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2020 Global Outlook

Eddie Sue

Singapore Client Business

5 February 2020

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FOR PROFESSIONAL INTERMEDIARIES AND INSTITUTIONAL INVESTORS ONLY - NOT FOR FURTHER DISTRIBUTION

Agenda

1. About BlackRock

2. Market Outlook

3. Why Multi-Asset Income?

4. Multi-Asset Income Investing

5. Key Takeaways

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2FOR PROFESSIONAL INTERMEDIARIES AND INSTITUTIONAL INVESTORS ONLY - NOT FOR

FURTHER DISTRIBUTION

1. About BlackRock

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25 investment centers worldwide

15,000 2,000 100 34

employees worldwide investment professionals

countries countries

Approximately More than Clients in over Offices in over

US$6.96 trillion

managed across different asset classes

Create a better financial future for our clients by building the most respected investment and risk manager in the world

BlackRock’s Mission Statement

*Source: BlackRock, data as of 30 September 2019.

4

1. About BlackRockThe World’s Largest Asset Manager*

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Assets under management ($ billions)

Source: BlackRock. As of 30 September 2019. Figures in USD.

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1. About BlackRockKey Milestones

2 4 8 17 23 53 69 83 105 131 165 204 239 273 309 342 452

1,1251,357 1,307

3,346

3,5613,513

3,792

4,3244,6524,644

5,147

6,2885,975

6,963

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2006: Merger of BlackRock and MLIM

2005: State Street Research and Management acquisition

2000: Launched BlackRockSolutions®

1999: IPO (NYSE: BLK) Broad employee ownership

1988: Founded Blackstone Financial Management

1992: Changed name to BlackRock

1995: Merged with PNC, offered common vision & fund platform

2007: Quellos Group, LLC acquisition

2009: Mergerof BlackRock and BGI; Hired Professionals from R3 Capital Partners

1998: Integrated equity, fixed income, liquidity, and mutual funds under BlackRockname

2008: Launched Financial Markets Advisory Business

2015: BlackRock acquires FutureAdvisor

2017: BlackRock acquires Cachematrixand First Reserve

2018: BlackRock acquires Citibanamex


Breadth of capabilities enables outcome-based solutions tailored to individual client objectives

6

1. About BlackRockScale and Breadth of Capabilities

AUM As of 30 September 2019. Figures in USD.* The alternatives AUM may include committed capital, in addition to invested capital, which remains subject to drawdown

• Capabilities across investment styles: index, active fundamental, scientific and absolute return

• Global, regional and sector-specific investing

• Specialized capabilities across real estate, private equity, direct hedge funds, fund of hedge funds, infrastructure and renewable power

• Solutions-oriented approach extends to alternatives portfolio construction

• Manage strategies across benchmark types and styles: index, fundamental, model-based and absolute return

• Specialized experts covering all market sectors

• Recognized as a ‘go to’ leader in credit and liquidity

• Flexible product range across multiple currencies

• Outcome focused: target-date, balanced risk factor, and liability-driven investing

• Asset-class agnostic perspective facilitates unbiased market views, advice, and portfolio solutions

$6.96 trillion in assets under management Scalable services and infrastructure

• Centralized platform analyzes risk across asset classes

• Leverage for risk management, investment decision support and performance analytics

• Partner with clients to help save costs and reduce risks when changing investment exposures

• Executed over 2,000 individual transitions with assets totaling $2.4 trillion over the past five years

• Advise public and private financial institutions on complex capital markets and balance sheet exposures

• Managed or advised on over $8 trillion in asset and derivative portfolios

• More than 72,000 trades per day across equity, fixed income, cash, currency and futures

• 24-hour global coverage across seven trading desks

• Focus on research, technology and coordination with portfolio management functions that seek to deliver above market returns

• Covers securities in over 30 markets globally

Equity

$3.48 trillion

Fixed Income

$2.26 trillion

Alternatives*

$167 billion

Multi-asset

$527 billion

Cash

$510 billion

Risk Management

Advisory

Transition Management

Securities Lending

Trading


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Source: The Asian Private Banker Asset Management Awards for Excellence 2018 reflect the funds’ performance on a 1-year or 3-year period, as of 31 December 2017. The Lipper FundAwards Singapore 2016, 2017 and 2018 reflect the funds’ performance as at 31 December 2015, 31 December 2016 and 31 December 2017 respectively The Benchmark Fund of theYear Awards 2016 reflect the funds’ performance between 1 October 2015 and 30 September 2016. BlackRock has not acquired any rights or license to reproduce the trademarks, logos orimages set out in this document. The trademarks, logos and images set out in this document are used only for the purposes of this presentation. Logos of Asian Private Banker, Benchmark andThomson Reuters are sourced from their website. For illustrative purposes only.

Capability Awards

Asia Private Banker Asset Management Awards for Excellence 2018

• Best Fund Provider – Asia ex-Japan Equity• Best Fund Provider – Asian Bond

• Best Fund Provider (ETF)- iShares• Fund House of the year

Asian G3 Bonds 2018- Asset Managers

• Top Investment House

Fund Awards

Equity Asia Pacific Ex Japan – 5 Yrs Lipper Fund Awards 2017, SingaporeOutstanding Achiever – AxJ Equity 2016 Benchmark Fund of the Year Awards

Equity Asia Pacific Ex Japan – 3 Yrs Lipper Fund Awards 2017, SingaporeEquity Asia Pacific Ex Japan – 3 Yrs Lipper Fund Awards 2016, 2018, Singapore

Outstanding Achiever – Asia Bond 2016 Benchmark Fund of the Year Awards

Equity China – 3 Yrs LipperFund Awards 2017, Singapore

Best-in-Class – Europe Equity Income 2016 Benchmark Fund of the Year Awards

Outstanding Achiever – Global EM Bond 2016 Benchmark Fund of the Year Awards

Best-in-Class – Global EM Bond 2016 Benchmark Fund of the Year Awards - Local Currency

Bond Emerging markets Global LC Lipper Fund Awards 2018, Singapore

Equity Europe – 3, 5 & 10 Yrs Lipper Fund Awards 2016, Singapore

Bond Global – 5 Yrs Lipper Fund Awards 2017, SingaporeBond Global – 3, 5 & 10 Yrs Lipper Fund Awards 2016, Singapore

Mixed Asset USD Balanced Global – 3 Yrs Lipper Fund Awards 2016, Singapore

Best-in-Class – Global Corporate Bond 2016 Benchmark Fund of the Year Awards – Currency Hedged

Equity Global Income – 3 Yrs Lipper Fund Awards 2016, SingaporeBest-in-Class - Global Equity Income 2016 Benchmark Fund of the Year Awards

Best-in-Class – Global Inflation-Linked Bond 2016 Benchmark Fund of the Year Awards

– USD Hedged

Equity Emerging Markets Latin America – 3 Yrs Lipper Fund Awards 2017, Singapore

Equity Emerging Markets Latin America – 5 Yrs Lipper Fund Awards 2018, Singapore

Best-in-Class – Sector Eqty Alt. Energy 2016 Benchmark Fund of the Year Awards

Outstanding Achiever – Sector Eqty Precious Metals 2016 Benchmark Fund of the Year Awards

Equity Sector Real estate Holdings Global – 3 Yrs Lipper Fund Awards 2017, Singapore

Best-in-Class – US Flex-Cap Equity 2016 Benchmark Fund of the Year Awards

Best-in-Class – US Large-Cap Value Equity 2016 Benchmark Fund of the Year Awards

Equity US Small and Mid Caps – 3 Yrs Lipper Fund Awards 2016, Singapore

Lipper Fund Awards 2016 & 2017, Singapore• Best Bond Fund Group over 3 Yrs

1. About BlackRockRecent Accolades in Singapore

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2. Market Outlook

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2. Market Outlook:Setting the scene

Annual asset performance, 1991-2019

Past performance is not a reliable indicator of current or future results. It is not possible to invest directly in an index.Source: BlackRock Investment Institute, with data from Refinitiv Datastream, December 2019 Notes: Data are through 4th December 2019. Indexes or prices used are: MSCI AC World Index, and Bloomberg Barclays Global Aggregate Index. Returns are shown in USD. Indexes are unmanaged and not subject to fees.

Both global stocks and bonds posted relatively healthy gains in 2019. This follows an atypical 2018 when both fell in tandem –only the second such occurrence since 1991.

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Glo

ba

l eq

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turn

s (

%)

Global bond returns (%)


2. Market Outlook:Asset performance in 2020 so far

Year-to-Date 2020 Asset Performance

Past performance is not a reliable indicator of current or future results. It is not possible to invest directly in an index.Source: BlackRock Investment Institute, with data from Refinitiv Datastream, 29 January 2020. Note: The bars show the total return in local currency terms, except for currencies, gold and copper, which are spot returns. Government bonds are 10-year benchmark issues.


2. Market Outlook:What are investors looking out for in 2020?

Image Sources: Los Angeles Times, AP News, The Straits Times, Voice of America


2. Market Outlook:Our 2020 Investment Themes

Growth Edges Up Rethinking Resilience

Yields testing lower limits in developed markets, making

government bonds less effective portfolio ballast

Inflection point in global economic growth due to

easier financial conditions

Policy Pause

Less scope for monetary easing surprises or fiscal stimulus, major central banks likely to

maintain easy policies


2. Market Outlook:Easy financial conditions should translate into growth

Growth edges up

BlackRock G3 FCI and Growth GPS, 2010-2020

Sources: BlackRock Investment Institute, Consensus Economics and Reuters polls, December 2019. Notes: The Growth GPS shows whereconsensus GDP forecast may stand in three months’ time, shifted forward by three months. The orange line shows the rate of GDP growth implied by our financial conditions indicator (FCI), based on its historical relationship with our Growth GPS, shifted forward by six months. The grey area shows annualized actual growth rates on a quarterly basis; values after Sept 30, 2019 are consensus estimates . The FCI inputs include policy rates, bond yields, corporate bond spreads, equity market valuations and exchange rates. Forward-looking estimates may not come to pass.

We see growth led by a recovery in global manufacturing and interest rate-sensitive sectors. Underappreciated risks around higher inflation temper our overall pro-risk stance.

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wth

(%

)

FCI-implied growth Growth GPS, shifted 3 months forward Annual growth

Estimated


2. Market Outlook:U.S. economic expansion is intact

Growth edges up

Output gap and stages of the U.S. business cycle, 1965-2019

Sources: BlackRock Investment Institute and National Bureau of Economic Research, with data from Refinitiv Datastream, as of December 2019. Notes: This chart shows an estimate of the U.S. output gap (GDP as a percentage of potential GDP). We have classified different time periods as belonging to certain stages of the business cycle. The classification of the stage is done via a 'cluster analysis' that groups together time periods where economic series have behaved in similar ways.

We see a limited pickup that pushes the economy back to the late-cycle norm of trend-like growth. The record-long U.S. economic expansion is underpinned by healthy household spending.

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2. Market Outlook:Central banks’ dovish pivot has likely run its course

Policy Pause

Central bank policy rates and 1-year/1-year forwards, 2018-2019

There is no guarantee that any forecasts made will come to pass. Past performance is no guarantee of future results. Source: BlackRock Investment Institute with data from Bloomberg, December 2019. Data as of 4th December 2019. Notes: The chart shows the market pricing of policy rates in overnight index swaps on a one-year horizon starting in one year’s time. Dotted lines show policy rates for each region; we use the midpo int of the Fed funds target range for the U.S.

We see the current policy setting supportive of growth yet don’t see monetary policy as a 2020 story. Emerging markets still have room to provide stimulus, but the U.S. dovish pivot is over for now.

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ECB

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2. Market Outlook:Moving the wrong way

Policy Pause

Monetary and fiscal impulse in G3 plus China, 2002-2020

Sources: BlackRock Investment Institute, with data from the IMF, OECD and Refinitiv Datastream, December 2019. Notes: We use weights based on GDP in purchasing power parity terms in the calculations. Monetary impulse refers to the change in the gap between inflation-adjusted real policy rates and neutral rates in G3 economies (the U.S., Japan and euro area). Neutral rates are estimated based on our November 2018 paper, taking into account financial cycle dynamics. Fiscal impulse is defined as the change in the cyclically adjusted primary budget for G3 and China. 2020’s estimated path implies mild fiscal stimulus consistent with views from the IMF, OECD and brokers, and an additional 10 bps monetary easing in G3 countries. The impact of monetary easing in China is not included to calculate the fiscal impulse due to its limited influence on growth and the lack of a consistent estimate for the neutral rate.

The policy debate is poised to shift from monetary to fiscal stimulus. On current projections, the policy outlook appears limited. Yet risk to fiscal support is on the upside.

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Fiscal Impulse

Double tightening Tighter monetary and easier fiscal

Coordinated easingTighter fiscal and easier monetary


https://www.blackrock.com/corporate/literature/whitepaper/bii-macro-perspectives-november-2018.pdf

2. Market Outlook:A limited outlook for fiscal stimulus

Policy Pause

Global fiscal impulse from G3 and China, 2002-2020

There is no guarantee that any forecasts made will come to pass. Source: BlackRock Investment Institute, IMF, OECD and the European Commission, with data from Bloomberg, December 2019. The chart shows the annual change in the cyclically adjusted government primary balance weighted by GDP in purchasing power parity terms. The bars show the fiscal impulse from each region relative to the size of the global economy. 2020’s estimated path implies mild fiscal stimulus consistent with views from the IMF, OECD and brokers. The impact of monetary easing in China is not included to calculate the fiscal impulse due to its limited influence on growth and the lack of a consistent estimate for the neutral rate.

Even modest shifts toward fiscal easing could have an outsized market impact. We see upside risks to fiscal stimulus – and uncertainty over U.S. fiscal policy will be high heading into the election.

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U.S. Euro area China Japan

Estimated


2. Market Outlook:Market attention to geopolitical risks remains high

BlackRock Geopolitical Risk Indicator, 2006-2019

Source: BlackRock Investment Institute, with data from Refinitiv Datastream, December 2019. Notes: See BlackRock’s Geopolitical risk dashboard for full details. Source: BlackRock Investment Institute, with data from Refinitiv, November 2019. Notes: We identify specific words related to geopolitical risk in general and to our top-10 risks. We then use text analysis to calculate the frequency of their appearance in the Refinitiv Broker Report and Dow Jones Global Newswire databases as well as on Twitter. We then adjust for whether the language reflectspositive or negative sentiment, and assign a score. A zero score represents the average BGRI level over its history from 2003 up to that point in time. A score of one means the BGRI level is one standard deviation above the average. We weigh recent readings more heavily in calculating the average.

We view the latest lull in U.S.-China trade tensions as temporary as it does not address strategic issues. A breakdown of talks could revive protectionist pressures and undermine sentiment.

Euro area crisis

Russia invades Crimea North Korea tensions

U.S.-China trade tensions

Saudi oil attack

Arab Spring U.S. election

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Rethinking Resilience


https://www.blackrock.com/corporate/insights/blackrock-investment-institute/interactive-charts/geopolitical-risk-dashboard

2. Market Outlook:Eyes on inflation risks


Changes and components in U.S. GDP deflator, 2000-2020

There is no guarantee that any forecasts made will come to pass. Sources: BlackRock Investment Institute, with data from the U.S. Bureau of Economic Analysis and Refinitiv, December 2019. Notes: The GDP deflator is a gauge of inflation that measures the year-on-year change in prices of all the goods and services produced in an economy. We decompose the deflator into the key drivers involved in creating each U.S. dollar of real gross domestic product (GDP), including labor costs, profit margins and capital expenses. The dotted green line is a BlackRock estimate. Forward-looking estimates may not come to pass.

Tight labor markets, rising wages and sluggish productivity growth could stoke inflation. A disruption of global supply chains could lead to inflationary supply shocks.

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2. Market Outlook:Profit margins under pressure


U.S. corporate profits over the business cycle, 1965-2019

Sources: BlackRock Investment Institute, with data from the U.S. Bureau of Economic Analysis (BEA), U.S. National Bureau of Economic Research (NBER) and Refinitiv, December 2019. Notes: We look at profit margins during different stages of the business cycle. The classification of the stage is done via a “cluster analysis” that groups together time periods where economic series have behaved in similar ways. These are the profit margins of U.S. corporations, in percentage points, as derived from national accounts data (NIPA) from the BEA.

A broad measure of U.S. corporate profit margins has fallen sharply from its peaks. The potential for further margin compression and downward earnings revisions is a risk for equities.

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Could shift into a Goldilocks regime if growth accelerates and inflation moderates – a positive for risk asset returns

Risk: a growth undershoot coupled with rising inflationary pressures

2. Market Outlook:Understanding macro regimes

Slowdown: Decelerating growth and inflation; rising uncertainty accompanied by monetary easing.

Our base case: Uptick in growth back to trend; no monetary easing surprises.

Goldilocks: Growth-supportive policy with little inflationary pressure and credit expansion.

Stagflation: Slowing growth and rising inflation; contracting credit.

Current regime

Potential regime shifts

Other regimes

Running hot: Monetary policy tightening to limit vulnerabilities, including inflation and financial.

Reflation: Supportive policy and low uncertainty; accelerating growth and inflation.

Hawkish squeeze: Decelerating growth and inflation while monetary policy is tightening.

Recession: Economic contraction with falling inflation, rising uncertainty and monetary easing.

Sources: BlackRock Investment Institute, December 2019. Note: For illustrative purposes only.


2. Market Outlook:Equity Risk Premium

Equity risk premia, 1995-2019

Past performance is not a reliable indicator of current or future results. It is not possible to invest directly in an index.Sources: BlackRock Investment Institute, with data from Refinitiv Datastream, December 2019. Notes: Data as of Sept. 31, 2019. We calculate the equity risk premium based on our expectations for nominal interest rates and the earnings yields for respective equity markets. We use MSCI indices as the proxy for the markets shown. We use our BlackRock expectations for interest rates so the estimate is not influenced by the term premium in long-term bond yields.

Compensation for equity risk looks reasonable compared with previous periods of stretched valuations.

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Emerging markets


2. Market Outlook:Importance of Income

Selected higher-yielding fixed income vs. U.S. investment grade, 2009-2019

Past performance is not a reliable indicator of current or future results. It is not possible to invest directly in an index.Sources: BlackRock Investment Institute, with data from Refinitiv Datastream, December 2019. Notes: The top charts shows the yield on an equal-weighted index of JPM GBI-EM GLOBAL DIVERS Composite Index, JPM EMBI Global Diversified Index, and Bloomberg Barclays U.S. Corporate High Yield Index versus the yield on the Bloomberg Barclays U.S. Corporate Investment Grade Index. The bottom panel shows the mathematical difference between the equally weighted average of the selected higher yielding fixed income indexes shown above and the U.S. IG Index. Indexes are unmanaged and not subject to fees.

We prefer EM local- and hard-currency debt and U.S. high yield over global investment grade credit.

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Equally weighted average of EM local, EM hard currency debt and US high yield


2. Market Outlook:Directional Views

Tactical views on major global asset classes from a U.S. dollar perspective, December 2019

Asset Underweight Neutral Overweight

Equities

• with central bank easing and valuation multiple expansion largely behind us, expect a growth uptick to take over as a key support

• valuations still look reasonable• uptick in global manufacturing and trade favors tactical tilt into more cyclical exposures, including EM

and Japanese equities.

Credit • income potential of EM debt — particularly local-currency — looks especially attractive• with growth uptick supporting risk assets, upgrade our view on global high yield after it has cheapened• global investment grade debt less attractive due to rich valuations

Govt bonds

• major central banks likely to keep policy mostly on hold in near term, even as growth and inflation somewhat firm

• this tilts risks toward a steepening of the yield curve• prefer shorter maturities in US Treasuries, and inflation-linked debt amid rising US wage pressures and

potential for supply shocks that could firm inflation beyond expectations

Cash • neutral position on cash for risk mitigation, in line with our modest tilt to risk in portfolios• see cash as a robust buffer against risks around regime shifts, especially those triggered by a negative

supply shock that could drive both stocks and bonds lower together

Note: This material represents an assessment of the market environment at a specific time and is not intended to be a forecast or guarantee of future results. This information should not be relied upon as investment advice regarding any particular fund, strategy or security.


2. Market Outlook:To sum it up…

Growth edges up – an inflection point as global economic growth

edges higher in 2020 thanks to easy financial conditions, limiting recession risks.

Implication: Maintain a moderate pro-risk stance and see the potential for cyclical assets to outperform tactically.

Policy pause – economic fundamentals to drive markets in 2020,

with less scope for monetary or fiscal stimulus. Major central banks likely to maintain easy policies – and interest rates and bond yields look likely to linger near lows.

Implication: Income streams are crucial in a slow-growth, low-rate world.

Rethinking resilience – Yields are testing lower limits in many DM,

making many government bonds less effective portfolio ballast. A focus on ESG can help add resilience to portfolios.

Implication: Prefer U.S. Treasuries to lower-yielding peers and like inflation-protected securities against inflation risks.

Source: BlackRock Investment Institute, as of December 2019. The information contained herein represents BlackRock’s general market analysis. This is subject to change at any time.


3. Why Multi-Asset Income?

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Short- and long-term interest rates, 3000BC - 2019

Short-term rates

Long-term rates

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20

25

%

1575 1735 1775 1815 1855 1895 1935 1975 2019

Sources: Homer and Sylla (1991); Heim and Mirowski (1987); Weiller and Mirowski (1990); Hills, Thomas and Dimsdale (2015); Bank of England; Historical Statistics of the United States Millenial Edition, Volume 3; Federal Reserve Economic Database. Notes: the intervals on the x-axis change through time up to 1715. From 1715 onwards the intervals are every twenty years. Prior to the C18th the rates reflect the country with the lowest rate reported for each type of credit: 3000BC to 6thcentury BC - Babylonian empire; 6th century BC to 2nd century BC - Greece; 2nd century BC to 5th century AD - Roman Empire; 6th century BC to 10th century AD - Byzantium (legal limit); 12th century AD to 13th century AD - Netherlands ;13th century AD to 16th century AD - Italian states. From the C18th the interest rates are of an annual frequency and reflect those of the most dominant money market: 1694 to 1918 this is assumed to be the UK; from 1919-2015 this is assumed to be the US. Rates used are as follows: Short rates: 1694-1717- Bank of England Discount rate;1717-1823 rate on 6 month East India bonds; 1824-1919 rate on 3 month prime or first class bills; 1919-1996 rate on 4-6 month prime US commercial paper ; 1997-2014 rate on 3month AA US commercial paper to non- financials, 2015-2019 yield on ECB deposit rates. Long rates: 1702-1919 - rate on long-term government UK annuities and consols; 1919-1953, yield on long-term US government bond yields; 1954-2014 yield on 10 year US treasuries,

3. Multi-Asset Income:5000 years of interest rates – short-term rates now lowest since 3000 BC


3. Multi-Asset Income:Opportunities beyond Traditional Income Sources

Are complementary income assets missing from your portfolio?

Investment

Grade Bonds

Government

BondsHigh Yield

Bonds

Developed

Market Equities

Emerging

Market

Equities

Complementary

Income

Assets

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FOR PROFESSIONAL INTERMEDIARIES AND INSTITUTIONAL INVESTORS ONLY- NOT FOR FURTHER DISTRIBUTION FOR PROFESSIONAL INTERMEDIARIES AND INSTITUTIONAL INVESTORS ONLY - NOT FOR


Source: BlackRock, Morningstar and Bloomberg. As of 30 Sep 2019. Fixed income yields represented by yield-to-worst, equity yields by 12 month dividend yield, Cash: US Dollar 3m DepositMiddle Rate. US Treasuries: Barclays US Treasury 7-10 Yr, German Bunds yield: Benchmark 10Y German Bund, Drawdowns: BofAML German Federal Govt 7-10Y. Global Inv Grade: BarclaysGlobal Agg Corporate (USD). US HY Barclays US HY 2% Issuer Cap. Global Equities: MSCI World. High Dividend Equities: MSCI World High Div Yield. EM Equities: MSCI EM. EMD: JPM EMBIGlobal. Bank Loans: S&P/LSTA Leveraged Loan Index. Preferred Stock: iShares S&P US Pf.Stk. Idx.Fd. Yield for Preferred Stock is trailing 12-month yield of iShares US Preferred Stock IndexETF (PFF). REITs: FTSE NAREIT All REITs Index. Past performance is not indicative of future results.

Traditional fixed income yields are typically lower than that of pre-crisis levels

Fixed income Equity Income Complementary assets

2007 2019

A single asset class may not provide the best yield at all times

3. Multi-Asset Income:Casting the Net Wider to Search for Yield

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Cash U.S.Treasuries

GermanBunds

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High YieldBonds

GlobalDividendEquities

GlobalEquities

MSCIWorld EM

BankLoans

EM Debt PreferredStock

REITs

Yie

ld (

%)


3. Multi-Asset Income:Opportunities across Complementary Asset Classes

Source: BlackRock as at 30 Sep 2019. Past performance is no guarantee of future results. Not a recommendation to buy or sell. For illustrative purposes only. Subject to change. There is no guarantee that the target will be met. Assumptions on which targets were calculated may not materialise.

Preferred Stock

Hybrid securities which offer features of debt (fixed payout) and equity (potential to appreciate in price), typically issued by financial companies

Typical Yield Today: 5-7%

Primary Risks: Market Risk

Equity Covered Call Writing

Exposure to stocks where an investor earns a premium today for selling away some amount of that stock’s future upside


Primary Risks: Market Risk

Floating Rate Loans

Exposure to corporate loans through securities which have minimal exposure to interest rate changes due to floating rate structure


Primary Risks: Credit Risk

Non-Agency Residential Mortgage-Backed Securities

Securities issued privately by banks and other financial institutions (not government entities) which are backed by residential properties


Primary Risks: Default Risk, Real Estate Risk, Prepayment Risk

Commercial Mortgage-Backed Securities (CMBS)

Securities backed by commercial property exposure such as hotels, office buildings, shopping malls, etc


Primary Risks: Default Risk, Real Estate Risk, Prepayment Risk

Real Estate Investment Trusts (REITs)

Real estate securities that must pay out >90% of their earnings as dividends to investors


Primary Risks: Market Risk, Real Estate Risk, Interest Rate Risk

30

RETH0220A-1077561-30/43FOR PROFESSIONAL INTERMEDIARIES AND INSTITUTIONAL INVESTORS ONLY- NOT FOR FURTHER DISTRIBUTION

3. Multi-Asset Income:Complementary Asset Classes Offer Diversification Benefits

Complementary income sources tend to have low or negative correlation to traditional income

sources

Source: BlackRock as at end Sep 2019. Correlations based on select underlying sleeves within the BlackRock strategies that invest in various complementary sources of income using the DLY risk model data (252 daily observations with a 40 day half life). Global Bonds refers to Barclays Global Agg (USD Hedged); Global Equity refers to MSCI World.

Correlation Summary of Traditional vs. Complementary Income Sources

Covered

Calls

Collateralised

Loan

Obligations

Preferred

Stock

Non-Agency

MBS/ CMBSGlobal REITs

Global Bonds -51% -51% -40% 64% 0%

Global Equity 97% 46% 72% -25% 61%

Complementary Income Sources

Traditional Income Sources

31RETH0220A-1077561-31/43FOR PROFESSIONAL INTERMEDIARIES AND INSTITUTIONAL INVESTORS ONLY - NOT FOR


4. Multi-Asset Income Investing

RETH0220A-1077561-32/43

• Flexible and unconstrained strategy in complementary asset classes that seeks to balance income, total return & risk

• A complement to traditional sources of income focused on tactically allocating across less commonly-owned income markets

Source: BlackRock as of 30 September 2019. Note: For illustrative purposes only. Subject to change.

33

4. Multi-Asset Income Investing: Opportunities beyond Traditional Income Sources

+

Traditional Income Sources

Equity

Emerging Market Equities

Global Ex-US Developed

Equities

US Equities

Fixed Income

High Yield Bonds

Investment Grade Bonds

Sovereign Bonds

Complementary Income Sources

Equity

Covered Call Writing

Energy Infrastructure

Global REITs

Fixed Income

Commercial Mortgages (CMBS)

Emerging Market Debt

Floating Rate Loans

Non-Agency Mortgages

Preferred Stock

FOR PROFESSIONAL INTERMEDIARIES AND INSTITUTIONAL INVESTORS ONLY - NOT FOR

FURTHER DISTRIBUTION RETH0220A-1077561-33/43

FOR PROFESSIONAL INTERMEDIARIES AND INSTITUTIONAL INVESTORS ONLY- NOT FOR FURTHER DISTRIBUTION

0%

4%

8%

12%

16%

20%

Dec-14 Apr-15 Aug-15 Dec-15 Apr-16 Aug-16 Dec-16 Apr-17 Aug-17 Dec-17 Apr-18 Aug-18 Dec-18 Apr-19 Aug-19

4. Multi-Asset Income Investing: Focus on Risk Management

34

The strategies seek to achieve lower or similar volatility to the risk benchmark

Source: BlackRock, Bloomberg as of end September 2019. Performance and portfolio references are to the BlackRock strategies that invest in various complementary sources of income. 30-day volatility is based on daily performance returns and is annualized. Performance data quoted represents past performance and is not a guide to future performance. Risk Benchmark: 50%MSCI World Index + 50% Barclays Capital Global Aggregate Bond Index Hedged for Global Multi Asset Income Strategy. 70% MSCI World Index + 30% Barclays Capital Global AggregateBond Index Hedged for Dynamic High Income Strategy. For illustration purposes only.

Strategy in Complementary Assets (A) 50/50 Risk Benchmark

Dynamic High Income Strategy 70/30 Risk Benchmark

0%

2%

4%

6%

8%

10%

12%

Nov-13 May-14 Nov-14 May-15 Nov-15 May-16 Nov-16 May-17 Nov-17 May-18 Nov-18 May-19

Global Multi-Asset Income Strategy 50/50 Risk Benchmark

30 D

ay

Vo

lati

lity

(p

.a.)

30 D

ay

Vo

lati

lity

(p

.a.)


RETH0220A-1077561-34/43FOR PROFESSIONAL INTERMEDIARIES AND INSTITUTIONAL INVESTORS ONLY- NOT FOR FURTHER DISTRIBUTION

Source: BlackRock. As of 31 December 2019. Not a recommended allocation. Subject to change. Asset class exposure shown as a percent of market value. Portfolio references are to the BlackRock Dynamic High Income Strategy.

Dynamic High Income strategy employs a flexible approach to adapt to changing market conditions

Historic monthly strategy asset allocation:Historical

Asset Class Current High Low

High Yield Bonds 19% 25% 1%

Inv Grade Bonds 2% 7% 1%

EM Debt 8% 11% 3%

Floating Rate Loans 10% 17% 4%

Mortgage-Backed 8% 19% 2%

Preferred Stock 9% 18% 7%

Other Fixed Income 0% 10% 0%

EM Equity 5% 6% 0%

Global Ex-US Equity 1% 4% 0%

US Equity 4% 6% 0%

Covered Calls 23% 36% 16%

Energy Infrastructure

3% 11% 0%

Global REITs 5% 9% 3%

Cash 3% 15% 0%0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

No

v

Jan

Ma

r

Ma

y

Jul

Se

p

No

v

Jan

Ma

r

Ma

y

Jul

Se

p

No

v

Jan

Ma

r

Ma

y

Jul

Se

p

No

v

Jan

Ma

r

Ma

y

Jul

Se

p

No

v

Jan

Ma

r

Ma

y

Jul

Se

p

No

v

2014 2015 2016 2017 2018 2019

4. Multi-Asset Income Investing: Flexibility to adjust exposure to changing market conditions


Equity income Fixed income Complimentary income

Asia high yieldSingapore

Asia dividendsHong Kong

Global dividend equityLondon

European dividend equityLondon

Global fixed incomeLondon

EM dividend equityLondon

US high yield & bank loansNew York

Fundamental fixed incomeNew York

Mortgage TeamNew York

Preferred stockNew York

US dividend equityPrinceton

MLPsNew York

Covered call writing Boston

Quantitative fixed incomeSan Francisco

European high yieldLondon

Alex Shingler, CFAPortfolio Manager

Michael FredericksLead Portfolio Manager

Justin Christofel, CFA, CAIAPortfolio Manager

$34B USDin global income strategies

Top down asset allocation...

… Bottom-up Security Selection & Risk Management

Source: BlackRock, as of 30 November 2019. Subject to change.

4. Multi-Asset Income Investing: Leveraging the Breadth and Depth of BlackRock’s Expertise


5. Key Takeaways

RETH0220A-1077561-37/43

2Policy pauseDovish central bank pivot that drove markets in 2019 is largely behind us, income streamsare crucial in slow growth, low-rate world

1Growth edges upGrowth should edge higher in 2020, limiting recession risks and providing a favorable backdrop for risk assets

3Diversify income sources Utilise a flexible investment approach that is diversified across traditional and complementary asset classes

5. Key Takeaways

38FOR PROFESSIONAL INTERMEDIARIES AND INSTITUTIONAL INVESTORS ONLY - NOT FOR

FURTHER DISTRIBUTION RETH0220A-1077561-38/43FOR PROFESSIONAL INTERMEDIARIES AND INSTITUTIONAL INVESTORS ONLY - NOT FOR


Appendix

RETH0220A-1077561-39/43

Granular Tactical Views

Note: Views are from a U.S. dollar perspective. This material represents an assessment of the market environment at a specific time and is not intended to be a forecast or guarantee of future results. This information should not be relied upon as investment advice regarding any particular fund, strategy or security.

Change in view

Previous New

Asset Underweight Overweight

Equities

United StatesRising uncertainty around the 2020 election and a wide range of policy outcomes may weigh on sentiment and prevent a repeat of outperformance.

EuropeDowngraded after a stretch of outperformance – and see greater upside in cyclical exposures elsewhere. Markets look to have fully priced in the ECB’s easing.

JapanWe see this market among those set to benefit most from a global manufacturing recovery and a lull in U.S.-China trade tensions.

Emerging markets EM equities are beneficiaries from the global recovery. EM central banks outside of China are likely to stay on their easing paths, supporting growth and equity markets.

Asia ex-JapanUpgraded Asia ex-Japan equities amid prospects of a growth uptick. We seeChina’s economy stabilizing but stimulus as capped. Disruptions in global trade pose downside.

Fixed Income

U.S. TreasuriesWe prefer front end of the curve. This offers shelter from any curve steepening triggered by stronger growth and some insulation against risk asset selloffs.

Treasury Inflation-Protected Securities

Like TIPS due to cheap valuations relative to current inflation levels – and potential for more price rise due to wage pressures, an uptick in activity and longer-term deglobalization.

German bundsDowngraded as prices already reflect the ECB’s easy policy stance. And we see limited scope for monetary easing to take rates to even more negative levels.

Euro area peripheralsDowngraded as we see yields and spreads as insufficient to compensate investors for underappreciated political risks in the region.

Global investment gradeDowngraded as valuations appear rich, and we see low coupon rates making the sector’s income relatively unattractive on a risk-adjusted basis.

Global high yieldUpgraded as it is supported by stable monetary policy and the prospect of a growth inflection. Spread widening, especially in lower-rated cohorts, has offered an entry point.

Emerging market –hard currency

Like hard-currency EM debt against a backdrop of dovish EM central banks, improving growth outlook and a stable to somewhat weaker USD, prefer the high-yielders.

Emerging market –local currency

Upgraded as coupons look attractive, and EM currencies could appreciate as major central banks stick to easy policies.

Asia fixed incomeUpgraded as Asian central banks have room to ease policy, and currencystability is a positive. Valuations have become richer, and we prefer up-in-quality exposures.

Tactical views on selected assets vs. broad global asset classes by level of conviction, December 2019


China fiscal outlook also limited

China’s credit and fiscal impulses, Growth GPS, 2013-2020

Past performance is not a reliable indicator of current or future results. It is not possible to invest directly in an index.Sources: BlackRock Investment Institute, National Bureau of Statistics of China, the People’s Bank of China and Consensus Economics, with data from Refinitiv Datastream, December2019. Notes: The fiscal impulse is defined as the 12-month change in the annual fiscal deficit as a percentage of GDP. The fiscal deficit includes spending from China’s general government fund. The credit impulse is defined as the 12-month change in the rate of broad credit growth as a share of GDP. We weight both the fiscal and credit impulses to reflect their respective contributions to GDP growth — as estimated in a December 2017 IMF paper. Our BlackRock GPS shows where consensus for the Caixin composite Purchasing Managers’ Index forecast may stand in three months’ time in China. A reading above 50 indicates an expansion; below 50 indicates contraction. Forward-looking estimates may not come to pass.

Upgraded Asia ex-Japan equities to neutral amid prospects of a growth uptick. We see China’s economy stabilizing but little appetite in China for large-scale stimulus that has buoyed the global economy in the past. Disruptions in trade pose downside.

-3%

0%

3%

6%

48

50

52

54

2014 2015 2017 2018 2020

Co

ntrib

utio

n to

gro

wthC

hin

a G

row

th G

PS

Estimated

China Growth GPS

Fiscal impulse

Credit impulse


https://www.imf.org/en/Publications/WP/Issues/2017/12/12/Credit-and-Fiscal-Multipliers-in-China-45460

Preferring EM debt and high yield

Selected fixed income yields, 2018-2019

Sources: BlackRock Investment Institute, with data from Refinitiv Datastream, Bloomberg Barclays and J.P. Morgan, December 2019. The bars show the range in yields for each index from the start of January 2018. Indices used: Bloomberg Barclays Pan-European Corporate, Refinitiv 2-year and 10-year benchmark U.S. Treasury, Bloomberg Barclays U.S. Corporate Investment Grade, Bloomberg Barclays Pan-European Corporate High Yield, J.P. Morgan GBI-Emerging Market Index, J.P. Morgan EMBI-Global Diversified Index and Bloomberg Barclays U.S. Corporate High Yield Index. Indexes are unmanaged and not subject to fees. It is not possible to invest directly in an index.

We like sources of coupon income from higher-yielding asset classes, even as all-in yields remain near the bottom of recent ranges.

0

2

4

6

8

Europeaninvestment

grade

U.S. 2-yearTreasury

U.S. 10-yearTreasury

U.S. investmentgrade

European highyield

$ EM debt EM local U.S. high yield

Yie

ld (

%)

Range since Jan 2018

Current


Important Notes

This advertisement or publication has not been reviewed by the Monetary Authority of Singapore. This document is issued by BlackRock(Singapore) Limited (co. registration no. 200010143N) for Navigator events use only.

The document is for informational or educational purposes only. Past performance is not a guide to future performance. There are risksassociated with investing, including loss of principal. Changes in the rates of exchange between currencies may cause the value ofinvestments to fluctuate. This document is for informational purposes only and does not constitute an offer or invitation to anyone toinvest in any BlackRock fund and has not been prepared in connection with any such offer. Any research in this document has beenprocured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available onlyincidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarilyreflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy. Thisdocument contains general information only and does not take into account an individual’s circumstances and consideration shouldbe given to talking to a financial or other professional adviser before making an investment decision. You are reminded to refer to therelevant prospectus for specific risk considerations which are available from BlackRock websites.

BlackRock® is a registered trademark of BlackRock, Inc., or its subsidiaries in the United States and elsewhere. All other trademarks,servicemarks or registered trademarks are the property of their respective owners.

©2020 BlackRock, Inc. All Rights Reserved.

43


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