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How this paraplanner helped BlackRock design a fund range

8 September 2019

In summer last year Martin Green, paraplanning manager and CFP at Chadney Bulgin, was asked by BlackRock to help in the design of a range of new funds for the global asset manager. Editor Rob Kingsbury spoke to Martin and BlackRock about the collaboration.

In May 2019 BlackRock launched the MyMap fund range, a group of four actively managed, multi-asset and low cost funds, built using BlackRock’s proprietary iShares index funds.

The desire to build the range, the global asset manager says, came from its “ongoing fiduciary desire to help individuals achieve financial wellbeing. We wanted to deliver a core investment allocation that met the needs of a spectrum of clients, including those with smaller portfolios.”

In creating the funds, BlackRock said while it had the investment expertise, it wanted deeper insight and understanding of the “needs and concerns of advisers and their clients”. BlackRock had been speaking with Martin and the team at Chadney Bulgin as far back as 2013, when they became a client of the asset manager’s index investing business and in August last year Martin was asked to meet members of the investment team in order to provide input into the design process.

The result was the MyMap funds, which seek to generate a total return over a 5-year period, while maintaining a pre-defined risk profile, as measured by each funds’ annualised volatility over that period. The range uses sequential volatility bands that increase in scale, thereby catering for investors’ different risk appetites, with varying levels of exposure to equities and bonds, as well as alternatives such as gold and property. They are low cost funds with an OCF of 0.17%, which are rebalanced every quarter.

Martin says he welcomed the opportunity to participate in the development process, discussing the ideas and providing feedback into the design process.

The involvement of Martin and the Chadney Bulgin team, BlackRock says, was “hugely helpful in enabling us to validate our belief that a client need existed for a solution of this nature. We engaged with Martin early in the trialling stage of the models, before we brought the funds to market, to solicit feedback and to make sure we had understood the adviser and client need correctly.

“Working with Martin and his team gave us valuable insight into not only the needs of advisers and their clients today but also what they need for the future. The outcome being a range of simple, cost-effective funds, matched to risk appetite – with the difference being that while our offering utilises iShares index funds it is actively managed and rebalanced on a quarterly basis.”

The use of the underlying instruments, BlackRock says, was decided based on calculated asset allocation to provide diversification. “Diversification is very important, and understanding which assets move together and those which are truly uncorrelated makes up the starting point of any asset allocation. Liquidity, growth, market access, governance and many other factors shape that allocation.

“The decision on how to express that allocation was born out of experience, analysis and testing. To be cost effective and transparent we chose passive building blocks but combined this with the insights and experience of BlackRock’s fund managers to bring [the] offering to market.”

Commenting on the experience, Martin says it drew heavily on his years of fund and product research and knowledge of the markets as well as being a member of the Investment Committee at Chadney Bulgin. “It was a great opportunity. I think participations like this can benefit both fund managers and adviser firms, helping each to better understand the bigger picture and most importantly, align the design of investments with the current and future needs of clients.”

Professional Paraplanner