How the BlackRock Pacific Fund’s Portfolio Has Shifted in 2016

BlackRock Pacific Fund overview

The BlackRock Pacific Fund invests 80% of its assets in stocks of companies located in “Far Eastern or Western Pacific countries.” It usually invests through common stocks and convertible securities. The fund literature indicates that the focus of the fund is emerging markets from the region.

The fund uses a combination of bottom-up stock picking and top-down macro analysis while constructing its portfolio. It seeks to “capture the highest conviction ideas by exploiting market inefficiencies.” The fund is growth focused, and thus doesn’t give much importance to the income generating ability of stocks.

How the BlackRock Pacific Fund’s Portfolio Has Shifted in 2016

The fund’s assets were spread across 92 holdings as of May 2016, and it was managing assets worth $226.7 million as of the end of May. As of May, its equity holdings included Mitsubishi UFJ Financial Group (MTU), Tencent Holdings Limited (TCEHY), China Petroleum & Chemical (SNP), Hitachi (HTHIY), and Westpac Banking Corporation (WBK).

Portfolio changes in the BlackRock Pacific Fund

MDPCX has financials as its largest invested sector. It forms a fifth of the portfolio. Consumer discretionary is second, followed by information technology. The top three invested sectors form 48% of the assets.

Compared to the MSCI AC Asia Pacific Index, the fund is overweight in the consumer staples, consumer discretionary, materials, and utilities sectors. Meanwhile, it’s underweight in the financial, information technology, and industrials sectors compared to the index. Japan has the most weight in the fund’s portfolio with 42% of the fund’s assets. Australia is a distant second, followed by China. South Korea and Hong Kong round off the top five countries with the highest weights in the fund.

The fund has seen a lot of change in its portfolio in the 12-month period until May 2016. A year ago, financials used to form 40% of the portfolio. Though financials is still the sector with the most weight in the fund, its weight has been cut in half compared to a year ago. All other sectors, except for industrials and information technology, have seen a rise in their shares due to this sharp decline in financial stocks. The sharpest increase was in the consumer staples, energy, and utilities sectors.

With this portfolio positioning, how has the BlackRock Pacific Fund – Investor A Shares (MDPCX) fared in YTD 2016? Let’s look at that in the next article.