Impact U.S. Equity Fund

Size: px

Start display at page:

Download "Impact U.S. Equity Fund"

Roderick Douglas
6 years ago
Views:

1 Impact U.S. Equity Fund INVESTING FOR PURPOSE AND PERFORMANCE Institutional: BIRIX A: BIRAX C: BIRCX There is growing demand and greater opportunity for investment approaches that bring together positive social or environmental outcomes and financial results. $ 6.6 T 71 % 33 % Invested in sustainable, responsible and impact strategies. 1 Individual investors are interested in sustainable investing. 2 Annual growth in sustainable assets over the last 2 years. 1 BlackRock s Impact U.S. Equity Fund enables investors to do more with their money than simply achieving a financial return. A Closer Look at Sustainable Investing BlackRock s global Impact platform leverages expertise and solutions across three key sustainable investing segments. EXCLUSIONARY SCREENS ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) FACTORS IMPACT TARGETS Avoiding exposures that conflict with your social objectives Focusing on companies that align with your social and financial objectives Targeting specific company outcomes and financial returns PREVENT PROMOTE ADVANCE 1 Source: Global Sustainable Investment Alliance (GSIA). 2 Source: Morgan Stanley s Institute for Sustainable Investing.

2 Portfolio Incorporating Social and Environmental Insights Many investors want to take into account positive and negative outcomes about the companies they own, but few investors know how to build a portfolio capturing these interests while still targeting financial returns. The BlackRock Impact U.S. Equity fund looks to answer that question by starting with the Russell 3000 Index, a core equity benchmark that seeks to represent the U.S. stock market. The portfolio management team then looks to create a portfolio that reflects societal outcomes important to investors, while maintaining a risk and return profile similar to the benchmark. Accomplishing this means fund investors don t have to choose between their financial goals and desire to hold a portfolio that reflects the social and environmental issues that they care about. Building a Benchmark-Aware Impact Portfolio Overweight to benchmark driven by positive impact outcomes and risk/ return objectives BENCHMARK WEIGHT Underweight to benchmark driven by negative impact outcomes and risk/ return objectives 1 2 Start by building a benchmark-aware portfolio by holding securities while keeping tracking error* to 1 2%, ensuring sector weightings and risk/return profile will be representative of the Russell 3000 Index. Use data tools to identify specific impact insights about health, the environment, and corporate citizenship when one or more measurable impact outcome is identified in an eligible company. 3 By actively weighting securities the investment team incorporates research insights to create a portfolio targeting positive aggregate societal impact outcomes. Identify impact outcomes and incorporate risk and return forecasts. * Tracking error is a measure of how closely a portfolio follows its benchmark index.

3 Innovative Approach Measuring Outcomes and Performance Today s world is complex. In the past, traditional, quality research could create a sustaining competitive advantage for investors. But today, the market incorporates information so rapidly that constant innovation is required to gain an edge. This is especially critical in identifying impact outcomes as there is no standard reporting process across companies. Through the use of new data analytics techniques, BlackRock s Active Equity Team uses a repeatable investment approach to identify insights about companies to develop a portfolio that targets returns and impact outcomes. Leveraging the Capabilities of BlackRock s Technology 200 DATA FEEDS 36,000 PAGES Analyzed across 38 countries to gain insight from sources such as social media, financial blogs and thousands of company specific documents. Reviewed from over 4,000 brokerage reports a day in 53 languages using advanced text analysis to extract information. Case Study: Capturing Impact Opportunities Analyzed over 250 disorders from the Institute for Health Metrics and Evaluation and the World Health Organization to identify diseases most burdensome to the world. IMPACT EXAMPLE Use text analysis to extract information from over nearly 34,000 clinical trials from ClinicalTrials.gov and the Clinical Trials Transformation Initiative covering more than 130 Health Authorities globally. RESULT Associate disease insights and clinical trial information with companies, to identify those with health innovation research likely to impact most challenging global health problems.

4 Seeks Impact and Consistent Returns The fund seeks to deliver consistent performance against the Russell 3000 on an aggregate impact outcome basis by blending return, risk and transaction cost forecasts to identify an optimal portfolio. Active, Benchmark-Aware Portfolio Combines Impact and Return Considerations Investors are targeting a wide variety of outcomes with their capital. IMPACT OUTCOMES RETURN CONSIDERATIONS Identifying measurable impact in public equities through research Targeting financial returns and Impact against mainstream benchmarks Health Global Diseases Burden Clinical Trail Research Fundamentals Improving & Persistent Profits Rising Earnings Expectations Attractive Company Valuations IMPACT EQUITY Environment Green Technology & Innovation Carbon Intensity of Production Environmental Focus at Company Sentiment Market Participant Views Short Term Liquidity Pressure Relationships Across Asset Classes Citizenship Employee Treatment & Sentiment Gender & Diversity Aware Less Controversial Businesses Themes Country Economic Conditions Exporter vs. Domestic Focused Firms Industry Country Styles Examples above are shown for illustrative purposes only and do not reflect each complete model.

5 So What Do I Do With My Money? The fund can help solve for many needs, including those looking for a core growth allocation that is designed to deliver positive impact exposure while trying to meet their financial obligations. Result: Core portfolio with holdings that reflect! MORE MORE LESS BETTER FEWER FEWER High Impact Disease Research Green Innovations Carbon Intensity Corporate Citizenship Ethics Controversies Lawsuits and Litigation 100% 80 % MORE (LESS) THAN BENCHMARK INVESTED IN OUTCOME LISTED* % 14 % 11 % -3 % % -25 % High Impact Disease Research Green Innovations Carbon Intensity Corporate Citizenship Ethics Controversies Lawsuits and Litigation * As of 12/31/17. Data based on fund holdings. For illustrative purposes only. The fund s benchmark is the Russell 3000 Index. BlackRock Impact U.S. Equity Fund is for investors looking to: Target impact outcomes as part of their core equity allocation. Gain exposure to aggregate positive impact outcomes while trying to meet their financial objectives. Receive frequent, measured and transparent reporting on the social impact of their portfolio.

6 % Average Annual Total Returns (as of 12/31/17) 1-Year 3-Year 5-Year 10-Year Inception 1 (11/5/15) BLK Impact U.S. Equity Fund (Institutional) Morningstar Category Average (Large Blend) Russell Not annualized. 2 The unmanaged Russell 3000 Index comprises the largest U.S. companies as determined by total market capitalization. Performance data quoted represents past performance and is no guarantee of future results. Investment returns and principal values may fluctuate so that an investor s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than that shown. All returns assume reinvestment of all dividend and capital gain distributions. Refer to for current month-end performance. Investment returns reflect total fund operating expenses, net of all fees, waivers, and/or expense reimbursements. Index performance is shown for illustrative purposes only. It is not possible to invest directly in an unmanaged index. Institutional shares net, including investment related expense as of the most recent prospectus are 0.55%. Total gross expenses are 1.19%. Expenses stated as of the fund s most recent prospectus. Investment dividend expense, interest expense, acquired fund fees and expenses and certain other fund expenses are included in the Net, Including Investment Related Expenses. Institutional shares have contractual waivers with an end date of 9/30/18 terminable upon 90 days notice. Want to know more? blackrock.com Risk of Impact Investing: The Fund intends to invest in companies with measurable societal impact outcomes, as determined by BlackRock, and screen out particular companies and industries. This may affect the Fund s exposure to certain companies or industries and the Fund will forego certain investment opportunities. The Fund s results may be lower than other funds that do not seek to invest in companies based on expected societal impact outcomes and/or screen out certain companies or industries. The Fund seeks to identify companies that it believes may have a societal impact outcome, but investors may differ in their views of what constitutes positive or negative societal impact outcomes. As a result, the Fund may invest in companies that do not reflect the beliefs and values of any particular investor. Risk of Using the BlackRock Systematic Equity Impact Methodology: Unlike funds that solely employ exclusionbased methodologies in order to implement their societally oriented investment programs, the Fund seeks to provide total return by investing in a portfolio of equity securities of companies with positive aggregate societal impact outcomes, as determined by BlackRock, compared to the Benchmark. The Fund screens out certain companies or industries and then selects and weights securities based on the issuer s measurable societal impact outcomes, as determined by BlackRock, in conjunction with forecasts of return, risk and transaction costs. This methodology may have the effect of limiting investments in companies that would pass screen-based tests, which could have a negative effect on the Fund s investment performance. The Fund may also invest in companies that would otherwise be screened out of other societally oriented funds. Security selection will be impacted by the combined focus on societal impact outcomes and forecasts of return, risk and transaction costs that is systematically and quantitatively applied to each equity investment by the Fund. You should consider the investment objectives, risks, charges and expenses of the fund carefully before investing. The prospectus and, if available, the summary prospectus contain this and other information about the fund, and are available, along with information on other BlackRock funds by calling or from your financial professional. The prospectus and, if available, the summary prospectus should be read carefully before investing BlackRock, Inc. All Rights Reserved. BLACKROCK, SO WHAT DO I DO WITH MY MONEY and ishares are registered trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners. Prepared by BlackRock Investments, LLC, member FINRA. Not FDIC Insured May Lose Value No Bank Guarantee Lit. No. IMPEQFD-IC-0218 OE41722T-0218

LifePath Index Funds

A complete retirement portfolio in a single fund LifePath Index Funds Morningstar Analyst Rating Morningstar has awarded the fund a Gold medal, its highest level of conviction. (Latest rating as of 2/2/17.)