blackrock consensus funds simple, transparent investment solutions

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1 blackrock consensus funds simple, transparent investment solutions for professional investors only

2 Tony Stenning Head of BlackRock UK Retail Business We ve developed BlackRock Consensus Funds as our core RDR-friendly solution for financial advisers and investors. The industry needs simple core asset allocation solutions which can be easily classified from a risk-return perspective and applied to a range of client objectives. BlackRock Consensus Funds allow advisers to implement portfolios for their clients, quickly and efficiently. [2] blackrock consensus funds funds

3 Contents Investing for a new world 2 What are BlackRock Consensus Funds? 4 Why choose BlackRock Consensus Funds? 8 The BlackRock investment advantage 10 More about the Fund range 11 How to invest 12 blackrock consensus funds [1]

4 solutions Investing for a new world It s not the world it was a decade ago, or even five years ago. In this new era of low income yields and stock market swings, portfolios need to be broadly diversified, strategic in design, and entirely relevant to investor desired outcomes. BlackRock Consensus Funds offer advisers and their clients simple, transparent and cost-effective investment solutions. Investment solutions With this in mind, we ve developed BlackRock Consensus Funds: a range of five independently risk-rated, core asset allocation portfolios, investing in index funds within the BlackRock Collective Investment Funds (BCIF) range. By using the BCIF range of efficient and transparent building blocks, with an asset allocation overlay from BlackRock s highly experienced multi-asset portfolio management team, we ve created a robust solution, designed to weather a variety of market environments. Catering to a variety of risk appetites, BlackRock Consensus Funds offer advisers and their clients simple, transparent and cost-effective investment solutions. Retail Distribution Review (RDR) From 1 January 2013, new regulations concerning how advisers service clients and receive payment for recommending investments will start to take effect. BlackRock Consensus Funds offer a complete RDR-friendly solution; independently risk-rated, core asset allocation portfolios, managed by experts relieving advisers of the cost and burden of day-to-day portfolio management. For more information on RDR please read our factsheet at [2] blackrock consensus funds

5 five core asset allocation funds CONSENSUS 35 CONSENSUS 60 CONSENSUS CONSENSUS 85 CONSENSUS 100 % % % % % Maximum exposure to equity securities Exposure to fixed income and other investments blackrock consensus funds [3]

6 What are BlackRock Consensus Funds? BlackRock Consensus Funds are a range of five core asset allocation strategies. Each Fund invests in BlackRock index funds to achieve desired levels of exposure to equities and fixed income investments. Core asset allocation solutions NURS Funds. BlackRock Consensus Funds are structured as Non-UCITS Retail Schemes ( NURS ) under UK regulations, and hence can be sold to the general public. BlackRock Consensus Funds offer core asset allocation solutions for a range of investor risk appetites. The Funds offer exposure to equities from various geographical regions (eg. UK, Europe, Emerging Markets), plus a mixture of fixed income assets. Where appropriate, Funds may also have exposure to money market instruments and an allocation to investments with exposure to alternative assets such as property. Each Fund contains weighted allocations to these asset types broadly in-line with industry standard averages as represented by the ABI Pension Sector averages. BlackRock Consensus Funds have been designed according to one of our core beliefs that diversification is the key to achieving a more consistent investment experience over time. Why ABI Sectors? The Association of British (ABI) Sectors are a system for the classification of life and pension funds. Every sector sets clear criteria that must be followed by funds wishing to belong to that sector. The sectors were introduced in 1997 to ensure life and pension funds operating similar investment strategies are grouped together so that consumers and advisers can compare them on a like-for-like basis. In November 2011 the ABI sectors were adopted by the Investment Management Association (IMA) for the managed/mixed investment sectors. BlackRock Consensus Funds are aligned to ABI Pension Sector averages so they are comparable and consistent with the wider UK investment fund market. This enables advisers to make quick and efficient investment recommendations. [4] blackrock consensus funds

7 Efficient building blocks BlackRock Consensus Funds seek to achieve a total return by investing in index funds managed by BlackRock. In other words, they are funds of index funds. However, while the funds use index building blocks, they are not themselves index portfolios. This is because the investment strategy is based on broadly matching the asset allocation of the relevant industry sector average rather than aiming to track their performance. The quality and range of the underlying index fund building blocks is important to being able to explore a breadth of equity and fixed income asset classes. This allows the manager to target desired fund exposures in a precise, liquid and cost-effective way. Risk-rated. Each BlackRock Consensus Fund has an independent risk-rating out of ten. These simple ratings mean investors can be easily matched with a portfolio that suits their risk appetite and their return objectives. Strong foundation BlackRock Consensus Funds invest in BlackRock s equity and fixed income index funds within the BCIF range. These Funds are a range of UCITS * funds, and have been used for many years by large pension funds and wealth managers as building blocks within their multi-asset solutions. The BCIF range includes: ``BlackRock 100 UK Equity Tracker Fund ``BlackRock Continental European Equity Tracker Fund ``BlackRock Corporate Bond 1-10 Year Fund ``BlackRock Corporate Bond Tracker Fund ``BlackRock Emerging Markets Equity Tracker Fund ``BlackRock Global Property Securities Equity Tracker Fund ``BlackRock Japan Equity Tracker Fund ``BlackRock Index Linked Gilt Tracker Fund Core asset allocation or multi-asset allocation? We refer to BlackRock Consensus Funds as core asset allocation funds given their collective exposure to the core asset classes fixed income and equities. Four of the Funds can also be classed as multiasset as they include an allocation to both these asset classes. However, for BlackRock Consensus 100, the Fund s exposure to equities may at any one time be 100%. ``BlackRock Mid Cap UK Equity Tracker Fund ``BlackRock North American Equity Tracker Fund ``BlackRock Pacific ex Japan Equity Tracker Fund ``BlackRock Overseas Corporate Bond Tracker Fund ``BlackRock Overseas Government Bond Tracker Fund ``BlackRock UK Equity Tracker Fund ``BlackRock UK Gilts All Stocks Tracker Fund ``BlackRock US Equity Tracker Fund. * UCITS (Undertakings for Collective Investment in Transferable Securities) is a European Union Directive that provides a regulatory framework for investment funds sold to the public in the EU. blackrock consensus funds [5]

8 continued Management by our multi-asset team means BlackRock Consensus Funds benefit from a dedicated focus on risk management and fulfilling client goals. Expertly managed BlackRock Consensus Funds are managed by our multi-asset team. The team monitors the Funds on a daily basis, actively implementing positions and allocating assets between different sectors of the market through investment in the BCIF range. Management by our multi-asset team means BlackRock Consensus Funds benefit from dedicated focus on risk management and fulfilling client goals. Working closely with this team are the expert managers of BlackRock index funds within the BCIF range. The Funds are also subject to rigorous independent oversight and the analysis of a dedicated risk-team within BlackRock. A focus on our clients needs runs through each element of the BlackRock Consensus Funds, from the composition of the underlying building blocks to the product design and implementation. [6] blackrock consensus funds

9 Access the full depth of BlackRock s expertise in one solution Level 1 Efficient building blocks BlackRock index funds provide efficient and cost-effective building blocks, across asset classes and market sectors. Level 2 F Expert management fund management and asset allocation overlay by BlackRock s multi-asset portfolio management team ensures targeted portfolio implementation and robust risk processes. Level 3 The BlackRock advantage BlackRock s world-leading risk management capabilities and clear focus on client service ensures peace of mind for investors. blackrock consensus funds [7]

10 Why choose BlackRock Consensus Funds? BlackRock Consensus Funds provide a transparent and cost-effective way of accessing investment returns from a range of asset classes and global markets. These Funds offer investors: RDR ready-made solution. RDR has prompted many advisers to take a good look at their service model for clients, and see where they and their clients can benefit from outsourcing in areas such as fund selection and management. BlackRock Consensus Funds offer a complete RDR-friendly solution; independently risk-rated, core asset allocation portfolios, managed by experts relieving advisers of the cost and burden of day-today portfolio management. diversification the Funds provide access to a diverse range of asset classes, sectors and geographic regions. For investors, core asset allocation funds such as BlackRock Consensus Funds offer access to different sources of return and should provide more consistent returns than investment in either equities or bonds alone. However, this outcome is of course not guaranteed and is subject to change. Simplicity and efficiency BlackRock Consensus Funds are designed to be simple and transparent investment solutions. Their industry-standard risk profiles aim to assist advisers to provide simplified recommendations and implement portfolios quickly and efficiently. Choice the Funds cater for a variety of risk appetites from lower-risk through to higher risk (as indicated by the independent risk rating). The choice of five Funds also allows investors to switch exposures between the different Funds as their particular needs and requirements change over time. Cost-effective solutions By investing in BlackRock index funds, we re able to offer investors a competitive charging structures for BlackRock Consensus Funds *. Underlying the low cost of the range is the cost-effectiveness of indexing. By design, index funds require fewer portfolio management and analyst resources. Instead, BlackRock s robust exception-based systems are in place to assist portfolio managers the day-to-day management of our index funds. * Class D units have an annual management charge (AMC) of 20bps. [8] blackrock consensus funds

11 Core satellite approach the Funds are designed to be an ideal core component or compliment to a bespoke investment portfolio. Using these Funds in client portfolios is a way of keeping costs down and controlling risk to a certain extent, while allowing the flexibility to invest in other specialist strategies or funds. Proven track-record BlackRock has managed this type of core asset allocation strategy for over ten years, for example the QIS (Qualified Investor Schemes) BlackRock Consensus Fund (now BlackRock Consensus 85 Fund) was launched in 2005 and has an AUM of 5.6 billion (as at 31 May 2012). The chart below shows its performance over the last five years. BlackRock Consensus 85 Fund five year performance Independent ratings. BlackRock Consensus Funds have been independently rated by Distribution Technology, a leading provider of financial services technology in the UK. These risk ratings have been achieved by analysing the historical performance of different asset classes, both individually and in combination. For further information on the risk ratings visit www. distribution-technology.com Indexed performance Fund ABI UK Mixed Investment 40%-85% Shares-Pension Sector The latest performance data is available on our website Performance is based on bid (selling) to bid prices with net income reinvested. Source: BlackRock. Important information on financial investments Past performance is not a guide to future performance. All financial investments involve an element of risk. The value of investments and the income from them will vary and the initial investment amount cannot be guaranteed. BlackRock will not consider the suitability of an investment in the Funds against the individual needs and risk appetite of investors. Potential investors should read the Simplified Prospectus which provide important information on the risks relating to an investment in the Funds. blackrock consensus funds [9]

12 The BlackRock advantage We re one of the world s largest providers of index funds, with 1.2 trillion * in indexed assets under management for clients worldwide. Indexing expertise Choice of manager is just as important for index investing as it is for actively managed funds. Not all index managers offer the same degree of skill, expertise and benefits to investors. BlackRock s experience of managing index funds stretches back many years. In fact, we pioneered the first index strategy in the 1970s, and our innovative focus has ensured consistent delivery of market returns to clients along with a stream of performance enhancements. Scale matters Indexing is a business which benefits from scale. As the world s largest provider of index funds, with over 1.2 trillion * in indexed assets, we re in a position to negotiate on price. Our clients benefit from access to significant economies of scale across global markets through our ability to trade cost-effectively and often the ability to cross security positions internally (saving bid/offer spreads and transaction costs). In turn, this helps to minimise any tracking error for our index funds. Dedicated and experienced teams BlackRock Consensus Funds are managed by BlackRock s multi-asset team, a group of 154 highly experienced investment professionals globally managing billion in assets. ** Working closely with this team are the managers of BlackRock index funds within the BCIF range. With over 340 investment professionals globally engaged in index investment strategies, BCIF managers are directly involved and responsible for the management of the underlying fixed income and equity building blocks. Risk management Management of risk lies at the heart of BlackRock s investment process. BlackRock is renowned for its pioneering approach to risk management, and we have developed state-of-the-art tools to analyse portfolios and manage risk. Our expertise, supported by the broader research and analysis undertaken throughout BlackRock, helps keep risk in check. * source: BlackRock. As at 31 March ** Source: BlackRock. As at 31 December [10] blackrock consensus funds

13 More about the Fund range BlackRock Consensus Funds provide investors with access to five professionally managed and diversified investment products, across the risk/return spectrum. The Funds seek to achieve total return by investing primarily in the BCIF range. The Funds may gain exposure globally to asset classes including: equity securities, fixed income securities (issued by governments, companies and other institutions), money-market instruments, deposits, cash and near cash, and indirect exposure to alternative asset classes (such as property). The following diagram illustrates where each of the Funds sit on the risk/return spectrum. Five risk-rated investment solutions Return CONSENSUS CONSENSUS CONSENSUS CONSENSUS CONSENSUS Risk Consensus 35 Consensus 60 Consensus 70 Consensus 85 Consensus 100 Based on The ABI Mixed Investment 0-35% Shares Pension Sector The ABI Mixed Investment 20-60% Shares Pension Sector A composite benchmark comprised of the ABI Mixed Investment 20-60% Shares Pension Sector and the ABI Mixed Investment 40-85% Shares Pension Sector The ABI Mixed Investment 40-85% Shares Pension Sector The ABI Global Equity Pension Sector blackrock consensus funds [11]

14 How to invest? It s simple and straightforward to invest with BlackRock. Instructions on how to invest are set out in the relevant Application Form. Clients can invest in BlackRock Consensus Funds inside or outside of an ISA. BlackRock has not considered the suitability of these Funds against an individual s needs and risk tolerance. To ensure you and your client understand whether our product is suitable, please read the Simplified Prospectus and where the relevant ISA Terms and Conditions. You may also request a copy of the Full Prospectus and latest annual or Interim Report and Accounts (when available). Contact us Phone: * broker.services@blackrock.com Website: Our website has information on all our products and services, and can give you full details of fund prices as well as literature to download, including application forms. * our Investor Services Team is available from 8.30 am 6.00 pm, Monday to Friday. [12] blackrock consensus funds

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16 LDN Creative Services PROOF NUMBER 6 JOB NUMBER DESIGNER Brice DATE About BlackRock In a world that is shifting and changing faster than ever before, investors who want answers that unlock opportunity and uncover risk entrust their assets to BlackRock. As an independent, global investment manager, BlackRock has no greater responsibility than to its clients. It s why many of the world s largest pension funds and insurance companies trust BlackRock to understand their unique objectives and why financial advisers and investors partner with BlackRock to help them build the more dynamic, diverse portfolios these times require. BlackRock has built its offering around its clients greatest needs: providing breadth of capabilities and depth of knowledge across active and passive strategies, including ishares ETFs. This is combined with a singular focus on delivering strong, consistent performance and an ability to look across asset classes, geographies and investment strategies to find the right solutions. With deep roots in every region across the globe, some 100 investment teams in 27 countries share their best thinking to gain the insights that can change outcomes. And, with a passion to understand risk in all its forms, BlackRock s 1,000+ risk professionals dig deep to find the numbers behind the numbers and bring clarity to the most daunting financial challenges. That shapes and strengthens the investment decisions that BlackRock and its clients are making to deliver better, more consistent returns through time. BlackRock. Investing for a new world. The Funds may be exposed to finance sector companies, as a service provider or as counterparty for financial contracts. Liquidity in the financial markets has been severely restricted, causing a number of firms to withdraw from the market, or in some extreme cases, becoming insolvent. This may have an adverse effect on the activities of the fund. Through investment in other collective investment schemes ( the underlying funds ), the Funds are exposed to economies and markets which may be less developed and compared to more established economies, the value of investments may be subject to greater volatility due to increased uncertainty as to how these markets operate. Certain of the underlying funds invest in fixed interest securities issued by companies which, compared to bonds issued or guaranteed by governments, are exposed to greater risk of default in the repayment of the capital provided to the company or interest payments due. These securities are exposed to changes in interest rates which will affect the value of any securities held. Over 35% of certain of the underlying funds may be invested in securities issued by any one government; therefore if these investments decline in value, this will have a pronounced effect on the overall value of the fund. All financial investments involve an element of risk. Therefore, the value of your investment and the income from it will vary and your initial investment amount cannot be guaranteed. Past performance is not a guide to future performance and should not be the sole factor of consideration when selecting a product. The funds invest a large portion of assets which are denominated in other currencies; hence changes in the relevant exchange rate will affect the value of the investments. This material is for distribution to Professional Clients and should not be relied upon by any other persons. Unless indicated the fund information displayed only provides summary information. To ensure you understand whether our product is suitable, please read the Key Investor Information Document. Any decision to invest must be based solely on the information contained in the Company s Prospectus, Key Investor Information Document and the latest half-yearly report and unaudited accounts and/or annual report and audited accounts. Investors should read the fund specific risks in the Key Investor Information Document and the Company s Prospectus. We recommend you seek independent professional advice prior to investing. If, after reading this brochure, you have any questions or would like any additional information please contact your financial adviser or speak to our Investor Services Team on Issued by BlackRock Investment Management (UK) Limited (authorised and regulated by the Financial Services Authority). Registered office: 12 Throgmorton Avenue, London EC2N 2DL. Registered in England No Tel: For your protection, telephone calls are usually recorded. BlackRock is a trading name of BlackRock Investment Management (UK) Limited BlackRock, Inc. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS, ALADDIN, ishares, LIFEPATH, SO WHAT DO I DO WITH MY MONEY, INVESTING FOR A NEW WORLD, and BUILT FOR THESE TIMES are registered and unregistered trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners. The Risk Categories assigned to each of the Funds are provided by use of Distribution Technology s Dynamic Planner risk profiling and asset allocation service. The Risk Categories are intended to provide risk profiling information to Financial Advisers in order to assist their understanding of a client s attitude to risk and assessment of whether an investment in the Funds is suitable for their clients. The Risk Categories range from 1 (lowest risk) and 10 (highest risk) based on Distribution Technology s analysis of the portfolios of the Funds. The provision of the Risk Categories by Distribution Technology does not constitute investment advice on the part of Distribution Technology or BlackRock and should not be relied upon by any person as such. No representation or warranty (including as to liability towards any party associated with any investment in the Funds and any third party), express or implied, is made by BlackRock as to the accuracy, reliability or completeness of the risk categorisations provided by Distribution Technology or the suitability therefore of any of the Funds for investors individual circumstances. It should be noted that the risk categorisations of the Funds are correct as at the date of this document but may be subject to change through a periodic review performed by Distribution Technology. The Risk Categories are also made available through Distribution Technology s website ( ). ( Aug2012) for more information UK broker.services@blackrock.co.uk