BlackRock Systematic Asia Pacific Equity Absolute Return Fund

Investment rationale

This is an Asia Pacific equity absolute return fund in the equity asset class that aims to deliver a positive absolute return through capital growth and income regardless of market conditions, while applying ESG principles. It has a summary risk indicator of 3 out of 7 and a recommended holding period of 5 years, indicating it is intended for investors able to bear losses up to the amount invested and prepared to hold through a medium-term horizon. Its use of market-neutral style exposure, derivatives, and broad Asia Pacific equity opportunity set makes it a distinct choice for investors seeking a specialist regional absolute return allocation rather than a simple long-only equity exposure.

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How the strategy works

The fund aims to achieve a positive absolute return through a combination of capital growth and income on the investment regardless of market conditions, in a manner consistent with ESG investing principles. It seeks to gain at least 70% of any investment exposure to equity securities of companies incorporated or listed in the Asia Pacific region, and achieves this by investing at least 70% of assets in equity securities, equity-related securities and, when appropriate, fixed income securities, money market instruments, deposits and cash. Equity-related securities include financial derivative instruments, with contracts for difference named as the main derivative type; the fixed income and money market holdings may be issued by governments, government agencies, companies and supranationals and may be investment grade, non-investment grade or unrated at purchase. The fund is actively managed, intends to generate market leverage via derivatives, compares performance against 3 Month SOFR compounded in arrears plus a 26.1 basis point spread, has an accumulating share class, offers daily dealing on a forward pricing basis with T+3 settlement, and has a recommended holding period of 5 years.

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Investment philosophy

• The investment universe is centered on companies incorporated or listed in the Asia Pacific region, with the fund seeking at least 70% of its investment exposure to equity securities from that region.

• The portfolio is built using a quantitative model-driven approach, and the fund uses quantitative models to make investment decisions.

• ESG criteria are incorporated in security selection, and the fund excludes companies engaging in certain activities inconsistent with its ESG criteria.

• Portfolio implementation can include equity securities, equity-related securities, contracts for difference, fixed income securities, money market instruments, deposits and cash; the manager may also generate market leverage through derivatives.

• The largest holdings as of 31 August 2026 were Ping An Insurance (Group) Company of China Ltd (1.62%), ENN Energy Holdings Ltd (1.10%), Singapore Telecommunications Ltd (0.93%), Singapore Technologies Engineering Ltd (0.82%), Public Bank BHD (0.78%), Taiwan Semiconductor Manufacturing Company Limited (0.77%), Venture Corporation Ltd (0.76%), Techtronic Industries Company Limited (0.73%), Cathay Pacific Airways Limited (0.64%) and Yuanta Financial Holding Co Ltd (0.61%), together totaling 8.76% of the portfolio.

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Management team

The portfolio managers are Jeff Shen, Ryan Kim and Rui Zhao. The fund itself launched on 22-Feb-2017 and the share class launched on 22-Feb-2017.

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Distinctive features

The fund combines an Asia Pacific equity focus with an absolute return objective, seeking positive returns regardless of market conditions rather than tracking regional equity market direction. It also integrates ESG criteria and is classified as SFDR Article 8, which differentiates it from comparable strategies without stated sustainability characteristics. Its toolkit is broader than a long-only equity fund because it can invest in equity-related instruments, fixed income securities, money market instruments, deposits and cash, and can use contracts for difference and leverage through derivatives. Daily dealing is available. The D2 USD share class has a performance fee of 20%, in addition to ongoing charges and transaction costs.

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Risks

The fund is classified as 3 out of 7 on the PRIIPs summary risk indicator, and capital is at risk. The fund is exposed to equity market risk, currency risk, fixed income risk from interest rates, credit risk and downgrades, derivative sensitivity risk, counterparty risk, liquidity risk, and the possibility that absolute return strategies may not move in line with market trends or fully benefit from positive markets. Additional named risks include greater price variation and lower trading volume in smaller companies, higher sensitivity of emerging markets to economic and political conditions, and the risk that quantitative models may become less efficient or show deficiencies as market dynamics change. The ESG screening process may reduce the investable universe and may adversely affect value relative to a fund without such screening, and insolvency of service providers such as the depositary or derivative counterparties may expose the fund to financial loss.

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Asset manager

The management company is BlackRock (Luxembourg) S.A., and is part of the BlackRock, Inc. group. The fund is a sub-fund of BlackRock Strategic Funds, a Luxembourg-domiciled UCITS umbrella. BlackRock Investment Management (UK) Limited is the principal distributor of BSF.

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