The Blackrock Global Funds (BGF) range and the retail authorised unit trusts range may now use derivatives for investment purposes, whereas previous policy only allowed the financial instruments to be used for efficient portfolio management purposes.
As such, derviatives can now be used for income or capital generation, whereas previously they were primarily used to manage risk or reduce costs.
Blackrock told Expert Investor’s sister publication Portfolio Adviser the prospectus was updated in April and relevant investors were sent a shareholder letter. The asset manager would not say how many assets under management are impacted by the change.
FE Analytics lists 68 funds in the BGF range representing £116.6bn (€133.4bn), while the retail range includes 43 funds representing £27.8bn.
A spokesperson said: “This clarification will not change the investment strategy of the funds but will give the funds flexibility to use derivatives to achieve their investment goals.
“This additional flexibility will be in the best interests of unit holders as it will enable the portfolio managers to better manage risk and maximise the performance of the funds. This flexibility will ensure that the investment characteristics and positioning of each fund remains both relevant to and consistent with the current investment environment and expectations of unit holders.”
The spokesperson said Blackrock wanted to remove ambiguity regarding the term efficient portfolio management (EPM), which many non-European jurisdictions do not recognise as a classification for derivatives usage.
