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BlackRock UK Absolute Alpha fund
This fund aims to achieve a positive absolute return for investors regardless of market conditions. It is a UK equity long/short fund, investing in UK businesses of all shapes and sizes. The manager will use contracts for differences (CFDs) to secure short positions, aiming to make money when share prices fall as well as rise.
Our opinion
Run by one of the best resourced and most experienced UK equity teams, the BlackRock UK Absolute Alpha fund is a very useful portfolio diversifier, with much lower volatility than the UK equity sector average. The manager has a pragmatic approach to stock selection which we like, taking the macroeconomic environment into account as well as looking at each individual company's fundamentals.
Company description
A part of the US-based BlackRock Group, BlackRock manage assets across equity, fixed income, cash management, alternative investment, real estate and advisory strategies. They provide a comprehensive range of products and services across asset classes, geographies and investment strategies, holding over 130 investment teams in 30 countries.
Fund manager
The fund is co-managed by Nick Osborne and Nigel Ridge. Nick was officially named manager in January 2008, although he has been actively involved in the management of the BlackRock UK Absolute Alpha fund since its launch. Nigel was named co-manager in April 2013. Nigel has been a member of the UK Equity team since 2004 and has been running long/short mandates since 2005.
From an early age I’ve been fascinated by numbers and after a brief flirtation with the world of engineering I found my ultimate passion was investing. After 30 years in the industry, I’m as excited as ever about the prospect of making money and if I wasn’t doing this professionally it would be an obsessional hobby!
Nigel RidgeFund manager
Investment process
Nick and Nigel aim to deliver a positive absolute return using four main strategies: long positions, short positions, pairs trades and cash. They will do this by investing in both equities and CFDs. The managers aim to identify a catalyst that could either unlock potential value and increase the price of a share, or destroy it in the case of a short holding. The extensive primary research carried out by BlackRock’s equity teams ensures that the majority of added value in the team's investment process comes from stock selection and the sharing of ideas is a key strength.
Risk
The UK Equity team take a holistic approach to risk management, leveraging BlackRock’s extensive risk resources to closely monitor concentration of stocks within portfolios. This ensures that the risk is deliberate, diversified and appropriately scaled. Each of the holdings fulfils a specific function in the portfolio, and the stocks selected complement each other so that risk and tracking error can be managed. They are also mindful of liquidity and monitor the position sizes against average trading volumes. The positions come mainly from a range of mid to large-cap names that tend to be very liquid.
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