Active Equities Systematic Active Equity

Transcription

1 Active Equities Systematic Active Equity Big Data Investing January 2018

2 Evolution of Systematic Active Equity (SAE) One of the pioneers of quantitative investing Research driven process blends investment insight with cutting edge technology Constant evolution is critical to keep a competitive advantage Big Data Machine Learning / AI Macro Themes Flows Earnings Quality Analyst Sentiment Fundamental Value Research driven investment approach designed to deliver differentiated returns *Source: BlackRock, 31 st December For illustrative purposes only. 2

3 Big Data - A world of new possibilities for generating a What is Big Data? Less structured, larger in volume, faster than traditional data Digital traces of human behaviour Source: BlackRock, 30 th June For illustrative purposes only. Reference to the names/logos of each company referenced is merely for explaining the investment strategy, and should not be construed as investment advice or investment recommendation of those companies. 3

4 Tracking the consumption purchasing process with Big Data Online Search GPS traffic data E-transactions receipts Booked sales Website traffic Satellite images Credit card data More Leading More accurate For illustrative purposes only. 4

5 Humans are key 1. Portfolio Managers and Researchers ask classic fundamental questions: How profitable is the business? How attractively valued are the shares? How confident are management? What do analysts think of the outlook for the business? How are other investors positioned in the shares? What economic exposure does the business face? 2. Researchers test and vet new investment ideas the process is not static. It evolves. Humans design it Humans innovate Machines build it and control the process 3. Senior Portfolio Managers incorporate approved ideas into broad models 4. Portfolio Managers set guidelines and constraints around automated portfolio construction 5. Portfolio Managers review output of automated for data errors or breaking news and also manage offmodel risk The same applies for scientific investing Images for illustrative purposes only. BlackRock has not acquired any rights or license to reproduce the trademarks, logos and images set out in this document. The trademarks, logos and images set out in this document are used only for the purposes of this presentation MKTG0118A

6 Three pillars to our investment philosophy We believe that superior investment outcomes are best achieved through a disciplined, objective process to managing return, risk and cost We seek to systematically exploit market inefficiencies while minimizing uncompensated risks Cost Factor trading costs into portfolio construction Use full range of trading strategies in seeking to minimize trading costs Control Cost Risk Many small positions versus concentrated positions Fully invested at all times Minimal industry/sector deviations Risk Management Return Evaluate stocks in terms of their expected alpha or excess return A proven, research-driven process to identify drivers of active returns Effective Stock Forecasting Fundamentals Sentiment Themes Note: Investment philosophy and process subject to change and provided here for illustrative purposes only. 6

7 Jan-50 Apr-50 Apr-50 May-50 May-50 Aug-50 Aug-50 Aug-50 Nov-50 Nov-50 Nov-50 Nov-50 Feb-51 Feb-51 Feb-51 Mar-51 What we look for in companies To inform and blend a view of the changing market landscape, the Systematic Active Equity (SAE) Team harnesses technology to uncover: Stocks underpinned by attractive fundamentals - Improving & persistent revenue / profits Rising earnings expectations Fundamentals Satellite Images Ability to analyze complex and growing data is the key to future investment success: Machine learning extracts useful insights from unstructured data Satellite image of Chinese facilities reveals true fundamental activities Strong balance sheet and cash flow Attractive valuations Stocks supported by positive sentiment - Views of market participants such as analysts Positioning of other investors Sentiment Social Media Social media in China is a major alpha source: We process 100,000 posts a day from chat rooms Linguistic analysis helps to capture retail sentiment successfully Trading opportunities from liquidity effects Stocks with positive exposure to macro themes - Domestic economic conditions Exporters exposed to the macro backdrop Industries, policy baskets, styles and beta timing 150% 100% 50% 0% Macro Themes Policy Direction 4% 3% 2% 1% Systematically detect policy changes that impact company fundamentals People s Daily is used by the government to guide policy directions Policy leads fundamental and sentiment and stock returns For illustrative purposes only. 7

8 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13 Apr-14 Aug-14 Dec-14 Apr-15 Satellite Data Captures Accurate and Timely Activity Fundamentals Satellite images reveal the true activity of China Satellite images help to capture activity daily on the ground Use machine learning to map companies to facilities Companies associated with increasing activities may benefit Economic activity through satellite images reveals more volatility than reported PMI since 2013 Activity through satellite images vs. official PMI China PMI Economic activity through satellite image 40 Source: BlackRock, as of 3Q 2015, for illustrative purposes only Satellite images show real-time facility utilization Map companies to facility locations High Utilization Rate Med Utilization Rate Low Utilization Rate Source: BlackRock, SpaceKnow, as of 4Q 2015, for illustrative purposes only Source: BlackRock, as of 3Q 2015, for illustrative purposes only 8

9 Tracking consumer foot traffic through geo-location 60+ billon data points collected per month Foot traffic estimated using geo-location data collected from mobile devices can point to change in company sales ~70% of the US population now own a smart phone* Multiple sensors in each mobile phone, from GPS, WiFi and Bluetooth, now provide accurate mapping of each user s location This can be collected by a third party with the users permission when they allow apps to access their location 50 million active users provide on average 100+ daily data points each, giving 60 billion total data points per month These data points can be mapped with high accuracy to individual store locations and aggregated to a company level This can provide a good estimate of foot traffic at close to 200 US consumer facing companies, such as retailers & restaurants Time series for number of unique devices per day Source: BlackRock, March For illustration purposes only. *Pew Research Center. Survey conducted Jun Jul

10 change Measuring Web Traffic Globally adopted anti-virus software captures internet browsing behavior of all users. Custom analytics mapped to relevant companies in our investment universe. Visits. Demonstrate attention on company products Anti-Virus software from 100mm devices globally Location-tagged real time browsing behavior for 17,000 urls Purchases. Real-time accurate measures of sales Subscriptions. Measure user engagement Case Study: Number of page views increased dramatically in Q1 2015, observed here in the first two months of the quarter. Q1 2015, the company announces 4.9mm new subscribers, beating estimates of 4.1mm. Equity returns reflect the change after earnings announcements. Source: BlackRock, as of Dec For illustrative purposes only, not meant to depict actual data. 10

11 Sentiment

12 Measuring sentiment through text analysis Source: 21 Century Fox 2Q2014 Earnings Release Teleconference Call. The name of the company are provided here for reference only and does not represent endorsement by the company. 12

13 Capturing Retail Sentiment in China Is Crucial Sentiment Social media has been a key alpha source in China Retail investors account for over 80% of trading volumes Over two million blog posts per month reveal retail sentiment Various features of blogs can help to predict future returns Extreme blog activities are usually followed by reversal Consistent positive sentiment lead to outperformance Text analysis helps to read investor s mind What are retail investors talking about? What are analysts talking about? 买入 Buy in 强烈推荐 Strongly recommend 利好 Good news 欲扬先抑 Price fall before rise 上涨 Price increase 正面 Positive news 发财 Make a fortune 稳健 Stable 垃圾 Garbage 反弹 Bounce back 快跑 Run away fast 价格战 Price war 骗子 Liar 十分艰巨 Very difficult 下跌 Price fall 下滑 Fall down Source: wordcloud as of June 30, 2015; View expressed above are as of the Scientific Active Equity and are subject to change Source: BlackRock, as of 4Q 2016, for illustrative purposes only 13

14 Themes

15 Policy signal (raw) Policy signal (smoothed) Return Policy signal Official Newspaper Help to Predict Policy Change Systematically capture policy directions through People s Daily ( 人民日报 ) Chinese market is heavily influenced by policy People s Daily ( 人民日报 ) is the official newspaper of the government and the party Case study: China s one child policy relaxation in Nov 2013 Text analysis helped to predict policy change and forecast next three-month returns Frequency of one child policy on People s Daily Big Data signal helps to predict returns % % % 80% 60% 40% 20% % OneChildPolicy Source: BlackRock, as of 4Q 2013, for illustrative purpose only 1-yr smooth (rhs) basket excess return signal (rhs) Source: BlackRock, as of 31 December 2013, for illustrative purposes only; basket excess returns corresponds to the returns of the selection of equity stocks relevant to the model s One Child Policy signal; signal relates to the unweighted, normalized z-score of the insight 15

16 Predicting themes in politics Source: BlackRock, November

17 A stock example

18 18

19 Digging in: McDonalds in /31/2016 1/31/2017 2/28/2017 3/31/2017 4/30/2017 5/31/2017 6/30/2017 7/31/2017 8/31/ Alpha Fundamentals Sentiment Fundamentals Sentiment Macro Source: BlackRock, as of 31 August

20 Drilling down to the underlying component signals Source: BlackRock, as of 9 August

21 CFT: Consumer Foot Traffic Signal Jan-17 Feb-17 Mar-17 Apr-17 May Source: BlackRock, June

22 Big Data in Action Source: BlackRock, Google, November

23 Q2 Earnings Announcement 5 months later Source: Bloomberg, as of 25 July

24 SAE s Current UCITS product offerings Type Fund Name Strategy BSF Asia Extension Extension (130/30) Core BSF Systematic European Equity BSF Systematic Global Equity Long only Europe Long only Global BGF Global Small Cap Long only Global small cap BGF Global Enhanced Equity Yield Enhanced Income Outcome Asia Enhanced Equity Yield Enhanced Income BSF Impact World Equity Impact Equity High Conviction Alpha BSF Americas Diversified Equity Absolute Return BSF Global Long Short Equity BSF Asia Pacific Diversified Equity Absolute Return Market neutral Long / Short equity Market neutral Thematic BSF Emerging Markets Allocation BGF China A-Share Opportunities EM exposure China A The above information is for illustrative purpose only and does not constitute invest recommendation, advice or offer. Before making an investment decision, investors should read the relevant offering documents carefully including the investment objective and risk factors relating to the Funds. As at 4/1/2018 MKTG0118A

25 3 years performance p.a. % BlackRock Scientific Active MSCI China A Opportunities Composite Strategy Calendar Year Performance 60% 50% 40% 30% 20% 10% 0% -10% -20% -30% 2017 to Q Q4 12 Composite Return Benchmark Return Excess Return Strategy Risk / Return 3 Year 30% 25% 20% Strategy 15% 10% 5% Benchmark 0% 0% 5% 10% 15% 20% 25% 30% 35% 3 years volatility % p.a. Source: BlackRock, as of 30 September 2017, inception date of 11/28/2012. Net of fees performance and monthly volatility represented using 0.75% base fees share class since inception; Past performance is not indicative or predictive of future performance. The BlackRock Scientific Active MSCI China Opportunities Composite is comprised of discretionary, equity portfolios which are actively managed and seek to exceed the performance of the MSCI China A Index US Net Dividend Index or similar index while incurring a low level of risk. All accounts included in the composite follow a similar investment philosophy. This composite may include separate accounts and pooled funds with multiple investor types which can have different withholding tax rates applied. The creation date of the composite is 1 January The composite does not have a Significant Cash Flow Policy. On 8/31/2017, the BlackRock Scientific Active MSCI China A Index Composite has changed its name to the BlackRock Scientific Active MSCI China Opportunities Composite. MKTG0118A

26 Historical data BlackRock Scientific Active MSCI China Opportunities Composite Notes 1. For purposes of compliance with the Global Investment Performance Standards (GIPS ), the "firm" refers to the investment adviser and national trust bank subsidiaries of BlackRock, Inc., located globally. This definition excludes: i) BlackRock subsidiaries that do not provide investment advisory or management services, ii) the Absolute Return Strategies (funds-of-hedge-funds) business unit under the "BlackRock Alternative Advisers" platform, iii) BlackRock Capital Investment Corporation, LLC, and iv) FutureAdvisor, Inc. 2. BlackRock claims compliance with the GIPS standards and has prepared and presented this report in compliance with the GIPS standards. BlackRock has been independently verified for the periods 1 January 1993 through 31 December The verification reports are available upon request. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation. The firm is verified annually by Deloitte & Touche LLP. 3. BlackRock uses a time-weighted linked rate of return formula with adjustments for cash flows to calculate rates of return. Trade date accounting has been used since the inception of the composite. The currency used to calculate performance is the US Dollar. 4. The benchmark index shown is the MSCI China A Index US Net Dividend Index. 5. Composite dispersion measures represent the consistency of a firm s composite performance results with respect to the individual portfolio returns within a composite. Dispersion is represented by the asset-weighted standard deviation of only portfolios that have been included in the composite style for a full year. For composites containing only one account, a measure of dispersion is not meaningful (NM). 6. Percentage of Firm Assets are rounded to the nearest whole percent. 7. There have been no alterations of the composite due to changes in personnel or other reasons. 8. When permitted by investment guidelines, derivatives may be used in the portfolio, but are not integral to the investment process. Shorting and leverage are not allowed. 9. Gross of fee performance results are presented before management and custodial fees and net of broker fees, transaction costs, and withholding taxes (if applicable). Certain portfolios may have custodial fees included. Net performance reflects the deduction of the highest management fee per the strategy fee schedule. Certain, but not all, accounts in the composite may pay incentive-based performance fees. The standard management fee schedule for this strategy for an institutional investor in a pooled fund is as follows: 0.75 of 1% of all assets. Comparable incentive-based fee pricing options are also available. Separate accounts may be charged additional management fees depending on complexity. Additional fees are generally in the range of 3-5 bps. 10. A complete list and description of all composites maintained by BlackRock and the related performance results are available upon request. Additional information regarding policies for calculating and reporting returns as well as valuation policies is also available upon request. The BlackRock Scientific Active MSCI China Opportunities Composite is comprised of discretionary, equity portfolios which are actively managed and seek to exceed the performance of the MSCI China A Index US Net Dividend Index or similar index while incurring a low level of risk. All accounts included in the composite follow a similar investment philosophy. This composite may include separate accounts and pooled funds with multiple investor types which can have different withholding tax rates applied. The creation date of the composite is 1 January The composite does not have a Significant Cash Flow Policy. On 8/31/2017, the BlackRock Scientific Active MSCI China A Index Composite has changed its name to the BlackRock Scientific Active MSCI China Opportunities Composite. MKTG0118A

27 Fund Specific Risks BSF Asia Extension Fund The fund invests a large portion of assets which are denominated in other currencies; hence changes in the relevant exchange rate will affect the value of the investment. The Fund 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 withdrawn from the market, or in some extreme cases, becoming insolvent. This may have an adverse affect on the activities of the fund. The fund may invest in smaller company shares which can be more unpredictable and less liquid than those of larger company shares. Compared to more established economies, the value of investments in developing Emerging Markets may be subject to greater volatility due to differences in generally accepted accounting principles or from economic or political instability. Derivatives may be used substantially for complex investment strategies. These include the creation of short positions where the Investment Manager artificially sells an investment it does not physically own. Derivatives can also be used to generate exposure to investments greater than the net asset value of the fund / investment trust. Investment Managers refer to this practice as obtaining market leverage or gearing. As a result, a small positive or negative movement in stockmarkets will have a larger impact on the value of these derivatives than owning the physical investments. The use of derivatives in this manner may have the effect of increasing the overall risk profile of the Funds. BSF Systematic European Equity The fund invests a large portion of assets which are denominated in other currencies; hence changes in the relevant exchange rate will affect the value of the investment. Compared to more established economies, the value of investments in developing Emerging Markets may be subject to greater volatility due to differences in generally accepted accounting principles or from economic or political instability. The fund investments may be subject to liquidity constraints, which means that shares may trade less frequently and in small volumes, for instance smaller companies. As a result, changes in the value of investments may be more unpredictable. In certain cases, it may not be possible to sell the security at the last market price quoted or at a value considered to be fairest. The Fund utilises derivatives as part of its investment strategy. Compared to a fund which only invests in traditional instruments such as stocks and bonds, derivatives are potentially subject to a higher level of risk and volatility. The strategies utilised by the Fund involve the use of derivatives to facilitate certain investment management techniques including the establishment of both long and synthetic short positions and creation of market leverage for the purposes of increasing the economic exposure of a Fund beyond the value of its net assets. The use of derivatives in this manner may have the effect of increasing the overall risk profile of the Fund. The Fund 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 withdrawn from the market, or in some extreme cases, becoming insolvent. This may have an adverse affect on the activities of the fund. BSF Systematic Global Equity Emerging market investments are usually associated with higher investment risk than developed market investments. Therefore the value of these investments may be unpredictable and subject to greater variation. The Fund uses derivatives as part of its investment strategy. Compared to a fund which only invests in traditional instruments such as stocks and bonds, derivatives are potentially subject to a higher level of risk. The Fund s investments may have low liquidity which often causes the value of these investments to be less predictable. In extreme cases, the Fund may not be able to realise the investment at the latest market price or at a price considered fair. MKTG0118A

28 Fund Specific Risks BGF Global Enhanced Equity Yield 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. The fund invests a large portion of assets which are denominated in other currencies; hence changes in the relevant exchange rate will affect the value of the investment. The fund may make distributions from capital as well as income or pursue certain investment strategies in order to generate income. Whilst this might allow more income to be distributed, it may also have the effect of reducing capital and the potential for long-term capital growth. The fund utilises derivatives as part of its investment strategy. Compared to a fund which only invests in traditional instruments such as stocks and bonds, derivatives are potentially subject to a higher level of risk and volatility. The use of covered call options in the fund will usually provide some limited protection to investors when stockmarkets are falling, but may also result in a lower return in a rising market, when compared to the benchmark. Investors in this Fund should understand that capital growth is not a priority and values may fluctuate and the level of income may vary from time to time and is not guaranteed Asia Enhanced Equity Yield Fund Investment involves risk, including the loss of principal. Please refer to the Prospectus and Key Facts Statement for details including the risk factors. Investors should not base their investment decision on this marketing material alone. Investors should note: The Fund invests in equity securities in Asia Pacific countries excluding Japan and is subject to equity market risks, emerging market risks, concentration risk, currency risks and risk associated with small cap companies. The Fund as a seller of a covered call option gives up the opportunity for gain when the market price of the underlying instrument in respect of the option is above the exercise price of the option. The value of the Fund may be adversely affected as a result. The Fund invests in derivatives and is subject to counterparty risk, liquidity risk, valuation risk, volatility risk, and over-the-counter transaction risks. The Fund is subject to risk relating to RMB class(es), including devaluation, discrepancy of exchange rate between offshore RMB in Hong Kong ( CNH ) which the Fund. uses to calculate the value of the RMB class(es) and onshore RMB in China ( CNY ), and not freely convertible nature of RMB. Payment of redemption from the RMB class (es) and payment of distributions in RMB (if any) may be delayed due to exchange controls and restrictions applicable to RMB. Some countries prohibit or restrict investment, or the repatriation of income, capital or the proceeds from sale of securities. Such restrictions may delay the investment or repatriation of capital of the Fund or incur higher investment costs. Distributions of certain unit classes, at the Manager s discretion, may involve dividends i) paid out of capital (including net realised and net unrealised capital gains); ii) paid out of gross income (i.e. payment of fees and expenses out of capital); or iii) payment of interest rate differentials arising from unit class currency hedging. Dividend payable includes interest rate differentials arising from unit class currency hedging gains/losses which may increase/decrease dividends paid. Dividend distribution represents a return or withdrawal of part of an investor s original investment or from any capital gains attributable to that original investment and will result in an immediate decrease in the fund s NAV per unit. BSF Impact World Equity The fund invests a large portion of assets which are denominated in other currencies; hence changes in the relevant exchange rate will affect the value of the investment. The fund utilises derivatives as part of its investment strategy. Compared to a fund which only invests in traditional instruments such as stocks and bonds, derivatives are potentially subject to a higher level of risk and volatility. The insolvency of any institutions providing services such as safekeeping of assets or acting as counterparty to derivatives or other instruments, may expose the Fund to financial loss. BSF Emerging Markets Allocation Fund The fund invests a large portion of assets which are denominated in other currencies; hence changes in the relevant exchange rate will affect the value of the investment. Compared to more established economies, the value of investments in developing Emerging Markets may be subject to greater volatility due to differences in generally accepted accounting principles or from economic or political instability. The strategies utilised by the Fund involve the use of derivatives to facilitate certain investment management techniques including the establishment of both 'long' and 'synthetic short' positions and creation of market leverage for the purposes of increasing the economic exposure of a Fund beyond the value of its net assets. The use of derivatives in this manner may have the effect of increasing the overall risk profile of the Funds. Investors in this fund should understand that the Fund is not guaranteed to produce a positive return and as an absolute return product, performance may not move in line with general stock market trends as both positive and negative share movements affect the overall value of the fund. The Manager employs a risk management process to oversee and manage derivative exposure within the Fund. The fund may invest in exchange traded funds which have exposure to property securities and commodities (through an index). Property investments are subject to adverse changes in economic conditions, adverse local market conditions and risks associated with the acquisition, financing and ownership and operation and disposal of real property. The underlying commodities index may concentrate investment on selected commodity futures of multinational markets. This makes the exchange traded fund extremely dependent on the performance of the commodity markets concerned. The Fund may invest more than 10% of its Net Asset Value in the units of UCITS and/or other UCIs. MKTG0118A

29 Fund Specific Risks BSF Americas Diversified Equity Absolute Return 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. The fund invests a large portion of assets which are denominated in other currencies; hence changes in the relevant exchange rate will affect the value of the investment. The strategies utilised by the Fund involve the use of derivatives to facilitate certain investment management techniques including the establishment of both 'long' and 'synthetic short' positions and creation of market leverage for the purposes of increasing the economic exposure of a Fund beyond the value of its net assets. The use of derivatives in this manner may have the effect of increasing the overall risk profile of the Funds. Investors in this fund should understand that the Fund is not guaranteed to produce a positive return and as an absolute return product, performance may not move in line with general stock market trends as both positive and negative share movements affect the overall value of the fund. BSF Global Long Short Equity 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. The fund invests a large portion of assets which are denominated in other currencies; hence changes in the relevant exchange rate will affect the value of the investment. Emerging market investments are usually associated with higher investment risk (than developed market investments). The fund invests 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 to the fund. The fund investments may be subject to liquidity constraints, which means that shares may trade less frequently and in small volumes, for instance smaller companies. In certain cases, it may not be possible to sell the security at the last market price quoted or at a value considered to be fairest. The value of this fund does not typically move in line with general market trends and is not expected to reap the full benefits of a rising stock market. Investment strategies employed by the manager may affect the risk profile of the fund, as both positive and negative share movements affect the overall value of the fund. The Fund utilises derivatives as part of its investment strategy. Compared to a fund which only invests in traditional instruments such as stocks and bonds, derivatives are potentially subject to a higher level of risk and volatility. The strategies utilised by the Fund involve the use of derivatives to facilitate certain investment management techniques including the establishment of both long and synthetic short positions and creation of market leverage for the purposes of increasing the economic exposure of a Fund beyond the value of its net assets. The use of derivatives in this manner may have the effect of increasing the overall risk profile of the Fund. BSF Asia Pacific Diversified Equity Absolute Return 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. The insolvency of any institutions providing services such as safekeeping of assets or acting as counterparty to derivatives or other instruments, may expose the Fund to financial loss. Overseas investment will be affected by movements in currency exchange rates.emerging market investments are usually associated with higher investment risk than developed market investments. Therefore the value of these investments may be unpredictable and subject to greater variation. Smaller company investments are often associated with greater investment risk than those of larger company shares.investments in China are subject to certain additional risks, particularly regarding the ability to deal in equity securities in China due to issues relating to liquidity and the repatriation of capital. As a result, the Fund may choose to gain exposure to Chinese equities indirectly and may be unable to gain full exposure to Chinese equity markets.the strategies utilised by the Fund involve the use of derivatives to facilitate certain investment management techniques including the establishment of both 'long' and 'synthetic short' positions and creation of market leverage for the purposes of increasing the economic exposure of a Fund beyond the value of its net assets. The use of derivatives in this manner may have the effect of increasing the overall risk profile of the Funds. Investors in this fund should understand that the Fund is not guaranteed to produce a positive return and as an absolute return product, performance may not move in line with general stock market trends as both positive and negative share movements affect the overall value of the fund. The Manager employs a risk management process to oversee and manage derivative exposure within the Fund. MKTG0118A

30 This material is neither an offer to sell nor a solicitation of any offer to buy shares in the Fund. You may not rely upon these materials in evaluating the merits of investing in the Fund. Any BlackRock funds mentioned in this material are only offered on a private placement basis and potential investors are required to inform themselves of, and to observe, any legal restrictions on their involvement in the offering. No sale of Fund shares will be made in any jurisdiction in which the offer, solicitation, or sale is not authorized or to any person to whom it is unlawful to make the offer, solicitation or sale. If any such offer of Fund shares is made, it will be made pursuant to the current relevant offering documents that contain material information not contained herein and to which prospective investors will be referred. Any decision to invest in the Fund should be made solely on reliance upon the offering documents of the Fund. This presentation is strictly confidential and may not be reproduced for, disclosed to or otherwise provided in any format to any other person or entity (other than the Reader s professional advisors bound by obligations of confidentiality to the Reader) without the prior written consent of BlackRock, Inc. or its applicable advisory subsidiaries (collectively, BlackRock ). Notwithstanding anything to the contrary herein, each Reader (and each employee, representative or other agent of such Reader) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of (i) the Fund and (ii) any of the Fund s transactions described herein, and all materials of any kind (including opinions or other tax analyses) that are provided to the Reader relating to such tax treatment and tax structure. This material has not been approved by the SEC, FINRA or any other regulatory authority or securities. This presentation is for informational purposes only and not to be relied upon as investment, legal, tax, or financial advice. The Reader must consult with his or her independent professional advisors as to the legal, tax, financial or other matters relevant to the suitability of an investment in the Fund. Certain information contained herein has been obtained from published sources, agencies of the US government and from third-parties, including without limitation, market forecasts, market research, publicly available information and industry publications. In addition, certain information contained herein has been obtained from companies in which investments have been made by entities affiliated with BlackRock. Although such information is believed to be reliable for the purposes used herein, none of the Fund or BlackRock assumes any responsibility for the accuracy or completeness of such information. Similarly, forecasts or market research, while believed to be reliable, have not been independently verified and none of the Fund or BlackRock makes any representation as to the accuracy or completeness of such information. All information is provided on an AS IS basis only. By using this information, the Reader agrees that BlackRock shall not have any liability for the accuracy of the information contained herein, for delays or omissions therein, or for any results based on your use of the information which are not consistent with your objectives. WITHOUT LIMITING THE FOREGOING DISCLAIMERS, THE INFORMATION PROVIDED HEREIN IS NOT GUARANTEED TO BE ACCURATE OR COMPLETE, NOR DOES BLACKROCK TAKE RESPONSIBILITY FOR IT. THE INFORMATION CONTAINED HEREIN HAS NOT BEEN AUDITED AND BLACKROCK DOES NOT GUARANTEE ITS SUITABILITY FOR ANY PURPOSE. ALL INFORMATION IS SUBJECT TO CHANGE AND/OR WITHDRAWAL AT ANY TIME WITHOUT NOTICE. Certain information included herein may refer to published indices. Indices that purport to present performance of certain markets or the performance of certain asset classes or asset managers may actually present performance that materially differs from the overall performance of such markets, asset classes or asset managers due to issues of selection and survivorship bias. Certain information contained in this presentation constitutes forward-looking statements, which can be identified by the use of forward looking terminology such as may, will, should, expect, anticipate, project, estimate, intend, continue, target, believe, the negatives thereof, other variations thereon or comparable terminology. Due to various risks and uncertainties inherent in the capital markets or otherwise facing the asset management industry, actual events or results or the actual performance of the Fund may differ materially from those reflected or contemplated in such forward-looking statements. The information contained in this presentation is proprietary and confidential and may contain commercial or financial information, trade secrets and/or intellectual property of BlackRock. If this information is provided to an entity or agency that has, or is subject to, open records, open meetings, freedom of information, sunshine laws, rules, regulations or policies or similar or related laws, rules, regulations or policies that require, do or may permit disclosure of any portion of this information to any other person or entity to which it was provided by BlackRock (collectively, Disclosure Laws ), BlackRock hereby asserts any and all available exemption, exception, procedures, rights to prior consultation or other protection from disclosure which may be available to it under applicable Disclosure Laws. In Hong Kong, this information is issued by BlackRock Asset Management North Asia Limited and has not been reviewed by the Securities and Futures Commission of Hong Kong. Please note some of the funds mentioned herein may not been registered with the Securities and Futures Commission for offering or distribution in Hong Kong. Accordingly, this material may not be circulated or distributed, nor may the Funds be offered or sold whether directly or indirectly, to any person in Hong Kong other than to a Professional Investor as defined in the Securities and Futures Ordinance (Cap.571 of the laws of Hong Kong) and any rules made under that ordinance and should not be relied upon by any other persons or redistributed to retail clients in Hong Kong. Please refer to the relevant Prospectus for details, including risk factors. In Singapore, this information is issued by BlackRock (Singapore) Limited (company registration number: N) for use only by institutional investors as defined in Section 4A of the Securities and Futures Act, Chapter 289 of Singapore and should not be relied upon by or redistributed to any other persons in Singapore. The above warnings and fund specific risks are explained in greater detail in in the current Prospectus and you should read them before investing. Some of the funds mentioned herein have not been registered with the Monetary Authority of Singapore for offering or distribution in Singapore. Accordingly, this information may not be circulated or distributed, nor may the funds be offered or sold whether directly or indirectly, to any person in Singapore other than (i) to an institutional investor pursuant to Section 304 of the Securities and Futures Act ("SFA") or (ii) otherwise pursuant to and in accordance with the conditions of any other applicable provision of the SFA. MKTG0118A

31 The BlackRock Strategic Funds (BSF) Asia Extension Fund, BlackRock Strategic Funds (BSF) Systematic European Equity Fund, BlackRock Strategic Funds (BSF) Systematic Global Equity, BlackRock Strategic Funds (BSF) Americas Diversified Equity Absolute Return, BlackRock Strategic Funds (BSF) Global Long Short Equity, BlackRock Strategic Funds (BSF) Asia Pacific Diversified Equity Absolute Return, BlackRock Strategic Funds (BSF) Impact World Equity, BlackRock Strategic Funds (BSF) Emerging Markets Allocation, BlackRock Global Funds (BGF) Global Enhanced Equity Yield Fund is domiciled in Luxembourg. BlackRock Asset Management Schweiz AG, Bahnhofstrasse 39, CH-8001 Zurich, is the Swiss Representative and State Street Bank International GmbH, Munich, Zurich Branch, Beethovenstrasse 19, CH-8002 Zurich, the Swiss Paying Agent. The Prospectus, Key Investor Information Document, the Articles of Incorporation, the latest and any previous annual and semi-annual reports are available free of charge from the Swiss Representative. Investors should read the fund specific risks in the Key Investor Information Document and the Prospectus. This material is for distribution to Professional Clients (as defined by the FCA or MiFID Rules) and Qualified Investors only and should not be relied upon by any other persons. Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: Registered in England No For your protection telephone calls are usually recorded. BlackRock is a trading name of BlackRock Investment Management (UK) Limited. BlackRock Global Funds (BGF) and BlackRock Strategic Funds (BSF) are open-ended investment companies established and domiciled in Luxembourg which are available for sale in certain jurisdictions only. BGF and BSF are not available for sale in the U.S. or to U.S. persons. Product information concerning BGF and BSF should not be published in the U.S. They are recognised under Section 264 of the Financial Services and Markets Act BlackRock Investment Management (UK) Limited is the UK distributor of BGF and BSF. Most of the protections provided by the UK regulatory system, and the compensation under the Financial Services Compensation Scheme, will not be available. A limited range of BGF and BSF subfunds have a reporting fund status A sterling share class that seeks to comply with UK Reporting Fund Status requirements. Subscriptions in BGF and BSF are valid only if made on the basis of the current Prospectus, the most recent financial reports and the Key Investor Information Document, which are available on our website. Prospectuses, Key Investor Information Documents and application forms may not be available to investors in certain jurisdictions where the Fund in question has not been authorised. Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy. This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer BlackRock, Inc. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS, ishares, BUILD ON BLACKROCK, SO WHAT DO I DO WITH MY MONEY and the stylized i logo 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. MKTG0118A

32 Important Information In Hong Kong, this material is issued by BlackRock Asset Management North Asia Limited and has not been reviewed by the Securities and Futures Commission of Hong Kong. This material is for distribution to "Professional Investors" (as defined in the Securities and Futures Ordinance (Cap.571 of the laws of Hong Kong) and any rules made under that ordinance.) and should not be relied upon by any other persons or redistributed to retail clients in Hong Kong. This material is for distribution to professional and institutional investors only and should not be relied upon by any other persons. This material is provided for informational or educational purposes only and does not constitute a solicitation of any securities or BlackRock funds in any jurisdiction in which such solicitation is unlawful or to any person to whom it is unlawful. Moreover, it neither constitutes an offer to enter into an investment agreement with the recipient of this document nor an invitation to respond to it by making an offer to enter into an investment agreement. This material may contain forward-looking information that is not purely historical in nature. Such information may include, among other things, projections, forecasts, estimates of yields or returns. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of December 2017 and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy. Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested. Changes in the rates of exchange between currencies may cause the value of investments to fluctuate. THIS MATERIAL IS HIGHLY CONFIDENTIAL AND IS NOT TO BE REPRODUCED OR DISTRIBUTED TO PERSONS OTHER THAN THE RECIPIENT BlackRock, Inc., All Rights Reserved. 32