BlackRock has announced the launch of the BGF Euro High Yield Fixed Maturity Bond Fund 2027, a fixed maturity bond fund. According to the asset manager, the fund is designed to take advantage of currently elevated yield levels, offering investors a combination of income distribution and capital appreciation. “In the current macroeconomic environment, fixed maturity bond funds can be an option for investors seeking some level of cash flow predictability or looking to stagger their interest rate exposure,” they explain.
The BGF Euro High Yield Fixed Maturity Bond Fund 2027 offers a carefully selected portfolio aimed at providing income and preserving capital until the strategy’s maturity date, which is three years from now. It primarily invests in two types of bonds: high-yield bonds, which the investment team believes will generate income, and high-quality government bonds for risk management. The fund aims to provide income through the European high-yield market, avoiding credit risks over a three-year investment horizon. Its strategy seeks to deliver income and preserve capital for investors holding their units until the Fund’s maturity date.
The asset manager explains that the investment process follows a barbell structure, incorporating high-quality government bonds and carefully selected high-yield bonds (at least 50%). The investment team believes this approach offers the best risk/reward trade-offs within the European sub-investment-grade bond universe. The bond mix is built to optimize yield while minimizing defaults, leveraging the team’s fundamental high-yield research. This investment process seeks to maintain an aggregate BB+ rating and optimize the tax efficiency of any coupon or capital gain, while aiming to sustain a high level of income for investors.
The fund, managed by José Aguilar, Head of European High Yield and Long Short Credit Strategies, is part of BlackRock’s active fixed income platform, which includes $1.1 trillion in assets under management. “As yields remain elevated, the opportunity cost of staying in cash is increasing. In this scenario, fixed maturity bond funds not only offer some visibility in income distribution but also provide investors with the chance to lock in attractive current yields. Moreover, the rise in dispersion in the high-yield bond market may create more opportunities for investors to generate alpha,” noted James Turner, Co-Head of European Fundamental Fixed Income at BlackRock.
For Funds Society, Madrid