Yahoo Finance 3 BlackRock Mutual Funds to Buy as Market Volatility Continues
In recent weeks, the Fed has started sending signals that it might not raise interest rates further anytime soon, as it is worried that the policy stranglehold might land the economy in trouble. Wall Street, for months, has been rising and falling on the basis of whether the Fed would continue to raise interest rates. Even though inflation has been coming down from its 2022 highs, over the last two months, it has started climbing back on a surge in fuel prices.
Normally, the central bank would be taking cognizance of rising prices and interpret it as a basis for further tightening of monetary policy. However, with core inflation staying low and interest rates currently remaining at a very high level of 5.25-5.50%, the Fed is trying to be dovish, even as it struggles to bring inflation down to its target rate of 2%. But it will be a while before the target rate is achieved. If one is to go by the Fed’s calculations, not before 2026. Market volatility, it seems, is poised to continue.
This market volatility has led to risk-off positioning, with many investors shifting from equity products to much safer fixed-income and money market mutual funds, which also have lower fees than equities. BlackRock Inc. BLK, one of the world’s largest asset managers, is poised to make the most of these opportunities.
BlackRock reported that it had $9.43 trillion worth of assets under management as of Jun 30, 2023, as it beat earnings estimates in the second quarter. This is significantly higher than the $9.09 trillion it had reported last quarter. In the second quarter, BLK reported adjusted earnings of $9.28/share, widely surpassing the Zacks Consensus Estimate of $8.47.
BLK’s initiatives to restructure the actively managed equity business are expected to continue aiding growth for the company. If the Bitcoin ETF application it filed with the SEC at the end of June bears fruit, it will also enter into and lend credence to the crypto market. Add to that strong earnings numbers and an iron-clad reputation, and the financial giant is well-positioned to counter any headwinds from global macroeconomic factors.
What also helps is that the company continues to cut costs as its expenses decline. Total expenses for BLK in the second quarter of 2023 amounted to $2.85 billion. Our estimate for the same was pegged at $3 billion. The decline can be attributed to a fall in all cost components, including general and administrative expenses.
Investing in these mutual funds may provide the much-required stability and growth potential in a market that is expected to remain volatile for a while. Hence, astute investors should consider such funds at present. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
We have thus selected three mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), have positive three-year and five-year annualized returns and minimum initial investments within $5000 as well as carry a low expense ratio.
BlackRock Tactical Opportunities Fund PCBSX seeks long-term capital appreciation by using a macro asset allocation strategy, investing different percentages of its portfolio in global stocks, bonds, money market instruments, cash and foreign currencies. The advisor may choose to invest in common stock, preferred stock and depositary receipts.
Richard Murrall has been the lead manager of PCBSX since May 2017. The three top holdings for PCBSX are 3.6% in Apple, 3.3% in Microsoft and 1.6% in Amazon.
PCBSX’s 3-year and 5-year annualized returns are 5.1% and 3.3%, respectively, and its net expense ratio is 0.85% compared to the category average of 1.52%. PCBSX has a Zacks Mutual Fund Rank #1. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
BlackRock Mid-Cap Value MRRFX primarily invests in a diversified portfolio of equity securities of mid-cap companies. MRRFX seeks capital appreciation and intends to generate income by investing in securities that pay dividends.
Tony DeSpirito has been the lead manager of MRRFX since June 2017. The three top holdings for MRRFX are 2.4% in Leidos, 2.3% in Cognizant and 2.3% in Baxter International.
MRRFX’s 3-year and 5-year annualized returns are 14.9% and 7.1%, respectively, and its net expense ratio is 0.70% compared to the category average of 1.01%. MRRFX has a Zacks Mutual Fund Rank #1.
BlackRock Floating Rate Income BFRAX invests the majority of its assets in floating rate investments and other economically similar investments, which enable the fund to achieve a floating rate of income. BFRAX also invests in senior floating rate loans or second lien floating rate loans.
Mitchell Garfin has been the lead manager of BFRAX since August 2018. The three top holdings for BFRAX are 0.9% in Sunshine Luxembourg, 0.9% in Cloud Software and 0.8% in Medline Borrower.
BFRAX’s 3-year and 5-year annualized returns are 5.1% and 3.6%, respectively, and its net expense ratio is 0.61% compared to the category average of 1.03%. BFRAX has a Zacks Mutual Fund Rank #1.
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