Fixed maturity portfolios have become an increasingly popular means for investors to access fixed income markets, providing access to a diversified portfolio of bonds while maintaining the typical characteristics of an individual bond. Like investing in individual bond securities, these portfolios have a defined maturity date and aim to generate income throughout their investment lifecycle. At the same time, they share similar characteristics to traditional mutual funds, as they are highly diversified and with low transaction costs. Fixed maturity portfolios have a limited offering window, meaning they are only open for subscriptions during the asset gathering period.

The BSF USD High Yield Fixed Maturity Bond Fund is a fixed term high yield bond strategy with an expected five-year maturity. Through employing a buy, hold and maintain strategy, the fund aims to deliver regular income while providing improved downside protection and mitigated volatility versus the broad US high yield market.

The fund invests in US Dollar denominated high yield corporate bonds, with maturities predominately around five years and has the flexibility to invest across sectors and geographies. The fund is open for subscriptions as of January 8, 2018 and will remain open for approximately three months [1]. The Fund will subsequently be closed to new investors but offers daily liquidity to existing ones, subject to swing pricing. Note, investors should anticipate holding their investment for the life of the fund to ensure income and return outcomes are fully harvested.

The fund will be managed by Mitchell Garfin, CFA, Senior US High Yield Portfolio Manager.

Mitchell Garfin, Senior US HY Portfolio Manager at BlackRock, comments: “Investors are diversifying the ways in which they access the bond markets. Fixed maturity portfolios are gaining traction as their hybrid structure allows investors to enjoy the diversification benefits of investing in a mutual fund while mitigating the risks of a concentrated portfolio of individual bonds. Given their unique structure, fixed maturity portfolios may provide stability in income with a reasonable degree of predictability.”

Michael Gruener, Head of EMEA Retail at BlackRock, adds: “Generating returns in today’s fixed income markets remains a challenge. Clients continue to look for alternative ways to build income focused, diversified and efficient bond portfolios. Fixed maturity portfolio can provide investors with an opportunity to retain bond like characteristics with greater certainty around outcomes. Having historically outperformed higher quality fixed income during rising interest rate environments, we expect investor appetite for investing in high yield assets to increase.”

The BSF USD High Yield Fixed Maturity Bond Fund is registered for sale in Austria, Belgium, Switzerland, Germany, Denmark, Spain, France, Ireland, Italy, Luxembourg, Netherlands, Norway, Finland, Sweden, UK and distributed in Latin America.