BlackRock announced the launch of the ACS World ESG Insights Protective Strategies Fund, an new fund targeted at UK pensions schemes, incorporating sustainability considerations into the investment approach while seeking to mitigate the impact of significant market declines to help members approaching retirement to manage downside risk.
According to BlackRock, the new fund is designed to address challenges faced by pension schemes, particularly Defined Contribution (DC) plans with members approaching retirement. Traditional approaches to reducing investment risk typically involve lowering equity exposure, potentially limiting long-term growth and increasing exposure to inflation and longevity risks, the firm said.
In order to accomplish its protection objective, the fund’s underlying equity exposure is complemented by an options-based overlay that seeks to mitigate the impact of significant equity market declines while retaining long-term growth potential. Unlike strategies that sell call options to help fund downside protection, the Fund purchases call options to enhance upside participation without imposing a structural cap on equity market gains.
To incorporate sustainability considerations, the fund is built around BlackRock’s World ESG Insights equity strategy, which provides access to global equity exposure while utilizes the firm’s proprietary sustainability insights. The underlying equity strategy includes an objective to reduce the firm’s carbon emissions intensity score and falls within the scope of BlackRock Investment Stewardship’s Climate and Decarbonization Stewardship program.
Adam Ryan, Head of Diversified Strategies at BlackRock, said:
“Traditionally, achieving downside protection often meant limiting participation in equity market gains. Our approach is different. By balancing protection with participation, we are providing clients with greater choice in how they allocate, with a solution designed to manage the impact of market declines without giving up the long-term growth potential of equity markets.”
