BlackRock Global Long/Short Credit Fund
Seeks to Minimize Interest Rate Risk While Expanding the Opportunity Set
Decades of declining interest rates have primarily driven performance within traditional fixed income portfolios. However, typical investors are substantially overweight interest rate risk.
Theseeks to mitigate interest rate risk, offering traditional fixed income investors diversification against interest rate moves.
To learn more about the features of the fund, please view the Investor Guide.
Fixed Income Investing in a Low Rate Environment
- Historically Low Interest Rates: Traditional fixed income portfolios overweight interest rate sensitive bonds benefitted as rates fell.
- Exposed to Interest Rate Changes: The flight to safety and obsession with income has left many portfolios vulnerable to the risk of rising rates.
- The Need for Diversification: We believe it's critical to find fixed income investments that improve overall portfolio diversification and can generate returns, regardless of whether rates rise, fall or stay range-bound.
Source: Bloomberg, as of December 31, 2011. Rate is a simple average of US, UK, and German 10-Year governmentbond rates.
The BlackRock Global Long/Short Credit Fund
Alternative to Traditional Fixed Income
The Fund offers a simple way to enhance diversification within fixed income. By focusing solely within credit sectors and applying a global long/short strategy, the Fund complements portfolios overweight interest rate sensitive securities. A wider opportunity set and the ability to short securities (although shorting can result in significant losses) offers an alternative to traditional fixed income and a distinct opportunity to improve diversification.
Minimizing Interest Rate Risk
With interest rates at historic lows, the values of traditional fixed income portfolios are increasingly vulnerable to losses should rates increase in the future. By seeking to eliminate any sensitivity to movements in interest rates (as measured by duration), the BlackRock Global Long/Short Credit Fund may offer a simple solution to help protect fixed income portfolios from the risk of rising rates.
Credit-Driven Returns, Independent of Rates
The BlackRock Global Long/Short Credit Fund seeks to generate a differentiated pattern and source of returns when compared to traditional fixed income. By focusing exclusively on credit opportunities and zeroing out interest rate sensitivity, returns aren't dependent on rising or falling rates. Over the past year, the Fund provided steady returns with less than half the volatility of the Barclays US Aggregate Bond Index.
Investor A: BGCAX
Investor C: BGCCX
Institutional Share Class: BGCIX
IMPORTANT RISKS OF THE FUND
Past performance is no guarantee of future results. The fund is actively managed and its characteristics will vary. Bond values fluctuate in price so the value of your investment can go down depending on market conditions. Two main risks related to fixed income investing are interest-rate and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility the bond issuer will not be able to make principal and interest payments. The principal on mortgage- or asset-backed securities normally may be prepaid at any time, which will reduce the yield and market value of those securities. US obligations are supported by varying degrees of credit but generally are not backed by the full faith and credit of the US government. Investments in non-investment-grade debt securities ("high- yield" or "junk" bonds) may be subject to greater market fluctuations and risk of default or loss of income and principal than securities in higher rating categories. Investing in derivatives entails specific risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility. Compared to a traditional long-only portfolio, the potential for volatility (compared to the market and the fund's benchmark) is anticipated to be greater given the fund's additional long exposure along with the short exposure. The fund may actively engage in short-selling, which entails special risks. If the fund makes short sales in securities that increase in value, the fund will lose value. Any loss on short positions may or may not be offset by investing short-sale proceeds in other investments. The fund may engage in active and frequent trading of it's portfolio securities which may result in short term capital gains or losses that could increase an investor's tax liability.
You should consider the investment objectives, risks, charges and expenses of the fund carefully before investing. The Fund's prospectus contains this and other information about the Fund. The prospectus, and, if available, summary prospectus, should be read carefully before investing.
Prepared by BlackRock Investments, LLC, member FINRA.