BlackRock launches Article 8 ESG multi-asset fund

Will use principles of existing Global Allocation Fund but with ESG embedded through investment process

BlackRock has launched a multi-asset Sustainable Global Allocation UCITS Fund in Europe which will be in line with Article 8 under Europe’s Sustainable Finance Disclosure Regulation and will be based on the principles of the firm’s existing Global Allocation Fund.

The product will have ESG considerations embedded through the investment process. BlackRock stated this will be done by the use of its proprietary externalities framework which evaluates and ranks underlying investments based on their positive and negative externalities.

“The fund will invest at least 50% of its total assets in securities classified as having positive externalities and exclude securities with negative externalities,” the group stated.  

The approach is intended to incorporate impact from financial and societal risks from ESG practices and leaves the portfolio tilted to issuers with best-in-class management of E, S and G risk factors and to those with a positive environmental impact. The team has committed to at least 90% of holdings within the fund being ESG rated.

The fund manager also aims for corporate issuers owned within the portfolio to achieve a lower carbon emissions intensity score compared to corporate issuers of the benchmark (60% MSCI All Country World Index and 40% Bloomberg Barclays Global Aggregate Index).

BlackRock will further reduce the investment universe using exclusions to limit exposure to fossil fuels, tobacco, controversial weapons, nuclear weapons, civilian weapons and violators of controversial business practises.

The fund’s strategy will supplement the best-in-class ESG framework for high conviction fundamental equity holdings with fixed income for diversification and yield and derivative strategies to manage risk.

Rick Rieder, BlackRock’s chief investment officer of global fixed income and head of the BlackRock global allocation investment team, said: “We have launched the Sustainable Global Allocation Fund in response to client feedback for an unconstrained multi-asset strategy that can help investors navigate extended periods of heightened volatility whilst also expressing their sustainability preferences.

“We have taken the principles from managing the existing Global Allocation Fund and leveraged BlackRock’s proprietary ESG framework to create a unique offering that will serve as a critical source of return for investors in the coming years.

“The new fund satisfies client demand for a long-term sustainable investment approach from which, importantly, they can expect a similar risk and return profile to our legacy Global Allocation product.”