The FSA Spy market buzz – 6 September 2024
Machine learning Chinese investment, BlackRock’s AI patience, Time Magazine’s AI cover, happier staff equal better returns, do wealth managers add value? sexy legs and much more.
The Blackrock and Fidelity funds were launched in 2012 and 2013 respectively and are about to hit the 10-year mark.
They both use a range of growth assets, income or yield assets, as well as some lower-risk assets to balance the portfolio, and often gain exposure to favoured asset classes through inhouse funds.
“Strategic allocation is not nailed down, but rather the funds are driven by a requirement to create income,” said Mottola.
The Blackrock fund invests globally in the full spectrum of permitted investments including equities, equity-related securities, fixed income transferable securities (including high yield securities), collective investments, cash, deposits and money market instruments, according to the fund factsheet.
Currently, the fund invests a whopping 40% of its assets in the money markets, followed by 28.5% in equities and about 20% in fixed income.
The remaining AUM is diversified into allocation, alternative, properties and commodities.
Blackrock’s return pattern is typically more like the market’s, noted Mottola.
While Blackrock doesn’t have a specific income target, Fidelity typically looks to generate a 5% yield, depending on market conditions, the researcher added.
Almost half of the Fidelity fund’s assets are invested in fixed income, followed by 24% in equities, and 15% in cash.
“Fidelity has more of a value bias in the team’s portfolios, and on the fixed income side they are heavily focusing on Asian bonds,” said Mottola.
Unlike the Blackrock fund which has a substantial amount of assets in the money market, the Fidelity fund is restricted to holding up to 25% of its AUM in cash or money markets in adverse market conditions.
“While many aspects of the strategies are similar, alternative assets play a bit bigger part in the Fidelity fund which invests in assets like infrastructure of many flavors (equities and bonds) and structured credit, to name a few,” said Mottola.
Both funds integrate non-financial, sustainability considerations into their investment process, with the Fidelity fund pledged to invest at least 50% of its net assets in securities that maintain sustainable characteristics.
Meanwhile, the Blackrock fund obtained an ‘A’ rating from the MSCI ESG Fund Rating, with a quality score of 6.28 out of 10.
Fund characteristics
Sector allocation:
Blackrock | Fidelity | ||
Money market | 40.8% | Fixed income | 48.3% |
Equity | 28.5% | Equity | 24.1% |
Fixed income | 19.9% | Cash | 15.0% |
Allocation | 7.4% | Other | 7.4% |
Alternative | 2.2% | Convertible | 5.26% |
Miscellaneous | 0.5% | ||
Property | 0.4% | ||
Commodities | 0.2% |
Top 5 holdings:
Blackrock | weighting | Fidelity | weighting |
iShares $ High Yield Corp Bond UCITS ETF | 2.20% | Fidelity Funds Global Multi Asset Income | 14.0% |
iShares J.P. Morgan USD Emerging Markets Bond ETF | 0.94% | Fidelity Funds Global Dividend | 12.9% |
BGF US Dollar High Yield Bond Fund | 0.61% | Fidelity Funds Solutions Asian High Yield Pool | 9.1% |
Taiwan Semiconductor Manufacturing | 0.49% | Fidelity Funds Global Hybrids | 8.5% |
Microsoft | 0.40% | Fidelity Funds Emerging Market Local Currency Debt | 5.6% |
Machine learning Chinese investment, BlackRock’s AI patience, Time Magazine’s AI cover, happier staff equal better returns, do wealth managers add value? sexy legs and much more.
Part of the Mark Allen Group.