BlackRock MyMap 4 Class D - Income (GBP)

The fund is not constrained by an official benchmark, and instead focuses on delivering growth over the long term within a predefined volatility range. The fund's success can therefore be judged on whether BlackRock have kept volatility within their target range over a rolling five-year period. The fund uses complex models to estimate the future risks and returns of different types of investment. Over time, the funds' managers will change its asset allocation to ensure the future returns are expected to fall within the target volatility range. Despite the capability that BlackRock have, models can never be seen as a definitive guide to future returns, and investment performance can be impacted by factors outside of the manager's control. Multi-asset funds invest in a range of assets which should help to reduce the risk being over-concentrated into a single type of security like shares. Historically, shares and bonds have tended to have a lower correlation. This means that when one asset drops in price, the other has typically tended to be more resilient.

The Blackrock MyMap 4 fund offers a low-cost solution for tracking a number of international markets. In doing so, the Fund aims to keep its volatility over 5-years within a defined range of 6-9%. Generally, the higher the volatility, the riskier an investment is considered to be. This volatility range is lower than what is usually experienced from company shares. The fund aims to achieve a return on investment, through a combination of growth and income. The fund aims to get its investment exposure by predominantly using units of other passive funds. Passive investments follow an index, where predefined rules dictate the investments included and their proportion. Passive funds aim to match an index, not beat it. Because investment choices within these funds are rules based, the fund does not need to employ expensive teams of analysts or researchers, which helps to keep costs down.

The fund is part of BlackRock's MyMap range. The number 4 in the name does not directly relate to the level of risk or return, but it does help to differentiate the fund from others in the range. The team aim to keep the volatility in roughly the middle of their target band at 7.5%, however there will be times when they actively choose to deviate from this if they feel the need to take on more or less risk. The fund aims to get its investment exposure by predominantly using units of other passive funds and they're typically adjusted 3 to 4 times a year, although there is no set frequency. The team have the flexibility to invest in both exchange traded funds (ETFs) and index funds. Within the fund there are a range of investments that span different geographies, sectors and asset classes. The team use their models to help them decide on the best mix of investments that will generate investment returns while remaining within their target volatility range. These decisions are made based on forward looking performance expectations, rather than based on how volatile the fund has been in the past. So, if the fund has been more or less volatile than the target range, the team are not going to change the investments in the fund just to bring the volatility back within that range. This means that investors should be aware that they may experience volatility outside of the target range. The team use currency hedging to convert overseas currency bonds and some of the shares back to sterling. The prices and income of global shares and bonds can fluctuate alongside foreign currency movements, adding volatility for UK investors. By using hedging, investors could experience less extreme price movements over time, which helps smooth returns. This can be achieved using derivatives which can add risk where used.