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Do you have hidden risks in your bond portfolio? BlackRock sees hidden risks others miss, and helps solve them with fixed income. When making investment choices, you should be aware of hidden risks in your portfolio. Hidden risks we have uncovered are equity risk, interest rate risk and yield risk. 1 2 Equity risk Do your bonds behave too much like stocks? High yield and corporate bonds are typically affected by the same factors that drive equity markets. If your goal is to diversify stocks, core bonds have delivered when the stock market was down. Interest rate risk Even a small rise in rates can lead to losses. While there is a role for core bonds in your portfolio, they may not guard against rising interest rates. Flexible funds and shorter duration strategies can help you manage interest rate volatility. Average calendar year returns when the stock market was negative1 Core bonds % +5.1 High yield bonds % Stocks -7.6 -13.6% When interest rates RISE Core bonds AT RISK +1% -5% Avg. duration: 5 years Bond values FALL 3 Yield risk If your investments are too conservative, you face the risk of not earning enough to meet your long-term goals. 2 6.0% Bonds 3.6% Bonds after inflation 2.7% Cash 0.3% Cash after inflation Performance data quoted represents past performance and is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index. 20170428-138640-410110 BlackRock solutions to consider 1 Diversify to help balance equity risk 2 Manage interest rate volatility 3 Seek attractive income potential BSIIX Strategic Income Opportunities Fund BHYIX High Yield Bond Fund Strategic Municipal Opportunities Fund BMSIX Credit Strategies Income Fund MAHQX Total Return Fund MANLX National Municipal Fund MAMTX AGG iShares® Core U.S. Aggregate Bond ETF NEAR IUSB iShares® Core Total USD Bond Market ETF CSJ Want to know more? iShares® Short Maturity Bond ETF EMB iShares® J.P. Morgan USD Emerging Markets Bond ETF iShares® 1-3 Year Credit Bond ETF PFF iShares® U.S. Preferred Stock ETF blackrock.com Investing involves risk, including possible loss of principal. Important Risks: Fixed income risks include interest-rate and credit risk. Typically, when interest rates rise, there is a corresponding decline in bond values. Credit risk refers to the possibility that the bond issuer will not be able to make principal and interest payments. There may be less information on the financial condition of municipal issuers than for public corporations. The market for municipal bonds may be less liquid than for taxable bonds. Some investors may be subject to federal or state income taxes or the Alternative Minimum Tax (AMT). Capital gains distributions, if any, are taxable. Diversification and asset allocation may not protect against market risk or loss of principal. International investing involves risks, including risks related to foreign currency, limited liquidity, less government regulation, and the possibility of substantial volatility due to adverse political, economic or other developments. These risks often are heightened for investments in emerging/developing markets, in concentrations of single countries or smaller capital markets. The strategies discussed are strictly for illustrative and educational purposes and are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. There is no guarantee that any strategies discussed will be effective. The information presented does not take into consideration commissions, tax implications, or other transactions costs, which may significantly affect the economic consequences of a given strategy or investment decision. Transactions in ETFs will result in brokerage commissions and will generate tax consequences. All regulated investment companies are obliged to distribute portfolio gains to shareholders. The iShares Funds are not sponsored, endorsed, issued, sold or promoted by JPMorgan Chase & Co. This company does not make any representation regarding the advisability of investing in the Funds. BlackRock is not affiliated with the company listed above. 1 Source: Morningstar as of 12/31/16. Core bond returns represented by IA SBBI IT Govt Index from 1926 to 1975 and the Bloomberg Barclays U.S. Aggregate Bond Index from 1976 to 2016. Stock returns are represented by IA SBBI Large Stock Index from 1929 to 1970 and the S&P 500 Index from 1971 to 2016. High yield bond returns represented by Bloomberg Barclays U.S. Corporate High Yield TR USD Index from 1984 (when HY was introduced to the market) to 2016. 2 Source: BlackRock, Morningstar. As of 9/30/16. Assumes constant annual inflation rates. Bonds are represented by the Bloomberg Barclays U.S. Aggregate Bond Index. Cash is represented by the Barclays U.S. 1-3 Month Treasury Index. Cash returns from inception of index, 11/30/1991. Inflation is represented by the Consumer Price Index. Index performance returns do not reflect any management fees, transaction costs or expenses. Carefully consider the Funds’ investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds’ prospectuses or, if available, the summary prospectuses which may be obtained by visiting www.blackrock.com or www.ishares.com. Read the prospectus carefully before investing. ©2017 BlackRock, Inc. All Rights Reserved. BLACKROCK and iSHARES are registered trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners. Prepared by BlackRock Investments, LLC, member FINRA. Not FDIC Insured • May Lose Value • No Bank Guarantee LIT NO. FI-RISK-0517 008236J-0517 20170428-138640-410110