Manager

Steve Walker, who’s responsible for Europe, Middle East and Africa (EMEA) Index Asset Allocation, runs the wider team at BlackRock that manage the Consensus 85 fund. Walker has been with BlackRock since 2009 and previously worked as a portfolio manager for Barclays Global Investors before the two firms merged together. BlackRock’s global approach allows them to work closely with their teams across the world, helping drive more efficient management of their funds. We have positive conviction in the ability of BlackRock to provide simple and effective tracking options for investors.

Process

The investment team use an asset allocation strategy based on the Lipper ABI Mixed Investment 40-85% Shares Pension Sector. This means that each month Lipper, an investment data provider, takes a survey on what investments are held in the average pension fund across the UK. The results of that survey provide a starting point for BlackRock to choose which passive investments are best suited to track the corresponding markets.

The number 85 refers to the maximum percentage of the fund that can be invested in shares. However, in practise the fund will typically hold slightly less than this amount and increase its holdings in other securities. A proportion of this fund is also invested into emerging markets, smaller companies and high yield bonds, which are higher-risk. The tracking error targets for the fund are monitored on a daily and monthly basis by BlackRock’s risk team to ensure the portfolio managers are on track.

BlackRock uses stock lending within their portfolios to try and add value for their clients. Stock lending is when funds make short-term loans of its assets (e.g. stocks or bonds) to other providers to incrementally increase returns for investors. However this can also increase risk.

Since BlackRock’s lending program started in 1981, only three borrowers with active loans have defaulted. In each case, BlackRock was able to repurchase every security out on loan with collateral on hand and without any losses to their clients.

The stock lending results in the fund receiving 62.5% of the associated revenue generated. The remaining 37.5% is received by BlackRock as the securities lending agent.

Culture

BlackRock is the largest asset manager in the world, running $7.32 trillion globally as of June 2020. The company was founded in 1988 by eight partners including current CEO Larry Fink. It is known for both active and passive strategies across the world.

Employees at BlackRock are encouraged to hold shares in the company so that they are engaged with helping the company perform well and grow. The company is committed to broadening employee share ownership and offers an employee stock purchase plan to help achieve this goal. For passive funds, the managers are incentivised to track the index as closely as possible. We think this helps align the company’s interests with its long-term investors.

Over recent years BlackRock has increased its drive towards stewardship and promoting ESG based products. This involves direct dialogue with companies on governance issues that have a material impact on sustainable, long-term financial performance.

It performs independent research and analysis, and contributes to voting decisions, including the re-election of directors that they believe are in the best long-term economic interest of their clients.

The team running the fund also work closely with various equity and risk departments across the business. We believe this adds good support and challenge on how to run the fund effectively.

Cost

The fund has an ongoing annual fund charge of 0.23%, but a discount of 0.13% is available for HL investors, which reduces the charge to 0.10%. The HL platform charge of up to 0.45% per annum also applies.

The fund discount is achieved through a loyalty bonus, which could be subject to tax if held outside of an ISA or SIPP.

Performance

The fund has performed well versus the IA Mixed Investment 40-85% Shares sector since its launch in August 2005. Over this time it’s grown 143.9% versus 131.3%* for the sector. This is credit to the selection of passive options used by the BlackRock team.

A glance at the five-year performance table below shows in some years the fund has tracked the sector closer than others. On occasion it has ended up slightly ahead due to the strategies used by the team, although this won't necessarily happen in future and isn’t an aim of the fund. Remember, past performance isn’t a guide to future returns.

Annual percentage growth
Sep 15 -
Sep 16
Sep 16 -
Sep 17
Sep 17 -
Sep 18
Sep 18 -
Sep 19
Sep 19 -
Sep 20
BlackRock Consensus 85 21.3% 10.2% 6.0% 6.0% -1.6%
IA Mixed Investment 40-85% Shares 15.7% 9.4% 5.3% 4.1% -0.4%

Past performance isn't a guide to the future. Source: *Lipper IM to 30/09/2020.

Find out more about BlackRock Consensus 85 including charges

BlackRock Consensus 85 Key Investor Information


Important information - Please remember the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. This article is provided to help you make your own investment decisions, it is not advice. If you are unsure of the suitability of an investment for your circumstances please seek advice. No news or research item is a personal recommendation to deal.


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