BlackRock High Yield Bond Fund
Focusing on Quality within High Yield Bonds
The research-intensive, credit-focused investment process of thehas helped provide investors high levels of income and capital appreciation.
The BlackRock High Yield Bond Fund is a portfolio of non-investment grade corporate bonds, focused on companies that can help clients generate a steady, competitive income stream over the long run. The strategy leverages BlackRock's industry-leading credit research capabilities to employ a classic bottom-up, company-by-company investment approach.
High Yield Has Produced 90% of the Return of Equities with Roughly Half the Risk
Return and Volatility of High Yield and Stocks
Sources: Strategic Insight, as of December 31, 2012. Data from June 1983 through December 2012. Past performance is historical and does not guarantee future results. High Yield is represented by the Barclays Capital US High Yield Credit Index; Stocks are represented by the S&P 500 Index.
Relative to traditional fixed income sectors, high yield bonds offer substantially higher income. While these bonds generally have lower credit ratings, they are also less sensitive to changes in interest rates. This means their price is less likely to decline when interest rates and inflation rise, two environments in which traditional fixed income sectors suffer. This makes them a valuable hedge and an important diversifier for your fixed income portfolio.
Best of Both Worlds
High yield securities combine the best characteristics of stocks and bonds. In fact, high yield bonds have historically generated long-term total returns similar to equities with almost half the volatility. When compared to traditional fixed income sectors, high yield bonds have provided greater returns, albeit with additional volatility. This distinct risk/return dynamic makes for a compelling, strategic long-term allocation.
Exhaustive Research, Solid Results
With one of the largest and deepest teams in the industry, we perform our own credit research, rather than relying on third-party rating agencies. Our more than 40 investment professionals adjust each portfolio over economic and market cycles, ensuring it is consistently diversified across issuer and industry. This exhaustive, bottom-up research has been the key to providing consistent, long-term results with fewer surprises.
Portfolio Management Team
BlackRock's leveraged finance group manages over $25bn in floating rate bank loans and high yield securities. The team has over 35 investment professionals, which is among the market's largest. Among the market's most experienced managers of bank loan funds with a track record dating back to 1988. The fund is managed by:
- James Keenan, Portfolio Manager and Head of the BlackRock Leveraged Finance Group, over 15 years investment experience
- Leland Hart, Lead Portfolio Manager and Head of BlackRock's Bank Loan Team; over 18 years industry experience
- Adrian Marshall, Portfolio Manager, over 10 years investment experience
Investor A: BHYAX
Investor C: BHYCX
Class R: BHYRX
Overall Morningstar Rating™
Investor A shares rated against 518 High Yield Bond Funds, as of 3/31/13, based on risk-adjusted total return.‡
IMPORTANT RISKS OF THE FUND
Past performance is no guarantee of future results. The fund is actively managed and its characteristics will vary. Any holdings shown are for information only and should not be deemed as a recommendation to buy or sell the securities mentioned. 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 ("highyield" 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.
‡ Ratings are determined monthly and subject to change. The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its 3-, 5- and 10-year (if applicable) Morningstar Rating metrics. For each fund with at least a 3-year history, Morningstar calculates a Morningstar Rating™ based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) BlackRock High Yield Bond Fund was rated against the following numbers of US-domiciled High Yield Bond funds over the following time periods: 518 in the last 3 years, 462 in the last 5 years and 324 in the last 10 years. With respect to these High Yield Bond funds, BlackRock High Yield Bond Fund received a Morningstar Rating of 3, 3 and 4 stars for the 3-, 5- and 10- year periods, respectively. Morningstar Rating is for the Investor A share class only; other classes may have different performance characteristics. ©2013 Morningstar, Inc. All rights reserved.
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 should be read carefully before investing.
Prepared by BlackRock Investments, LLC, member FINRA.