BlackRock Global Unconstrained Equity

BlackRock Global Unconstrained Equity is a concentrated, high-conviction fund, targeting extraordinary companies across developed markets. It takes a long-term approach which filters out short-term noise in the marketplace. Although relatively new, it is backed by some of the most experienced and top-performing equity managers of the past decade.

Our opinion

We think this fund has a sound philosophy and strategy. It has the added advantage of being able to access the immense resources of BlackRock, as well as being run by two top performing managers. Alister Hibbert and Michael Constantis have delivered exceptional performance for investors throughout their careers, and we have no hesitation in backing them on this fund. BlackRock Global Unconstrained Equity is still relatively young but has already delivered excellent performance since it launched in January 2020 despite the difficulties which many other quality growth strategies have experienced.

Fund manager

Alister Hibbert is a well-known and experienced fund manager who previously ran European equities at Invesco Perpetual, Oeschle International and Scottish Widows. Alister joined BlackRock in 2008 and successfully managed BlackRock European Dynamic until 2020 when he relinquished the fund to launch this portfolio. Alister is also co-manager and founder of the BlackRock Strategic Equity Hedge fund strategy.

Michael Constantis previously worked for Deutsche Asset Management and joined Merrill Lynch in 2005, which then merged with BlackRock in 2006. Michael has managed pan-European growth strategies since 2008 and launched the BlackRock Strategic Equity Hedge fund strategy with Alistair in 2011. Michael also assumed responsibility for the European unconstrained strategy in 2017, before launching this fund in 2020.

Alister HibbertFund manager

Investment process

BlackRock Global Unconstrained Equity has a global mandate but is limited to only investing in developed markets. The team's philosophy is built around the idea that the market has become increasingly focused on short-term returns. This provides an opportunity for the long-term investor who is willing to ride out short-term noise and back exceptional businesses well into the future. It is essentially a ‘buy and hold’ approach.

The team believes that low economic growth and technological disruption means the equity market is increasingly divided into ‘winners’ and ‘losers’. A benchmark-orientated approach makes no sense in this environment and the fund deliberately avoids any benchmark constraints as a result.

Fundamental research is centred around the sustainability of a company’s returns and the scale of its reinvestment opportunity. The focus is on how a company’s growth might look well into the future rather than over the next quarter. Compounding is exceptionally powerful and those businesses which can manage it consistently for many years, or even decades, can deliver outstanding returns. The team looks for established market leaders with high returns, structural returns and conservative, judicious management teams.

The only constraint on the fund is that more than 50% of assets must be invested in defensive companies. Defensive companies are those whose cash flows are not expected to fall significantly in the event of an economic downturn.

The fund has a general bias in favour of large and mega-cap companies, which make up the vast majority of the portfolio. However, it does also invest a reasonable proportion into mid-cap stocks. The fund has a very clear style bias in favour of quality growth companies with resilient earnings

Mindful that rebalancing the portfolio too frequently ultimately defeats the objective of compounding, trading is rare and only driven by fundamental change to the investment case, valuation extremes or a superior idea.

ESG

ESG - Integrated

The fund’s ESG approach combines a negative screen, which excludes certain stocks, and an integration into the fundamental assessment of a stock during the research process. UN global compact violators, controversial and nuclear weapons stocks are all excluded, as are companies which derive more than 5% of their revenues from civilian firearms, tobacco or fossil fuels.

ESG factors are also considered as part of fundamental research on all potential ideas. The team’s own knowledge is supplemented with data from MSCI to flag potential ESG issues which may have a material impact.

Risk

BlackRock Global Unconstrained Equity is benchmark-agnostic and is very highly concentrated, with a portfolio of just 20 to 30 stocks. It typically has a number of holdings with individual weights of more than 8%. This means there is a high degree of individual stock risk.

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