Global Allocation
Global Allocation Fund (Aust) Update
September Quarter 2008
This update is for the BlackRock Global Allocation Fund (Aust) (formerly known as the Merrill Lynch Global Allocation Fund (Aust)).
The performance shown in the Fund Update is the gross performance of the fund. To view the net performance of the fund or of the different unit classes of the fund download the Fund Performance Report or visit Fund Performance.
Gross performance returns and benchmark performance shown do not include expenses, fees or tax. Net performance returns are prepared on an exit-to-exit fee basis which includes all ongoing fees and expenses.
Portfolio activity
- During the quarter, the Fund’s overall equity allocation remained essentially unchanged at 54% of net assets.
- Within equities, an increase in the U.S. (+1.6%) was offset by slight decreases in Europe (-1.3%), Latin America (-0.4%), and Canada (-0.3%). On a sector basis, the Fund increased its weightings in Health Care (+0.8%) and Telecom Services (+0.6%), while reducing its weightings in Financials (-0.4%), Materials (-0.9%) and Utilities (-0.2%).
- The Fund’s allocation to fixed income decreased from 34% to 30% of net assets mainly due to decreases in the U.S. (-2.0%) and Europe (-1.4%). Reflecting the above changes, the Fund’s cash equivalents increased from 11% to 16% of net assets.
- Compared to its reference benchmark, the Fund’s asset allocation is underweight equities (-5.4%), underweight fixed income (-10.3%), and overweight cash equivalents (+15.7%).
- Within the equity segment, the Fund is underweight the U.S. and Europe, overweight Asia, and modestly overweight Latin America.
- On a sector basis, the Fund is overweight Materials, Telecom Services, Energy, Healthcare, and Industrials, with underweights in Financials, Consumer Discretionary, Consumer Staples, Information Technology, and Utilities.
- As for currency exposure, (relative to its benchmark) the Fund is underweight the Euro (-9.6%), British pound (-6.7%), and overweight the US Dollar (+2.9%), Japanese yen (+5.0%), Brazilian real (+3.4%) and Swiss franc (+1.2%). The Fund has modest overweight positions in several small Asian currencies, including the Singapore dollar, Malaysian ringgit, and Korean won.
- The Fund’s internal reference benchmark currency weights remain fully hedged back to Australian dollars.
Performance review
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Gross
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Benchmark*
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Out-performance^
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1 Month
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-7.47%
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-6.04%
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-1.43%
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3 Month
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-8.78%
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-4.87%
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-3.91%
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6 Month
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-7.93%
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-5.86%
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-2.07%
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1 Year
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-8.96%
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-9.57%
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0.61%
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2 Year (pa)
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3.97%
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1.62%
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2.35%
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3 Year (pa)
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7.42%
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4.55%
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2.87%
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Past performance is not necessarily a guide to future performance.
*Benchmark consists of a weighted average of returns for a composite of 36% S&P 500 Composite (total return), 24% Financial Times/S&P Actuaries World Index ex-US Citigroup Non-USD World (total return), 24% Merrill Lynch Government Index GA05 (5 year Treasury Bond) and 16% Government Debt Index.
^ Outperformance represents the difference between Gross return and Benchmark return. Long term performance returns show the potential volatility of returns over time.
The Fund returned -8.78% (before fees) in the quarter, relative to the internal reference benchmark return of -4.87%. The Fund out-performed the Hedged MSCI world ex-Australia Index which returned -11.20%.
Positive influences on performance were:
- Underweight in European equities, notably the U.K.
- Overweight position in Health Care.
- Stock selection in Information Technology and Telecom Services.
Negative influences on portfolio performance were:
- Overweight equity exposure in Russia, Brazil, and Singapore.
- Stock selection in the U.S., as global equity markets declined sharply.
- Stock selection and underweight in Financials, Consumer Staples, and Consumer Discretionary sectors.
- Overweight and stock selection in Energy.
- Underweight in U.S. Treasuries, as Treasuries rallied from a low in June.
Composition of the Fund as at 30/9/2008
Australia Equities
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0.45%
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Australia Fixed Income
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0.59%
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Asia (ex-Japan) Equities
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1.39%
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Asia (ex-Japan) Fixed Income
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0.99%
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Emerging Market Equities
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8.91%
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Emerging Market Fixed Income
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2.44%
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Europe (ex-UK) Equities
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3.66%
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Europe (ex-UK) Fixed Income
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4.31%
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Japan Equities
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7.70%
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Japan Fixed Income
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0.91%
|
North America Equities
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30.35%
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North America Fixed Income
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16.30%
|
UK Equities
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2.17%
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UK Fixed Income
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4.16%
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Cash Equivalents
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15.67%
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Investment objective
The Fund seeks to maximise total investment returns while managing risk by actively investing in global equities, debt and short-term securities.
Fund strategy
The Fund is managed by the Global Allocation Team (“G.A. Team”) which is based in Princeton, New Jersey, USA. The investment strategy is to invest in global equities, fixed income and cash, with the combination varied both with respect to types of securities and markets, in response to changing market conditions and economic trends.
In selecting equity investments, the Fund mainly seeks to invest in securities which are believed to be undervalued. The Fund may buy fixed income securities of varying maturities.
The Fund can, and does, look for investments in all the markets of the world, however, it will typically invest a majority of its assets in the securities of companies and governments located in North and South America, Europe and Asia. The G.A. Team aims to identify the long-term trends and changes that could benefit particular markets and/or industries relative to other markets and industries.
Currency is actively managed in the Fund around a fully-hedged Australian dollar benchmark.
Designed for investors who…
- Seek a single fund that offers broad global exposure and the largest universe of securities from which to choose.
- Seek a fund that maximises total investment return while having the flexibility to manage risk and move into safer instruments.
- Have a long term investment horizon.
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