BlackRock Asia Pacific Absolute Return

The BlackRock Asia Pacific Absolute Return fund looks to combine long and short stock-specific opportunities across Asia-Pacific markets into a best ideas portfolio that is run in a near market neutral manner. The fund builds upon the resources and experience of the BlackRock Global Emerging Markets equity team, with three PMs for the fund, headed by Sam Vecht. The team utilises local expertise with 2/3 of the broader research team based in Asia whilst also benefitting from an onshore China research partnership. The core focus of the philosophy is to build a portfolio centered on stock-specific risk expressed through differentiated views on earnings. The long book will include companies with 1-2yr earnings upgrades vs the market, as well as undervalued cash flow compounders and re-rating stories. Whilst the reverse can be seen in the short book, with earnings downgrades, over hyped stocks with unjustified multiples vs fundamentals and companies seeing equity value destruction through cash burn and with accounting abnormalities. While this is a fundamental, bottom-up stock picking fund, a top down macro view helps to guide the overall process, eg the long book currently has a tilt towards domestic cyclical to play the current cycle while the short book contains companies the team see to be losers from the current monetary tightening of liquidity. The outcome is a well-diversified portfolio, invested across multiple markets, sectors and factors, with returns exhibiting little correlation to market direction. Due to the return seeking and best ideas nature of the fund, there are typically no positions under 0.75% with longs ranging from 3-4% and shorts 2-3%. Gross exposure usually falls between 150-250% with a net between -10% and +20%, and typically max 15% net long/short in any one country or sector.