BlackRock has announced the launch of its new flagship securitised fund, the BlackRock Senior Securitised Fund (BSSF), in its existing specialist strategies fund range.

It stated that the BSSF has been designed to meet the strong demand for securitised assets from institutional and wealth clients looking to diversity their fixed income exposures.

According to BlackRock, its clients had demonstrated a desire for the diversification benefits, limited interest rate risk and the yield premium securitised assets typically offer versus corporate credit.

The fund will include asset-backed securities (ABS) and collateralised loan obligations (CLO), and aims to identify ‘unique and attractive’ investment opportunities.

BSSF will have a minimum exposure of 65 per cent to ABS and a maximum exposure of 35 per cent to CLOs.

It has a minimum exposure of 75 per cent to AAA assets and a minimum rating of AA-, and is primarily focused on European and UK assets but can invest up to 25 per cent in the US and other regions.

Commenting on the launch, BlackRock senior securitised fund and head of European ABS, lead portfolio manager, Kate Galustian, said: “The BSSF leverages BlackRock’s experience in the securitised market to identify unique and attractive investment opportunities that have the potential to offer clients attractive risk-adjusted returns throughout the cycle.

“The fund seeks to maximise total return by investing in high grade, predominately AAA, securitised assets, in a manner consistent with the principles of ESG-focused investing.”

Isio head of investment research, Ajith Balan Nair, commented: “We like high quality ABS as an asset class for the yield premium versus corporate credit, diversification benefits from exposure to consumer risk and the floating rate nature.

“More broadly, we see ABS as a versatile asset class that can play a wide range of roles in client portfolios ranging from allocations in collateral buckets to growth portfolios. BSSF is a good example of our focus, and we are happy to have engaged with BlackRock from the initial design stage.”

LCP senior investment consultant and partner, Nick Cooney, added: “Securitised debt continues to be a core asset for institutional investors, so it is encouraging to see BlackRock embrace feedback and build a solution which closes a gap in its fund range.

“This development is particularly timely given the current strong demand from those seeking liquid investment strategies that offer favourable risk-reward characteristics.”

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