BlackRock Australia rejigs multi-asset range

Two popular multi-asset funds from BlackRock Australia are getting an ESG makeover, effective end of this month.

BlackRock kicked off its "Scientific Diversified" range over 20 years ago, and currently offers them in stable and growth versions.

They now have about $540 million in assets and are used by over 1000 Australian advisers.

Starting next month, the portfolios for both funds will be screened for ESG factors, said David Griffith, BlackRock's head of investment strategy for multi-asset strategies group, Australia.

"The change is driven by client demand.  We periodically receive enquiries from existing investors and clients about ESG and the changes reflect that demand," Griffith said.

"There are not too many multi-asset funds screening for ESG. You will typically find that they will do it for the equity component but we have tried to incorporate it into all asset classes in the fund."

The equity component will be screened for tobacco, controversial weapons and nuclear weapons.

The fixed income allocations will have more comprehensive screening, accounting for nine areas including fossil fuels, alcohol, gambling, adult entertainment and civilian firearms.

BlackRock said it is hard to quantify how much of the portfolio will change.

"It's hard to quantify because changes to underlying funds include both screens and re-weighting (ESG optimisation). If we only look at resulting changes specific to screens, then changes from a total exposure perspective is anticipated to be less than 3% change versus standard market cap benchmark," a spokesperson said.

The costs and target returns will remain unchanged for both the funds.

"We find that as soon as a fund is labelled ESG, it comes at a higher cost to the investor. We have kept the fees same," the spokesperson said.

The two funds will also change name from "BlackRock Scientific Diversified Growth/Stable Fund" to "BlackRock Diversified ESG Growth/Stable Fund".

BlackRock will continue to offer non-ESG multi-asset funds.

"There are no plans to do it [ESG screening] for all funds. We will, where it makes sense to do so," he said.

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